UK could vote to rejoin EU customs union after Brexit, minister admits

The UK parliament could vote in favour of rejoining the EU customs union after Brexit without further legislation, a Treasury minister admitted to MPs.

The revelation came during a commons debate on Monday night on the Cross Border Trade Bill, which will set the rules on tax arrangements after Brexit.

Financial Secretary Mel Stride told MPs that a clause within the Bill allowed the UK to levy duties and tariffs on goods from the EU once Britain leaves the bloc.

“Clause 31 makes provision for the government to enter into - or this country to enter into - a customs union with another territory,” Stride said.

“That territory could be the existing customs union of the European Union after we have left the European Union, it could be another territory apart from that.”

Stride also admitted that any deal could be approved by parliament using a “statutory instrument”, meaning new legislation would not be needed.

Many MPs and ministers are concerned that leaving the customs union would add billions to the cost of doing business and delay goods at the border.

The UK's position on membership of the customs union with the EU after Brexit was thrown into confusion last Friday when Chancellor Philip Hammond refused to rule it out.

Conservative MP Nicky Morgan, who chairs parliament's influential Treasury select committee, published a letter from Hammond in which he spurned the chance to rule out membership.

Instead, Hammond said the matter was still subject to negotiations on the transition phase once the UK leaves the 28 member bloc in march 2019.

Hammond said the UK would have to "seek a new customs arrangement with the EU that facilitates the freest and most frictionless trade possible in good between the UK and EU".

Morgan said the chancellor's response proved the government position was still not final.

“It was widely thought that being in a long-term customs union with the EU had been ruled out by the government. But the Chancellor’s letter confirms that this is not the case,” Morgan said.

“It is vital that the Cabinet reach agreement on these central questions about the UK’s future relationship with the EU, as a matter of urgency.”

There are still deep divisions within Prime Minister Theresa May's Cabinet over what the relationship with the EU should be after Brexit. Hammond is in favour of a closer relationship, while hard Brexiteers such as Foreign Secretary Boris Johnson and Environment Secretary Michael Gove want to cut ties altogether.

Under customs union rules, import tariffs are uniform regardless of which member state is importing. However, members cannot negotiate separate trade deals with nations outside the bloc. The EU has told Britain it cannot have the benefits of membership once it leaves.