On 6th July, the government announced the Chequers Plan – the Brexit in Name Only plan that pushed Boris Johnson and David Davis to resign their front bench positions. In the plan, May outlined her vision of a future customs deal with the European Union that she called the “Facilitated Customs Arrangement.”
The Chequers white paper explained:
“The UK and the EU would work together on the phased introduction of a new Facilitated Customs Arrangement that would remove the need for customs checks and controls between the UK and the EU as if a combined customs territory. The UK would apply the UK’s tariffs and trade policy for goods intended for the UK, and the EU’s tariffs and trade policy for goods intended for the EU - becoming operational in stages as both sides complete the necessary preparations. This would enable the UK to control its own tariffs for trade with the rest of the world and ensure businesses paid the right or no tariff - in the vast majority of cases upfront, and otherwise through a repayment mechanism.”
This essentially means that the borders between the UK and the EU will remain open, with all goods coming from the EU entering the UK with no tariffs. If goods entering the UK from outside the EU are destined for the UK, they will pay UK tariffs – but if the goods received in the UK from outside the EU are destined for the EU, then the UK will arrange for EU tariffs to be collected and paid to the European Union.
I’m the first to admit that this is a tricky situation to solve, but by no means impossible. By starting the negotiations with a “no deal”, and working backwards from there, Theresa May would have found herself with a significantly stronger hand in these negotiations. But she didn’t do that. She did quite the opposite, and that’s why this Facilitated Customs Arrangement policy has today been knocked back by Michel Barnier.
At a news conference at the European Commission headquarters – the first time he appeared alongside our new Brexit Secretary Dominic Raab – Barnier made it clear he doesn’t want the plan. And why would he? It might make trading easier, and they don’t want to make this process simple. They want to punish the UK as much as possible – and make the negotiations as difficult for Theresa May as they can.
Specifically, Barnier explained:
“The EU cannot, and the EU will not, delegate the application of its customs policy and rules, VAT and excise duty collection to a non-member who would not be subject to the EU’s governance structures.”
Well, duh. If other countries realized they could still trade with the EU, without being controlled by unelected commissioners and presidents, they’d all want in on the deal!
The rejection of this plan is sure to give May a headache over Northern Ireland, too. This plan wasn’t just set out to make trade simpler, but it was a way of manoeuvring around the Northern Ireland issue. The Good Friday Agreement means there can’t be a hard border between Northern Ireland and the Republic of Ireland, and this plan would have meant no border was necessary. Trade would remain seamless, meaning a lack of a hard border between the two Irelands – between the EU and the UK – wouldn’t have been an issue.
Now we’re back to square one…which isn’t ideal given it’s summer and the politicians are on their holidays. Barnier and Raab say they’re hoping to finish the withdrawal treaty before October, but we’re really up against it at this point. Negotiators won’t be meeting for another two or three weeks.
All the while, the EU and the UK are preparing for a possible no-deal scenario. We’ve been told that sandwiches are under threat, cheese is going to become a luxury, and we should start stockpiling processed food – in case we start starving, or something.
Great work, Theresa. You’re really nailing this.