David Davis has told MPs that both of his government's post-Brexit customs proposals remain on the table, despite the opposition of most senior ministers to Theresa May's preferred option of a new customs partnership with the European Union.
The Brexit secretary said both proposals had merits and the government needed more time to consider them.
“There are two models. The streamline model essentially uses conventional techniques used around the rest of the world, including electronic prenotification, the use of authorised economic operators and a whole series of other technical mechanisms.
“The alternative proposal – the new customs partnership – is a brand-new idea; it has never been tested anywhere in the world and involves, essentially, charging the common external tariff when goods enter the country, and then rebating that. Both approaches have merits and virtues, and both have some drawbacks, and that is why we are taking our time over this discussion,” he said.
At a meeting of the UK cabinet's Brexit subcommittee on Wednesday, most ministers rejected the customs partnership as unworkable, with Ms May's newly appointed home secretary, Sajid Javid, joining the Brexiteers to oppose it. Mr Javid's predecessor, Amber Rudd, was a strong voice for a soft Brexit, and his appointment has tilted the cabinet towards a harder Brexit.
Despite the opposition of most ministers at the meeting, the UK prime minister refused to abandon the customs partnership completely, instead asking officials to come up with ideas for how it can be improved. The EU has rejected both proposals, dismissing the "maximum facilitation" model favoured by Brexiteers as incompatible with avoiding a hard border in Ireland.
Mr Davis told MPs on Thursday that the best way to resolve the Border issue was in the context of the broader trade relationship between Britain and the EU.
“We have said categorically that there will be no physical infrastructure or related checks and controls at the Border between Northern Ireland and the Republic. We have set out clear commitments in relation to the Border and have put forward two potential customs models,” he said.
‘Deep and special partnership’
"I have always said that the best solution to the Northern Ireland Border issue will be reached through the deep and special partnership between the United Kingdom and the European Union, recognising the unique circumstances of Northern Ireland. As the European Commission has itself acknowledged, solutions to the Border issue cannot be based on precedent."
While Ms May is under pressure from Brexiteers to abandon the customs partnership proposal, Conservative remainers are threatening to join opposition MPs in backing an amendment to the EU withdrawal Bill calling for Britain to remain in a customs union with the EU. Up to 12 Conservatives could rebel against the government, enough to ensure defeat for the prime minister.
In the House of Commons on Thursday Mr Davis said the government remained determined that Britain should leave the customs union when it leaves the EU.
"The issue of leaving the customs union plays directly to the issue of how we manage our future export and trade arrangements. Almost 60 per cent of our exports are now going to the rest of the world. That is not surprising, because both the International Monetary Fund and the European Commission itself have said that the vast majority of growth in world trade will come from outside the European Union. It is our explicit aim to make the most of that, and that means we have to leave the customs union," he said.
The government has suffered 10 defeats on the Bill in the House of Lords, including one on an amendment that would ensure that MPs could reject the final Brexit deal without triggering a no-deal Brexit.
