The U.K. wants a Brexit backstop to be temporary. Brussels has other ideas.
The temporary U.K.-EU customs union agreed by Brexit negotiators as a stop-gap measure to avoid a hard border in Northern Ireland will be used as leverage by Brussels to keep the U.K. within its customs orbit, senior EU officials have admitted privately.
According to two officials present at a briefing for EU ambassadors earlier this week, the EU believes the provisional deal struck by the two sides sets a “precedent” for the future customs relationship. Brussels intends to prevent London from watering it down in the negotiations to come over its future trading relationship.
Theresa May has called a Cabinet meeting for Wednesday afternoon at which ministers will be invited to approve the draft Brexit deal. If they do, that paves the way for a summit in Brussels later this month at which EU leaders would sign it off.
But the backstop revelation risks further inflaming May’s domestic political problems, as she battles to get the deal past her Cabinet before putting it to parliament some time before Christmas.
The U.K. prime minister has insisted that Britain will not be permanently tied to the EU’s customs union so it can strike independent free trade deals outside the bloc.
The Cabinet has also insisted that the backstop clause in the Withdrawal Agreement — which includes a U.K.-wide customs “arrangement” with the EU — includes a mechanism allowing the U.K. to leave so that it cannot be tied to the EU’s trade policy in perpetuity.
However, according to two EU officials, Brussels is adamant that the temporary backstop customs deal will form the basis of whatever supersedes it afterwards — regardless of the exit mechanism.
If the EU is successful it means the U.K. would be tied permanently to EU trade rules, unable to lower its tariff barriers as a bargaining tactic in trade deals with other countries. It would also mean the U.K. being forced to grant access to its markets to any country the EU strikes a future trade agreement with — without gaining reciprocal access to that country’s market in return, according to trade experts.
Leading Brexiteers — and some Remainers — have already accused the government of effectively agreeing to a permanent customs union.
Reacting to news of a provisional deal Tuesday, former Foreign Secretary Boris Johnson said: “We are going to stay in the customs union in this deal. We are going to stay, effectively, in large parts of the single market. That means it’s vassal state stuff.”
A senior Democratic Unionist Party aide said: “What you sign up to now is the minimum the EU will sign up to in the future relationship. People should be opposing this on the basis of how bad it is for the U.K. even before you get to the Northern Ireland bits.”
In an op-ed for the Financial Times, former EU trade commissioner Peter Mandelson agreed, insisting that “being in any sort of customs union means having a common non-negotiable external tariff.”
U.K. officials insist the backstop agreement will not form the basis for the future trade and customs deal both sides want to agree.
According to leaked accounts of the Brexit deal struck by U.K. and EU negotiators, London has agreed that should the future relationship not be wrapped up by the end of the transition in 2020, the U.K. will agree to stay within the EU’s common external tariff to ensure the border in Ireland remains open.
This will happen either by the U.K. extending the transition period — under which it stays in the customs union and single market — or by moving into the “backstop” provision. That would entail the U.K. as a whole entering into a customs “arrangement” with the EU, with special provisions for Northern Ireland, which will have to abide by EU standards on goods and food.
The EU wants the customs union agreement reached as part of the Withdrawal Agreement to form the basis for the permanent relationship — something that will be met with horror by Brexiteers, who have held up Britain’s ability to set its own trade policy after Brexit as one of the fundamental benefits of leaving the EU.
According to two officials present at a briefing of EU ambassadors by the European Commission’s deputy lead negotiator Sabine Weyand, Brussels believes the customs union agreed by May is the basis of the future relationship, not simply a backstop. “This would set a precedent,” said one official — one which it would be hard for the U.K. to back out of when negotiating its ultimate relationship with the bloc.
Sam Lowe, a senior research fellow at the Centre for European Reform think tank, said the constraints of an U.K.-EU customs union were substantial. “Whilst in a customs union with the EU, the U.K. will be required to fully align its external tariff with that of the EU’s, meaning it cannot lower or remove tariffs either unilaterally or as part of a new free trade agreement.”
The U.K. could negotiate trade agreements with countries like the U.S. and China in those areas “not constrained by its customs union with the EU” — areas such as services, procurement, intellectual property, data and investment.
But even in a customs union with the EU the U.K. would not automatically get access to all the countries the EU has trade agreements with.
“The U.K. will need to replace all of the existing EU free trade agreements, and will need to mirror all future EU free trade agreements, while all those countries would continue to get, theoretically, continued preferential access to the U.K. market,” Lowe said.
This means the U.K. would be granting tariff-free access to all the countries that the EU has free trade deal with — but the U.K. would not automatically have tariff-free access to those countries in return.