A group of 60 Eurosceptic MPs from the European Research Group (ERG), led by Tory MP Jacob Rees-Mogg, has issued a letter calling on prime minster Theresa May to drop what is believed to be her preferred post-Brexit customs plan.
The letter, ahead of a Brexit committee meeting today, describes the “customs partnership” model as flawed and likely to keep the UK tied to the European single market.
The customs partnership would remove the need for custom checks at the border. At the same time, this so-called “hybrid model” would require the UK to collect EU import tariffs on behalf of Brussels and then to refund companies of the difference if UK tariffs were lower. While some MPs regard it as the only means of avoiding the imposition of a hard border on the island of Ireland, EU officials believe the complexity of this solution amounts to “magical thinking”.
The other option on the table is the maximum facilitation, or “max-fac”, proposal, which relies on technology to minimise border checks through electronic pre-notifications of incoming goods. It includes also a “trusted trader” scheme to improve custom checks’ efficiency, allowing companies to pay duties in bulk every few months rather than at every border crossing.
Saying that the customs plan would “festoon the entire economy with burdensome controls”, the letter concluded: ”The new customs partnership proposed is undeliverable in operational terms and would require a degree of regulatory alignment that would make the execution of an independent trade policy a practical impossibility.”
Rees-Mogg told BBC Radio 4’s Today programme that the ERG is “not in the business of making threats”.
“There is no question of there being an ultimatum, this is a paper that has been produced on a specific aspect of policy that would not work - it would not effectively take us out of the European Union, it would leave us de facto in both the customs union and in the single market,” he said.
Separately, an investigation by the International Trade Committee has warned a potential free trade deal with the US would see farming and manufacturing lose out in favour of the UK’s financial services sector.
The report states that “providing access on agricultural products to the US allows for agreement in other areas that are more important for UK trade, such as financial services”.
As a result, the British farming industry could be “sacrificed” by a trade-off due to the different sanitary, animal welfare and environmental regulations between the UK and US.
The US is currently the UK’s largest single-country trade partner and the two countries are also each other’s largest contributors of foreign direct investment.
Committee chair Angus MacNeil warned the government that rushing negotiations could be a “catastrophic error” and consensus across parties on a future trade policy is needed.
“If there is a clash between the regulatory regimes of the EU and the US, which does the government plan to prioritise? These issues need to be worked out, not just before negotiating a deal with the US, but also before we finalise our future trading relationship with the EU,” he said.
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