Out-Law News | 27 Jul 2018 | 12:00 pm | 1 min. read
The UK government outlined plans earlier this month for a new 'facilitated customs arrangement' which would have no need for customs checks and controls between the UK and EU, but which would allow the UK to control its own tariffs for trade with the rest of the world.
Under those proposals, set out in the UK government's Brexit white paper, the UK would collect customs duties on the EU’s behalf when goods pass through the UK into the EU market.
However, following a meeting with the UK's new Brexit secretary Dominic Raab in Brussels on Thursday, Barnier said the EU27 could not accept the UK's proposals.
"The EU cannot – and will not – delegate the application of its customs policy and rules, VAT and excise duty collection to a non-member, who would not be subject to the EU's governance structures," Barnier said. "Any customs arrangements or customs union – and I have always said that the EU is open to a customs union – must respect this principle."
"In any case, a customs union, which would help to reduce friction at the border, would come with our Common Commercial Policy for goods…. Any customs arrangement will also have to be workable and must protect EU and national revenue, without imposing additional costs on businesses and customs authorities. This is the framework within which we will work with the UK over the coming weeks," he said.
Brexit expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said Barnier's comments should come as no surprise, but said they increase the likelihood of a 'no deal' scenario for businesses.
Lougher said: "Michel Barnier’s challenge to the white paper proposal that, in a future EU-UK trading arrangement, the UK collects customs duties on the EU’s behalf is consistent with what he has said before. Nevertheless, it does represent a significant setback for the UK government’s proposal."
"The two more extreme outcomes of joining the EEA or a hard-exit are becoming more likely. In the meantime, businesses are increasingly reaching the point when they need to start taking irreversible Brexit-related decisions. If they haven’t already done so, businesses should engage in structured scenario planning, to ensure that they are taking the most appropriate Brexit-related decisions," he said.