Brexit: UK hopes to strike new trade deals during transitional period

trade deals

Ministers hope to negotiate and complete trade deals with other countries during any Brexit transitional period, a Government document has said.

Brexit Secretary David Davis revealed future customs proposals, including an interim customs union with the EU aimed at avoiding a “cliff-edge” for manufacturers after Brexit, Sky reports.

He told Sky News that a temporary customs arrangement will be “in both sides’ interests” – and stressed any transitional period should not exceed two years.

But his plan drew a cold reaction in Brussels, with one official calling it “fantasy”.

The document states that Britain will seek the right to negotiate other trade deals during the interim customs union, though ministers accept they won’t be able to implement them during the transition.

But Government officials refused to be drawn on whether a third country trade deal could actually be signed.

This appeared to contradict an earlier promise made by Chancellor Philip Hammond and International Trade Secretary Liam Fox, who wrote in the Sunday Telegraph that once EU membership ends in March 2019, the UK would be an “independent nation with the freedom to sign bilateral free trade agreements”.

Mr Davis estimated the transition period would be roughly two years – with the deadline of the next General Election in 2022 as the “absolute maximum”.

The document sets out two broad approaches to a possible customs deal.

One aims to continue some existing arrangements the UK has with the EU, using technology to make custom requirements “as frictionless as possible”.

The second option is without precedent, which would involve the UK mirroring the EU’s requirements for imports where the final destination is the EU.

The Government also says it has contingency plans in place to deal with the possibility of no agreement.

But there are increasing concerns that all the Government’s possible options mean businesses will be hit with extra red tape and increased costs.

For example, proposals for goods that do not comply with the EU’s trade policy would need a “tracking mechanism” where traders could claim “refunds” if tariff trades differ.

The British Irish Chamber of Commerce responded saying it was cautious about the feasibility of some proposals being put forward in London on simplifying new trade barriers with Europe.

John McGrane, director of the association, said the ideas were a constructive contribution to the negotiations.

“The recognition of the need for an interim period to allow for the adoption of new systems and infrastructures will be welcomed by businesses who have long warned of the dangers of leaving the Customs Union without such a transition phase,” he said.

“It is important that this phase is as close to the status quo as possible with minimum disruption caused by tariff and non-tariff barriers.”

Chief EU negotiator Michel Barnier said the two sides needed to agree on key divorce issues before moving on to the future relationship – sticking to the EU’s preferred timetable.

A European Commission spokesman said the UK position paper on customs would be examined carefully.

“We take note of the UK’s request for an implementing period and its preferences as regards the future relationship, but we will only address them once we have made sufficient progress on the terms of the orderly withdrawal,” the spokesman said.

“An agreement on a future relationship between the EU and the UK can only be finalised once the UK has become a third country.

“As (EU chief negotiator) Michel Barnier has said on several occasions, ‘frictionless trade’ is not possible outside the single market and customs union.”

Guy Verhofstadt, the European parliament’s Brexit coordinator, tweeted: “To be in and out of the Customs Union and ‘invisible borders’ is a fantasy.

“First need to secure citizens’ rights & a financial settlement.”

Labour’s shadow Brexit secretary, Sir Keir Starmer, branded the customs proposals “incoherent and inadequate” and “designed to gloss over deep and continuing divisions within the Cabinet”.