UK’s ‘backstop’ customs plan published

Posted in UK and EU legal framework

The UK Government has published its proposal for a ‘backstop’ option regarding temporary future customs arrangements between the EU and the UK.

The issue of future customs arrangements has proved to be controversial in the Brexit negotiations. As long ago as January 2017, the Prime Minister, in her speech at Lancaster House, made clear that the UK would not remain within the Customs Union as this would restrict its ability to pursue an independent trade policy. However, aside from the fact that this approach makes it more difficult to achieve frictionless trade between the UK and the EU post-Brexit, it also creates a challenge as to how to avoid creating a hard border between Ireland and Northern Ireland – or a hard border between Northern Ireland and the rest of the UK – neither of which are considered acceptable outcomes.

The Government had previously confirmed in the Joint Statement issued by the UK and EU in December 2017  that, in the absence of any other agreement between the EU and the UK, it will maintain “full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 [Good Friday] Agreement.” 

Subsequently, the EU’s draft withdrawal treaty, proposed a "common regulatory area" between Ireland and Northern Ireland. Under this proposal, there would be free movement of goods between Northern Ireland and Ireland and Northern Ireland would be subject to EU customs rules. The upshot of this would effectively be to bring Northern Ireland within the Customs Union, thus transferring the real border between the UK and the EU to that between Northern Ireland and the rest of the UK. This was immediately rejected by Theresa May, on the basis that it would "threaten the constitutional integrity of the UK". In response, both the Irish government and the EU sought to reassure that this initial proposal was a back-stop option and invited the UK to come out with an alternative.

The UK Government’s current proposal for ‘Temporary Customs Arrangements’ would effectively keep the UK within the Customs Union beyond the expiry of the transition period at the end of 2020. The paper provides that insofar as the backstop is to apply, “a temporary customs arrangement should exist between the UK and the EU”. This would see “elimination of tariffs, quotas, rules of origin and customs processes including declarations on all UK-EU trade”. Further, during this time, although the UK will be able to negotiate its own trade deals, it would only implement those aspects that do not affect the functioning of the temporary customs arrangement.

The paper provides that the ‘backstop’ arrangement should be time limited, and that it will be only in place until the future customs arrangement can be introduced”. The UK “expects” that such future arrangements will “be in place by the end of December 2021 at the latest”. However, if no agreement has been reached by that time, it would seem to follow that the ‘backstop’ arrangement would remain in place. 

It is worth noting that the ‘backstop’ option is only intended to apply in the event that no other agreement is reached between the parties regarding future customs arrangements. However, there have been few signs that any such agreement is close. In the UK’s earlier position paper it had proposed either a “highly streamlined customs arrangement between the UK and the EU, streamlining and simplifying requirements, leaving as few additional requirements on UK-EU trade as possible” or a “new customs partnership with the EU, aligning our approach to the customs border in a way that removes the need for a UK-EU customs border”. To date, neither option has been deemed acceptable by the EU.

It also remains to be seen whether EU will accept the UK’s ‘backstop’ proposal. The immediate response of Michel Barnier was that the EU will examine the proposal to determine whether: (i) a workable solution to avoid a hard border between Ireland and Northern Ireland; (ii) it respects the integrity of the Single Market and Customs Union; and (iii) it is an ‘all-weather backstop’. If the answer to any of those questions is ‘no’, time is rapidly running out for the parties to reach agreement on the terms of the UK’s departure.

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