EU Said to Be Ready to Give U.K. a Say on Trade in Customs Union

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(Bloomberg) -- The European Union would be prepared to offer Britain a better trade deal than the one it gave Turkey if it decides to stay in the customs union after Brexit, and would listen to U.K. views on trade policy, according to an EU official.

The official, who spoke on condition of anonymity, said the U.K. would have to give up its autonomy and wouldn’t get a seat at the negotiating table when the EU makes deals with other countries. But it would be possible to establish a U.K.-EU dialog on trade and the EU would take a pragmatic approach to such a setup.

Prime Minister Theresa May is under growing pressure to make a U-turn and keep the U.K. in the customs union after Brexit. Businesses, opposition lawmakers and many in her own party want to remain in the trading regime to prevent disruption to cross-border commerce and also help solve the Irish border issue, a major obstacle in divorce talks.

The prime minister chairs a meeting on Wednesday of key ministers, and they are expected to discuss what kind of future relationship the U.K. will seek with the EU after the split. May’s inner circle thinks she could be forced to accept staying in the customs union, as Parliament gears up for a vote on the issue as soon as next month. But if she caves, she risks a leadership challenge from the most enthusiastic Brexit supporters in her party.

Better Than Turkey

The most cited model of a customs union is the one the EU has with Turkey, and it has many flaws. Turkey has to open its markets to countries the EU cuts deals with, even though it has had no say in the negotiation. That would leave the U.K. vulnerable to having its interests sold out by EU negotiators who aren’t concerned about protecting British interests.

How a ‘Customs Union’ Helps Businesses With Brexit: QuickTake

Staying in the trading bloc also risks a domestic political crisis as Brexit backers in May’s Cabinet have long said that being able to strike new trade deals independently from the EU is a major benefit of Brexit. Staying in the customs union would mean Britain effectively outsources its trade policy on goods, though it could still go its own way on services.

While it would help business with international sales and supply chains, it falls far short of staying in the single market. The flipside is that in the trade-off of Brexit talks, the U.K. would still be able to keep its pledge to end freedom of movement, which wouldn’t be possible if it stayed in the single market.

Read more: Brexit-Backer Fox Offers an Argument for Keeping Customs Union

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