Hammond, the Chancellor and Fox, Trade Secretary had a joint article in The Telegraph (behind a pay wall but covered by The Guardian HERE) yesterday saying we will leave the EU customs union and the single market but there will be a time limited transition to avoid a cliff edge. It is being seen as a truce between factions in the cabinet. The article will not endear the government to the EU. The statement that we will leave the EU at the end of March 2029 is simply a fact. But to say there will be a time limited transition and no cliff edge for British business infers little will change in April 2019. But is that even possible outside the customs union?
The key paragraphs are these:
"A time-limited interim period will be important to further our national interest and give business greater certainty – but it cannot be indefinite; it cannot be a back door to staying in the EU. And it must ensure a smooth and predictable pathway for businesses and citizens alike. We are both clear that during this period the UK will be outside the single market and outside the customs union and will be a ‘third-country’ not party to EU treaties.
"But we are also clear that during this period our borders must continue to operate smoothly; goods bought on the internet must still cross borders; businesses must still be able to supply their customers across the EU and our innovative, world-leading companies must be able to hire the talent they need, including from within the EU. Once the interim period is over, we want a permanent, treaty-based arrangement between the UK and the EU which supports the closest possible relationship with the European Union, retaining close ties of security, trade and commerce."
The EU's negotiating guidelines say a core principal applying to "any form of transitional arrangement" is that there can be no "cherry picking". I think the EU will say if you want a transitional period to give "certainty" then we must continue to follow all the rules as set out in the treaties and this will involve the customs union.
In the phased approach to the negotiation the EU guidelines are, "Should a time-limited prolongation of Union acquis be considered, this would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply". We seem to be asking for everything to change but also remain exactly the same wherever it is in our interests.
Are Hammond and Fox saying we will leave the single market and the customs union but follow all the rules as if we are still a member? If so, the article is semantics rather than a clarifying of our position. And now The Telegraph has an article quoting an unnamed minister saying the truce will not last because Hammond views Fox with contempt (HERE).
Bernard Jenkins has been on The Today programme this morning and has already started to blame the EU. Unless they allow us to leave in March 2019 and sign trade deals with other countries but continuing to enjoy all the benefits of the customs union and the single market to avoid a cliff edge they are being unreasonable.
Another inflammatory issue is the announcement of more position papers this week on the Irish border and some proposals for a new customs regime. The EU have said repeatedly that there are three issues to be resolved first and these are citizens rights, the Irish border and the Brexit bill. Limited progress has been made on the first, none on the second (so that position paper will be welcomed) but nothing at all on the Brexit bill. They will note we want to outline the customs regime because it is linked to the Irish border and this makes sense - but nothing on the money side of things. This will infuriate the EU.
I can see that leaving without a deal and with a lot of rancour grows more likely by the week.
