Fox says UK may seek compromise to stay in customs union

The UK may seek a compromise deal to remain in the EU customs union, according to Liam Fox, the Eurosceptic minister for international trade.

In July, Mr Fox called for the UK to leave the customs union, which sets out common rules for checks on goods entering the EU, but he said on Sunday that there may not be a “binary” decision, suggesting that the government might seek some unspecified compromise deal.

Mr Fox said it was “important to have continuity in trade”, and that the cabinet would “take a collective view on this once we have looked at all the issues”.

If Britain remained in the customs union it would be obliged to apply EU common tariffs, sharply reducing the scope for Mr Fox to strike trade deals with third countries.

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Asked by the BBC's Andrew Marr whether it would in effect put him out of a job, Mr Fox said: "There would be limitations on what we could do on tariff settings."

He suggested Britain could still negotiate trade deals with third countries based on the removal of “non-tariff” barriers to trade of different rules and standards between countries.

Bridge the gap

Mr Fox said he was open to the idea of a transitional deal to bridge the gap between the UK leaving the EU in 2019 and a new trade deal with Europe – but it depended on what the deal was and how long it might last.

One precedent is trade in manufactured goods between the EU and Turkey, a non-EU member, which is covered by the customs union and is tariff free. Turkey has to offer access to imported goods from third countries on terms agreed by Brussels, but has to strike its own deals to gain reciprocal access.

Meanwhile, George Osborne, the former chancellor, said the decision to quit the customs union should be based on "a hard-headed assessment" that it would bring net gains in trade to Britain.

He said that while leaving the customs union might allow Mr Fox more freedom to strike deals with the US and Australia, it could come “at the price of giving up existing free-trade agreements with Germany and France”.

Discrepancy

Mr Osborne argued there was a discrepancy between those Brexiters who wanted Britain to be “a beacon of free trade in the world” while at the same time allowing barriers to be created with Europe.

The former chancellor said he had advised David Cameron not to hold the EU referendum, and that the Remain side had clearly run "the wrong campaign" because it had failed.

The Remain campaign focused on the economy, he said, because voters were not interested in arguments about European unity and peace on the continent.

– Copyright The Financial Times Limited 2016