May’s new Brexit plan rejected by key minister

UK Prime Minister Theresa May is fighting to win Cabinet backing for her Brexit plan as a compromise proposal that aimed to unite warring ministers was rejected by her chief negotiator.

Brexit Secretary David Davis has written to May to tell her that her new idea for how customs should operate after the divorce is unworkable, according to a person familiar with the situation, confirming an earlier report in the Telegraph.

His move comes just two days before May gathers her ministers together to try to force an agreement on what kind of trading relationship the UK will seek from the European Union after the divorce. She’s been briefing ministers on some of the details of her plan, but has kept the full document from them. Some officials don’t expect to see it until the night before.

At stake is whether the UK government can devise a coherent and unified position that negotiators can then present to their EU counterparts. The details that have emerged so far indicate May is seeking to maintain closer ties to the bloc than she initially envisaged. While Environment Minister Michael Gove – a key Brexit campaigner – said he didn’t expect ministers to resign in protest, pro-Brexit lawmakers are outraged by what they see as a betrayal of their project.

Businesses meanwhile are stepping up their demands on May to make a deal with the bloc that protects their interests. Jaguar Land Rover added its voice to the chorus on Wednesday, saying a bad Brexit deal would jeopardise investment and jobs.

Whatever May comes up with needs to be a plan that the EU doesn’t immediately reject, as time runs out to reach a deal before exit day in March. May meets German Chancellor Angela Merkel in Berlin on Thursday as she seeks support in European capitals. The EU has so far dismissed her proposals on trade and customs.

Compromise Plan

The new customs compromise aimed to bridge the divide between ministers in May’s Tory party who want a clean split with the EU and their colleagues who say businesses need to keep the closest possible ties.

The UK would collect tariffs on goods crossing the border that are destined for the EU. The use of technology and accrediting companies through “trusted trader” schemes will keep the bureaucracy for businesses – such as the need to re-claim if they have overpaid tariffs – to a minimum, said a British official, speaking on condition of anonymity.

Named “facilitated customs agreement,” it is a blend of the two UK options which split the Cabinet in May and caused the logjam in the negotiations since. The EU didn’t like either of the previous suggestions.

The plan is also intended to avoid customs checks at the politically sensitive Ireland-UK border.

In theory, the UK will be free to strike its own trade deals and determine an independent tariff regime. Winning the freedom to pursue independent trade deals and set tariff policy is a key goal for Brexit campaigners.

Third Option

It’s not just Davis who’s uneasy. May’s senior pro-Brexit colleagues want her to explain more clearly how the new customs proposal for the UK’s future customs regime will work, as some fear it could keep the country chained to the EU’s tariff regime forever, according to people familiar with the situation.

The hardline euroskeptic European Research Group of Tories met May’s chief whip on Wednesday to raise their concerns that she’s going to betray their vision of a clean break with the EU.

Jacob Rees-Mogg, the leader of the ERG, said on Wednesday that he will not accept her plan if it ties the UK to the EU tariff and regulatory regime.