Trade Secretary Liam Fox, a veteran Brexit campaigner, warned he will not accept a deal with the European Union that stops the U.K. signing trade accords with other countries, as the government continues to debate what kind of relationship it wants with the bloc.
Fox said in an interview that the U.K. cannot be in any agreement with the EU that prevents him striking new bilateral deals with other countries. His comments follow reports that some of Prime Minister Theresa May’s officials believe the U.K. should replicate membership of the EU’s customs union after Brexit.
Under current terms of customs union membership, EU member countries are banned from negotiating free trade agreements with other countries. The EU strikes deals on behalf of all 28 member nations instead.
Asked if replicating the terms of customs union membership would be a problem for him, Fox said: “Yes. We’ve said we will not come to an arrangement with the EU that prohibits us from having an independent trade policy—and we cannot be in the customs union.”
“Of course we want to have a customs arrangement that leaves us with trade that’s as frictionless as possible, and in terms of a trade agreement we will want to have one that leaves us with an open and liberal relationship. That’s in the interests of both the UK and our European partners.”
Cabinet Debate
Nineteen months after the referendum, May’s cabinet is in the process of deciding what it wants the future trade agreement with the EU to look like. The terms of that deal will start to be negotiated in March, with the aim that an outline agreement can be secured by the end of the year.
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British ministers including Fox and Brexit Secretary David Davis often cite the freedom to become a global trading nation as one of the main benefits of leaving the EU, and it was an argument used during the referendum campaign.
However, quitting the customs union will probably make it necessary to have a hard border between Northern Ireland and the Republic of Ireland, when that frontier becomes the dividing line between the U.K. and the EU. Avoiding a hard border in Ireland is critically important for the negotiations to succeed—as Ireland and the EU have made it a precondition.
Business leaders have also called for the U.K. to remain in the customs union to facilitate trade of goods, although it wouldn’t help service industries or address concerns about future differences in regulation.
The Sunday Times reported this week that Oliver Robbins, the prime minister’s senior Brexit official, has told European officials that May would support staying in the customs union after Brexit to minimize friction at the U.K. border.
While May has said the U.K. will leave both the European single market and the customs union, Chancellor of the Exchequer Philip Hammond told business leaders in Davos last week that the future relationship between the U.K. and EU would differ only “modestly” from the current arrangement.
