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Britain could pay for the privilege of striking trade deals while remaining in a temporary customs union with the EU, David Davis signalled today.
The Brexit Secretary said Britain wants to be able to sign off deals with other countries while still trading freely with EU nations for up to two years.
The suggestion has been described as a “political problem” for the EU by a former European trade commissioner. Speculation is mounting that Mr Davis’s proposal will hit the UK with a significant bill.
In a string of media interviews, the senior Tory said he would not discuss negotiations “on air” but failed to rule out that there would be a price to pay for maintaining Britain’s place in a temporary customs union.
He told LBC radio: “The aim is to say [International Trade Secretary] Liam Fox wants to start signing deals with the rest of the world but we want to keep for a short while an arrangement whereby we can sell to you and you can sell to us unfettered at the customs border.”
Asked if the UK would be happy to pay for that privilege, he said: “I’m not going to do those negotiations on air.
“As you well know we’re having a long haggle on the money at the moment. It’s the tenser part of the negotiations that’s going on.”
He told BBC Radio 4’s Today programme: “What we are not going to do, let’s be clear, we are not going to continue the £10 billion a year net contributions we currently have.”
Pushed on whether money could be part of the negotiations, he said: “I didn’t say that. Wait and see.” Mr Davis said because the EU exports €290 billion worth of goods and services to the UK, the proposal is in Brussels’ interest and to their benefit.
EU leaders are yet to respond to Mr Davis’s suggestion.
He said: “This is an ambitious aim but we think we can deliver it. It’s also going to take some tough times.
“I think there’s going to be some hardball on both sides. We’ll get through it. We can see strong reasons for them wanting to deliver it too. There is no legal basis to say we can’t do it.”
Britain will only be able to legally implement new trade deals after it has left the EU in 2019 and once the proposed transitional period comes to an end. Mr Davis said this could be under two years.
Karel de Gucht, European commissioner for trade between 2010 and 2014, told the BBC it was technically possible for the UK to sign its own trade deals and implement them after a transitional period. However, he said “politically it’s very difficult” because Britain would be “undercutting” the EU at the same time.
He said: “It would be trying to get preferential tariffs with other nations, different from the common EU tariff in the transitional period.”
Mr Davis said EU negotiations were going “incredibly well” so far, and suggested the amount of money Britain may have to pay the EU to leave — the so-called Brexit divorce bill — could be known after November.
Criticism that the Government has been unclear on where it is heading with Brexit was dismissed by Mr Davis as “constructive ambiguity” and a natural feature of a negotiation.
The proposals for new customs arrangements immediately after Brexit were outlined in the first of a series of “future partnership” papers being released by the Government.
One option being put forward for a transitional period would see the UK manage a new customs border with administration streamlined by using new technologies.
The other plan floated is for a customs partnership with the EU which would entirely negate the need for a customs border between the UK and the rest of the bloc.
The European Commission has so far issued a lukewarm reaction to Mr Davis’s proposals. A spokesman said Britain’s vision for “frictionless trade” was not possible outside the single market and customs union.
Although their officials have taken note of Britain’s request for a transitional period, the Commission will only address the request when progress is made on the terms of withdrawal.
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