Public Policy

January 9, 2017

Brexit: A Look Forward to 2017…


Despite the continuing ructions in the UK Government and Parliament, we are beginning to divine a direction of travel in the UK’s approach to its Brexit policy. Still a long way to go to achieve clarity, as others have commented more dramatically than we. But forthcoming events will add to our understanding. There is the developing narrative around the thorny topic of immigration;  the forthcoming Dutch, German and French elections; the white/green paper or dossier that the British Government has promised to publish on Brexit (expected early February); and the UK Prime Minister’s promised Brexit speech to look forward to in terms of balancing the desire of Parliament for more information on the UK’s negotiating stance with Downing Street’s determination not to reveal the Government’s hand. And we are, of course, also awaiting the ruling from the Supreme Court.

Analysis of all of these will shed further light on the UK’s direction of travel. One interesting element perhaps already apparent is the Government’s position on the Customs Union. As we’ve argued before, it was clear from Theresa May’s first statement as the UK’s Prime Minister on the steps on 10 Downing Street that the UK would not remain a member of the EU’s single market. Subsequent statements, perhaps particularly in relation to the UK no longer being subject to decisions of the CJEU – a less negotiable position than movement of people in this context – have confirmed this. Access to the single market, particularly for goods rather than services, is, of course, a different matter.

Access is determined by meeting standards laid down by the EU – as with exports to any country or economic area – and import tariffs. Membership of the customs union provides, amongst other things, tariff free trade. Notably, the UK Prime Minister has insisted that no decision has been taken on membership of the customs union, even when the Three Brexiteers (Boris Johnson, David Davis and Liam Fox) have suggested that leaving it would be necessary to enable the UK to negotiate free trade agreements with third countries.

But here’s the rub: it may not be. There are precedents – such as Turkey – for partial membership of the customs union. It is possible to envisage a deal whereby the UK could negotiate FTAs with third countries but where at least some sectors effectively remained within the customs union. You could opine that such a deal might be limited to sectors where there was a coincidence of interest, maybe life sciences where politicians won’t want to be accused of putting barriers in the way of their citizens receiving lifesaving and life changing medicines (and where the current EU WTO notified tariff is zero anyway); or automotive where there may be a coincidence of interest between Germany and the UK (Nissan anyone?).

This is, of course, largely speculation: but the developing rhetoric on membership of the customs union, perhaps particularly from the UK side, will be one area worth watching carefully as an indicator of the likely UK negotiating position and ambition. And there is just a lovely piece of irony in the UK seeking to adopt (in part) Turkey’s relationship with the EU as it leaves it whilst the UK’s Foreign Secretary with a Turkish heritage supports Turkish membership of the EU.  All just too delicious!