Government backs May’s plan for all-UK customs union with EU

Barnier has rejected the idea but Dublin officials argue it could settle border question

The Government has boosted Theresa May's hopes of breaking the impasse in Brexit talks by backing her emerging plan for an all-UK customs union with the EU.

Ahead of a crucial EU summit this month, the British prime minister is seeking to resolve a dispute over the "backstop" to avoid a hard Border on the island of Ireland.

One of the proposals she is working on – to take effect if no other solution to the Border issue is found – is for the whole UK to participate in a customs union with the EU.

Michel Barnier, chief EU negotiator, has rejected the idea, but officials in Dublin privately argue it could settle the Border question and open the way to a deal.


"It looks like it would resolve that issue [of the Border]," said a senior Irish official involved in Brexit talks. "Whether Europe accept it or not is another conversation."

The Irish intervention will help Mrs May in the run-up to the EU summit on October 18th as she attempts a delicate diplomatic docking exercise on Brexit. The prime minister may have more freedom to manoeuvre, now that her ruling Conservative party has concluded its conference.

Vexed issue

She will offer to meet the EU halfway on the vexed issue of the Irish backstop, agreeing to Brussels' demands that Northern Ireland stay part of the single market regulatory area of the bloc.

But in return she wants the EU to concede to Britain’s demands that under the backstop plan the whole UK – rather than just Northern Ireland – would stay in the customs union for a limited period, until a UK/EU trade deal was finalised.

The “temporary” extension of the customs union would prevent Northern Ireland being carved off from the rest of the UK into a separate EU customs territory. Some British ministers predict the arrangement might in practice extend well into the next decade.

The main attraction of the plan for Leo Varadkar’s Government is that it would remove the need for customs checks on the Border. It would also avert the need for customs checks on Ireland’s €65bn annual trade with Britain.

But Brussels is reluctant to give its legally binding agreement to provisions that could keep the UK in a customs union with the bloc after Brexit, since it is concerned this could serve as a back door into the EU's trade and regulatory regime with none of the obligations of membership.

Mr Barnier has also argued that the customs relationship should be settled in the second phase of Brexit talks on Europe’s new trading relationship with the UK.

The Irish official added: “If [(the UK is)] accepting a customs union, what are they leaving? That’s the big question. If effectively they accept the customs union, they’re not leaving anything really.”

The hardening stance of the DUP, whose support Mrs May needs for her parliamentary majority, is a further source of anxiety in Dublin.

Arlene Foster, DUP leader, has insisted she would not accept new regulatory checks in the Irish Sea that would still be required under Mrs May's new bid to revive the talks. Mrs Foster warned at the Conservative conference that the DUP's red lines were "blood red", raising fresh questions over the all-UK customs proposal from the prime minister.

But, by keeping the whole UK in a customs union with the EU, Mrs May’s plans would avert any requirement for custom checks between Britain and Northern Ireland, one of the DUP’s prime concerns. – Copyright The Financial Times Limited 2018