The EU’s chief Brexit negotiator has warned the UK government that trade barriers with the EU would be “unavoidable” if it insists on leaving the customs union, as both sides refused to concede any new ground.
“Without the customs union, outside the single market, barriers to trade and goods and services are unavoidable,” Michel Barnier said on Monday (5 February) following meetings with his counterpart David Davis and Prime Minister Theresa May in London.
This includes financial services and the “passport” currently allowing UK banks to trade seamlessly with the continent, which Barnier said will be “gone” after Brexit.
Visiting European Banking Authority @EBA_News today.
— Michel Barnier (@MichelBarnier) February 5, 2018
At the weekend, May appeared to rule out customs union membership after the UK leaves the EU in March 2019, after coming under intensive pressure from her Conservative party’s ‘hard Brexit’ faction. She will convene a meeting of around ten senior ministers later this week to firm up the government’s position.
“We will wait, on the European side, for an official UK position of the government, in the next few weeks,” commented Barnier.
For his part, Davis told reporters that an “intense period of negotiation” would now begin, in a bid to finalise the terms of a transition period lasting roughly two years by an EU summit on 22 March, in order to allow negotiations to start on a successor free trade pact.
Talks between senior officials begin in Brussels tomorrow and will focus on the Irish border question, governance and the implementation of the transition.
“I am confident that we can get to that political agreement at the March Economic Council,” said Davis.
“We want a comprehensive free trade agreement, and with it a customs agreement, and to make it as frictionless as possible whilst giving ourselves the opportunity to make free trade deals with the rest of the world,” Davis told reporters.
The transition period would be “time-limited”, said Davis, adding that “it will lead to us being outside the customs union and indeed the single market in the longer term.”
Hilary Benn, the Labour chair of the UK Parliament’s Exiting the EU committee, told the BBC on Monday that ruling out customs union membership was “a profound mistake”.
“What the government is now coming face to face with is the consequences of red lines it set, including saying leaving the customs union is what they want to do.”