U.K. Offers Customs Proposals for Brexit

By Jason Douglas Features Dow Jones Newswires

The U.K. government on Tuesday proposed a far-reaching customs arrangement with the European Union that it said would eliminate the need for border checks on imports and exports after Brexit.

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The "new customs partnership" with the EU was one of two suggestions the government put forward in a paper detailing its thinking on customs before resuming talks with Brussels later this month over the terms of Britain's withdrawal from the EU.

The proposals highlight the complexity of negotiating Britain's EU exit after more than 40 years in the bloc.

In the paper, one of several due to be published in the coming days on various issues, the U.K. set out a two-stage approach to giving up its place in the EU's customs union and moving to new arrangements for policing trade in goods with the EU. It hasn't yet spelled out its thinking on services trade.

Within the EU's customs union, goods move freely between member states but imports from outside the union face common tariffs.

As a first step, the U.K. said it proposed to leave the customs union when it exits the EU in March 2019 and would seek to negotiate a temporary arrangement that mirrors much of the existing union but, critically, would enable it to negotiate its own free-trade deals with non-EU countries.

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David Davis, Brexit secretary, told the British Broadcasting Corp. he anticipates this temporary phase would last "something like two years."

The U.K. offered two proposals for longer-term customs arrangements with the EU to take effect after that transition phase has passed.

The government's more ambitious proposal called for a new partnership between the EU and the U.K. that it said would eliminate the need for customs checks entirely between the EU and U.K.

The paper said this could be achieved by preventing goods from abroad that don't comply with the EU's rules from leaving the U.K. for the EU market, while collecting the correct EU taxes on goods destined for the EU market. This would require monitoring U.K. imports from non-EU countries to determine whether they were bound for the EU.

Officials acknowledged such an approach is "unprecedented" in international trade. It isn't clear whether the EU would be willing to sign up to such an arrangement if it proved practically possible.

The government's second proposal sketched out a more modest, "streamlined" customs arrangement that would use technological fixes to reduce delays at borders and similar impediments to trade.

The U.K. has yet to set out its proposals either on an interim or a long-term basis for its relationship with the EU's single market, the bloc's zone of common product regulation. Once the U.K. is no longer bound by EU single-market rules, EU border checks are likely to be required even if the U.K. remains inside the customs union.

Jenny Gross contributed to this article.

Write to Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

August 15, 2017 08:45 ET (12:45 GMT)