Michel Barnier says UK cannot avoid trade barriers if it leaves customs union

Britain cannot avoid trade barriers with the European Union if it leaves the customs union and the single market after Brexit, the EU's chief negotiator Michel Barnier has warned.

Speaking in Downing Street following meetings with Theresa May and Brexit secretary David Davis, Mr Barnier said he was still waiting for clarity on what relationship Britain wanted from the EU after it leaves.

“The only thing I can say – without the customs union, outside the single market – barriers to trade and goods and services are unavoidable. The time has come to make a choice,” he said.

Downing Street on Monday sought to defuse a row within the Conservative party about the customs union, stating that Britain would definitely be leaving it. Mr Davis said, however, that a new customs arrangement should be part of a future free trade agreement with the EU.

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“We’ve said in terms we want a comprehensive free trade agreement and with it a customs agreement and to make that as frictionless as possible. To make as much trade that currently exists as free as possible whilst still giving ourselves the opportunity to make free trade deals with the rest of the world where 90 per cent of the rest of the growth will come, according to the numbers of the European Union itself,” he said.

Next stage

Mr Davis said British and EU officials would immediately begin work on the next stage of the negotiations, on the terms of a transition arrangement after Brexit. They will also put into a legal text the joint report agreed by both sides last December, which includes commitments from Britain about how it will avoid a hard border on the island of Ireland.

Only after the legal text is agreed and the transition arrangements worked out, probably in late March, will the two sides begin negotiations on their future relationship, including a free trade agreement.

Mr Barnier said this schedule would give Britain time “to clarify its position” on the future relationship it will seek with the EU.  “I will not give a running commentary on the domestic and internal debate in the UK. We will wait, on the European side, for an official UK position of the government, in the next few weeks,” he said.

Ms May, the prime minister, will chair two meetings this week of her so-called Brexit war cabinet, a cabinet subcommittee that includes leading Brexiteers such as Boris Johnson and Michael Gove as well as former Remainers like chancellor Philip Hammond and home secretary Amber Rudd. The meetings on Wednesday and Thursday will each last for two hours and will focus on some of the thorniest remaining issues surrounding Brexit, including the customs union.

Jacob Rees-Mogg, who leads a Conservative backbench caucus of hard Brexiteers, on Monday repeated his claim that civil servants were skewing economic forecasts to encourage Britain to stay in the customs union.

“When you take these models of what happens unless you stay in the customs union, they are all completely dependent on the inputs that you start with, and the inputs that they have started with are ones that lead to the conclusion that you have to stay in the customs union, other economists have used different inputs and looked at different modelling of global trade which says we’ll do extremely well by not being in the customs union,” he told a group of journalism students at the Press Association.

“And so do I think civil servants are politically biased, well I think the information the treasury has produced is biased, but the blame must always be with ministers.”