On August 15, the UK Government published a paper outlining plans to pursue a temporary customs union with the EU in the years following the country’s official exit from the bloc in March 2019. The arrangement would prevent the worst case cliff-edge scenario for businesses by allowing tariff free trade between the UK and EU to continue until a new trade deal is struck.
The paper is the first in a series to be published over the coming months, outlining broadly what the UK seeks to achieve in the ongoing Brexit negotiations on matters such as trade and the border with Ireland. The paper also describes the UK’s intended customs relationship with the EU following the transition period as an arrangement that will permit trade with the EU to be as frictionless as possible. The government said it hoped for either “a new customs partnership with the EU…in a way that removes the need for a UK-EU customs border”, or a new “highly streamlined customs arrangement…leaving as few additional requirements on EU trade as possible”.
If the EU agrees to the temporary customs union, the UK intends it to last the duration of the transition period
If the EU agrees to the temporary customs union, the UK intends it to last the duration of the transition period, around three years. However, the EU has repeatedly said any terms of the UK’s departure will only be discussed when the immediate arrangements following the decoupling have been agreed upon. This will include settling on a figure for the UK’s divorce bill. In a series of interviews about the publication of the paper, David Davis, the UK’s Brexit Secretary, admitted that he does not expect a figure to have been reached until at least October.
The proposed temporary customs union will be popular with UK advocates of a smooth Brexit transition, but is likely to face opposition from Europe since it would essentially allow the UK to cherry pick the advantages of the single market, while negotiating new trade deals with non EU countries. Since all EU members must trade with other countries under the same terms and tariffs, the UK is seeking an advantage in international trade beyond EU member countries, while hoping to maintain all the benefits of single market membership.