Brexit negotiators aim to stop UK undercutting EU on tax

Sharp disagreements have erupted within the British government over Brexit ahead of a meeting in London on Monday between Theresa May and the EU's chief negotiator, Michel Barnier.

The row within the Conservative Party over future customs arrangements comes as European negotiators are looking at how to stop Britain undercut the EU in tax and regulation after Brexit.

The EU task force working on new negotiating guidelines has been engaged in a series of consultative meetings with the 27 remaining states in which they made clear the talks would have to be about far more than free trade.

Preserving employment rights, environmental standards and co-operation against tax avoidance are all part of a “wide-ranging” EU agenda for talks that EU officials say will be all about maintaining a “level playing field”, in which as much as possible of the status quo rights, obligations and regulatory alignment are safeguarded.

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The “depth and breadth” of the UK-EU relationship, the task force argues, necessitates a far more extensive agreement and controls than provisions in agreements with the US, Japan or Canada. It is an explicitly “ambitious” agenda that will infuriate hard Brexiteers on the Tory back benches.

Conservative Brexiteers have warned Ms May against agreeing to remain in any form of customs union with the EU after Brexit, but home secretary Amber Rudd insisted on Sunday some customs arrangement was needed to keep trade frictionless.

Brexiteer plans

“We do not want to have tariffs at the border, so that is a form of customs agreement, arrangement [or] partnership. It is likely to be something within the customs framework,” she told the BBC’s Andrew Marr Show.

However, last night UK government sources were quoted as insisting that the UK would leave the customs union, in a move interpreted as trying to dampen dissent from Brexiteers.

Amid media reports of Brexiteer plans to move against the prime minister and to unite behind Boris Johnson as her successor, veteran Brexiteer Bernard Jenkin warned she could not command a majority in parliament if she compromised on the customs union.

The Brexit war cabinet will meet twice this week in an attempt to agree on what Britain should seek from the next phase of the negotiations.

Mr Barnier's talks with Ms May and Brexit secretary David Davis are expected to focus on the EU's transition proposals and the drafting of the "withdrawal treaty" that puts in legal language commitments made by both sides at the end of phase one of the talks last December.

Ms May insists the UK must be allowed a say during transition on new legislation that it will be expected to implement, and wants to introduce controls on EU migrants from the start of transition at the end of March 2019.

Much of the withdrawal treaty text has already been drafted by the task force, although, one source suggests, there are problems with the language on the Irish Border.

Mr Barnier will also certainly touch on the future relationship discussion, if only to express Brussels’s frustration at the UK inability to make its position clear. He may take some comfort from the promise that more clarity should emerge from British cabinet discussions devoted to the issue this week.