Brexit Bites, 28 May 2018

May 28, 2018

As a further phase of talks between the EU and the UK completed last week, the EU has urged the UK to face the reality of Brexit.  The Institute also calls for the introduction of measures to delay the payment of VAT on imports after Brexit.  In the next in our series of Back to Brexit Basics, we look at how Brexit could give rise to a heavy VAT cost for traders.

“Get on with it”

UK Foreign Secretary, Boris Johnson has said that UK Prime Minister Theresa May needs to “get on with it” and take the whole of the UK out of the EU Customs Union as soon as possible.  Currently there are three customs options on the table and we examined them in detail in Brexit Bites last week.  The options are; a new customs partnership with the EU, a maximum facilitation option which would see the use of technology and trusted trader schemes and a backstop arrangement where the UK in its entirety could stay within the EU customs union for a period of time.

There are reports of concerns in the UK among some parties that the backstop option could be allowed to become more permanent and this would go against the UK’s vision to cut ties with the EU. 

However, a senior EU official is reported to have dismissed the UK’s backstop option saying that any backstop arrangement has to be specific to Northern Ireland and would also involve full alignment with EU rules on standards and regulations and not just customs.

It’s been reported that the UK Prime Minster is planning to ask the UK Parliament to decide in June what type of customs arrangement they want to pursue with the EU.   The EU’s Chief Negotiator has said that the UK needs to “face the reality” of Brexit and come up with a solution for Northern Ireland. Because without that there can be no withdrawal agreement and therefore no transition period.

The next EU summit will take place in just a few weeks in June and the EU will be expecting the UK to give some clarity on their Brexit strategy.