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Britain will attempt to retain access to the customs union for several years after Brexit.
The Government has unveiled plans to continue with current customs arrangements for at least three years after Britain officially leaves the EU in 2019.
The move, announced in a government paper published on Tuesday, marks a victory for those advocating a smooth transition deal rather than a “cliff-edge” feared by businesses.
The UK will set out its ambitious proposals for a time-limited transition period, which Brexit Secretary David Davis believes will create the “freest and most frictionless possible trade” with Europe.
It is hoped the temporary measure with avert border chaos and calm UK businesses worried by the effects of leaving the European Union.
Critics have dubbed the proposals “a fantasy” and said they will do little to provide the certainty businesses have called for.
Mr Davis, writing for the City AM newspaper, said the UK’s new customs arrangements “will need to facilitate the freest and most frictionless possible trade in goods between Britain and the EU”.
He said the Government would seek to negotiate an interim period with the EU in order to avoid “unnecessary disruption”.
He added: “That would be a strong indicator to all our businesses and citizens that politicians on both sides are serious about finding a constructive outcome that works for all involved. Doing so is our shared duty.
“The united desire to avoid unnecessary disruption or a disorderly exit for the United Kingdom from the European Union is a strong foundation for the negotiations.”
Ministers have been warned about the strain ports could be put under if they face a big increase in bureaucracy for dealing with goods entering and leaving the country.
The proposals for new customs arrangements to allow trade with the EU are being outlined in the first of a series of “future partnership papers” being released by the Government.
Although negotiations on a new system are not scheduled to start for some time, the Government said setting out its aims showed the UK’s “desire to ensure our exit from the EU is smooth, orderly and successful”.
One option being put forward by Mr Davis for new arrangements would see the UK manage a new customs border with administration streamlined to the “fullest extent possible”.
Sir Keir Starmer, the shadow Brexit secretary, called the proposals “incoherent and inadequate” in response to pleas for certainty from British businesses.
He said: “The Cabinet remain split on key issues and cannot decide between two very different but equally unachievable options.
“The first proposal suggests ‘a new customs border with the EU’ could be introduced without disrupting trade; the second suggests a new borderless customs partnership could somehow be agreed while Britain also signs external trade deals.
“These fantastical and contradictory proposals provide no guidance for negotiators or certainty for businesses.”
It comes after Chancellor Philip Hammond and International Trade Secretary Liam Fox said the UK would pull out of both the single market and the customs union in 2019.
Labour former shadow chancellor Chris Leslie, a leading supporter of the Open Britain campaign group, said: “It looks like the new unified position in the Cabinet is to return the Government to the territory of wanting to have their cake and eat it.
He added: “It is a fantasy to pretend we can have the freest and most frictionless trade possible with our largest partner when the Government remain intent on pulling Britain out of the customs union.”
Tom Brake, the Liberal Democrats’ Brexit spokesman, said the Government’s “extreme Brexit will end up leaving Britain poorer”.
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