Politics

Brexit: Liam Fox to warn of customs union 'sell out'

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Liam Fox arriving for cabinet ahead of the triggering of Article 50Image copyright
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The rest of the world offers more potential growth in services than the EU, Mr Fox will say

Any form of customs union with the EU after Brexit would be a “complete sell out” for the UK, International Trade Secretary Liam Fox is to argue.

The UK would find itself in a “worse position” than it is now, he will say, if it leaves the existing customs union but negotiates a similar arrangement.

Labour says such an outcome would help business by securing tariff-free trade.

But Mr Fox will say having to accept EU rules and limits on doing other deals would make the UK “less attractive”.

In a speech in London, he will warn changing economic and trade patterns mean the EU is a less significant partner than 15 years ago and the UK must have the freedom to exploit the “opportunities of the future”, particularly in services and digital industries.

Mr Fox, one of the most prominent Brexiteers in the cabinet, is the latest minister to set out his stall about the benefits of leaving the EU as part of the government’s attempt to map out “the road to Brexit” in March 2019.

Prime Minister Theresa May will address the issue of the UK’s future relationship with the EU on Friday amid calls for greater clarity about how her twin objectives of frictionless trade with the continent and no hard border on the island of Ireland can be achieved outside the single market and customs union.

The government has said it wants a customs agreement with the EU, which is the UK’s single largest trading partner accounting for 43% of exports, but one that does not stop it from doing free trade deals with other countries.

‘Rule takers’

On Monday, Labour shifted position by calling for a long-term customs union with the EU, a move which puts the government at risk of defeat when MPs vote on the issue in the Commons.

Opposition leader Jeremy Corbyn said he would support an arrangement that would protect existing jobs and supply chains while giving the UK a say in future deals negotiated by the EU.

But Mr Fox will reject this, saying the UK would have to cede “considerable control” of its trade policy to Brussels in any customs union.

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The customs union allows its members to set internal and external tariffs

In a speech in the City of London, he will urge an approach based on tapping growing markets not merely on preserving existing aspects of the UK’s relations with the other 27 EU members.

“As rule takers, without any say in how the rules were made, we would be in a worse position than we are today,” he will say. “It would be a complete sell out of Britain’s national interests.

Citing Turkey’s experience of being outside the EU but joined in a customs union with it, he will say if the UK found itself unable to set its own rules in key sectors of our economy, this would “remove the bulk of incentives” for other countries to enter into comprehensive free trade agreements.

“The inevitable price of trying to negotiate with one arm tied behind our back is that we would become less attractive to potential trade partners and forfeit many of the opportunities that would otherwise be available.”

Flexibility, he will say, must be the basis of the UK’s trade policy if it is to support the fledgling industries that will provide much of the employment and income of the future.

The European Commission will publish the first draft of its proposed withdrawal treaty on Wednesday, which it wants both sides to agree to by the autumn to allow for an orderly departure.

The UK and EU are starting to negotiate the terms of a transition period after the UK leaves on 29 March 2019, expected to last about two years.

During this implementation phase, the UK wants to be able to sign external trade deals although they will not come into effect until after the period has ended.

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