Richard North, 17/05/2018  
 


The purpose of the current Brexit talks being conducted within the Cabinet are, we are told, mainly concerned with how the UK is to avoid a "hard" border between the Irish Republic and Northern Ireland.

So far, the entirely fruitless discussions have been focused on two options, the so-called "customs partnership" and the "maximum facilitation" plan, neither of which would secure free movement of goods across the border, or be acceptable to Brussels.

But, in her desperation to avoid the "backstop", which would inevitably involve a "wet" border between Northern Ireland and the rest of the UK, it seems Mrs May has come up with a stunning "third way" alternative.

In order to keep the goods flowing, the prime minister - we are told - is ready to tell Brussels that the UK is prepared to stay in the customs union beyond 2021.

By such means, the UK will stay aligned to the customs union, to allow the "highly complex technology needed to operate borders after Brexit" to be procured and installed, processes which are said to take until 2023 to complete.

What is absolutely staggering here – if the report is correct – is the belief that continued membership of the customs union will in any way facilitate the free movement of goods across the Irish border and thereby avoid the need to set up a "hard" border.

This appears to rest on the continued perpetration of error of confusing the "customs union" with "customs cooperation ", two entirely separate concepts which rest for their authority on distinct parts of the Treaty of the European Union (Chapters 1 & 2, respectively, of Title II).

Confirmation that this error is at the heart of this initiative would seem to rest with Telegraph claiming that remaining in a customs union would keep the whole of the UK within the EU "customs territory" for a temporary period, avoiding Northern Ireland being under a separate regime.

This in itself is a mistake. For a start, the European Union itself is based upon a customs union. That much is written into the treaty, so the only way the UK can remain in the customs union is to stay in the EU. In fact, the UK will leave the EU on 29 March 2019 and, in so doing, will leave the customs union.

Thus, what is actually meant is that the UK will adopt all the regulations pertaining to the customs union, but without actually being in it. But this is largely what the UK has said it intended to do through what was originally known as the Great Repeal Bill.

As to the "customs territory", this is not defined by the customs union, per se. Rather, this is defined by Regulation (EU) No 952/2013 (Article 4) - the Union Customs Code Regulation. As a formally defined area, this embraces much more than just the customs union – it also takes in the internal market.

As such, the "customs territory" does not define the customs union, any more than the customs union defines the customs territory. It actually defines the area to which the Union Customs Code (UCC) applies. That is the common administrative code which defines customs procedures applicable to the Union as a whole, administering the application of the customs union and the import and export of goods to and from the internal market.

Thus, for the UK to remain within the customs territory, the EU would have to amend or extend the application of Regulation 952/2013 (and all the related regulations) to ensure continuity of application. But, the UK would no longer be in the EU and therefore outside its jurisdiction. One can only imagine therefore, that the provisions would be carried through in the formal Withdrawal Agreement.

If this looks complicated, that's because it is. One has to recall that no country has ever left the EU under the Article 50 process so everything is being tried out for the first time. And there will be plenty of work here for the lawyers to define the precise legal structures. Even then, that will not necessarily guarantee that they will withstand scrutiny if the ECJ comes calling.

The upshot of all this though is that the best we can get from the application of customs union rules, and the relevant parts of the UCC, is that we will have a tariff-free border, with no rules of origin (ROO). But that in no way ensures free movement of goods. As we know, that only comes with full participation in the Single Market, requiring regulatory alignment and much else.

In other words, conformity with customs union rules do not solve the "hard" border problem. We need much, much more.

Right up front is our old friend, conformity assessment. When we drop out of the EU, none of our Notified Bodies will be recognised and any goods requiring third party testing will no longer have valid certification.

Unless by the time we leave, there are Mutual Recognition Agreements (MRA) on conformity assessment in place, any goods requiring third party certification will require re-testing before they are permitted to circulate freely within the Single Market.

There is no point in asserting that this testing can be done "beyond the border". In the immediate aftermath of Brexit day, Union customs officials will need to be in their guard for a torrent of goods which previously was entitled to free passage and will then be prohibited access until complex formalities have been complied with.

Not only will this include the general range of manufactured goods, but also chemicals, pharmaceuticals, cosmetics, vehicles and their components, aircraft and their components, and much else. Even waste which we export to some EU countries for treatment or recycling will be caught in the net.

This will necessarily mean an enhanced level of document scrutiny, a massive rise in load inspections and huge quantities of goods detained for testing and certification. All of this is untouched by customs union provisions, as are the sanitary and phytosanitary checks, which must be carried out in approved facilities which, at present, do not exist.

Where Mrs May thinks she is going with this, therefore, is beyond understanding. Nothing on the table, now or previously, addresses the "hard" border issue.

Yet, perversely, if Mrs May took the time out to look at the EEA Agreement, she would see that Article 10 makes provision for the prohibition of "customs duties on imports and exports, and any charges having equivalent effect" – exactly what be achieved through application of customs union rules.

With the adoption of the EU's WTO schedules of tariffs, and continuity arrangements on third country trade agreements, that has the effect of maintaining the common external tariff, while we are only limited on making deals with other countries of we adopt the common commercial policy (which is not part of the customs union.

If ROO issues arise, there is provision for dealing with these in the 34-page Protocol 4 of the EEA Agreement, which could be amended to suit specific UK requirements.

Customs cooperation is arranged through Protocol 10 and Protocol 11 of the EEA Agreement, and conformity assessment is dealt with in Protocol 12.

Together with the Annexes, and especially Annex I on veterinary and phytosanitary matters, there is in the EEA Agreement much of what is needed to ensure free movement of goods. Add to that your "maximum facilitation" and you have the makings of a plan which would give us an invisible border.

And in all that, the customs union is a complete irrelevance. If Mrs May genuinely thinks that adopting customs union rules is going to get her out of the hole she has dug for herself, then she has reached the nadir of comprehension. In all her period in office, she has learned nothing and knows nothing.

We are not even at the starting gate.






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