Trade

British businesses call on May to stay in customs union with EU

LONDON — British businesses will launch an urgent lobbying operation this week to keep the U.K. inside a customs union with the EU, effectively calling on Theresa May to drop her vision of an independent U.K. trading policy after Brexit.

With negotiations on the U.K. and the EU’s future relationship due to begin within weeks, the Confederation of British Industry (CBI) will call on May’s Cabinet to secure a transition deal within 70 days, to reach a united view about the future relationship by April, and to have an “unambiguous” outline of what the trade deal will look like by October.

In a speech at the University of Warwick on Monday, CBI Director General Carolyn Fairbairn will call for both the U.K. and the EU to “revisit red lines” — in the U.K.’s case, dropping May’s opposition to a customs union with the EU that would restrict the U.K. from striking bilateral trade deals with other countries.

“There may come a day when the opportunity to fully set independent trade policies outweighs the value of a customs union with the EU … But that day hasn’t yet arrived,” Fairbairn will say, according to extracts of her speech released to journalists.

Staying in a customs union — “a single set of tariffs for goods imported from outside the EU, enabling tariff-free trade within it” — would, Fairbairn will say, also improve the chances of avoiding a hard border between the Republic of Ireland and Northern Ireland.

On the wider future trading relationship between the U.K. and the EU, Fairbairn will reflect growing alarm among businesses that the U.K. and the EU’s red lines will force the two sides to settle for a Canada-style free-trade agreement, which would represent a significant step backwards compared to existing terms.

“Currently, to trade with the EU, many U.K. businesses need only complete a simple form. But with a Canada-style agreement U.K. firms would face customs declarations, which means filling out a 12-page form for each batch of goods sent to customers,” Fairbairn will say, adding that the Canada deal is “patchy” on services trade.

“Put simply, a Canada deal is an ocean away from what we need,” she will add.

However, the CBI will not endorse the Norway-model of Brexit, saying the U.K. needs more control over immigration to honor the outcome of the EU referendum, and should not contribute to the EU budget in the same way that Oslo does.

Fairbairn will call for a solution that is “neither Norwegian nor Canadian, but one focused on prosperity, reflecting the size of our economy and its value as a marketplace next-door to Europe” — a call for more flexibility from EU negotiators, who have signaled that there can be no special treatment for the U.K. that differs substantially from existing third-country models.

Warning that “hundreds of thousands of jobs” are at stake, Fairbairn will also call for rapid decision-making.

Without it, she will say, “firms will have no choice but to trigger their Plan Bs. More jobs and investment will leave our shores and future generations will pay the price.”

Original Article

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