Brexit Bulletin: A Final Position?

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(Bloomberg) -- Today in Brexit: The battle over customs union membership continues to rage as the home secretary signals the government’s position isn’t fixed.

Home Secretary Amber Rudd appeared to let the cat out of the bag yesterday.

When asked by journalists about the position of Prime Minister Theresa May’s cabinet on whether the U.K. will remain in the European Union’s customs union after Brexit, she said there were still “a few discussions to be had” among ministers “in order to arrive at a final position.”

The trouble is, that isn’t the government line. And there’s supposed to be a united stance. And it’s meant to be “We’re leaving.” As recently as Tuesday, the prime minister reassured euroskeptics in her party that she will deliver the type of Brexit they want and take Britain out of the trading regime, as Tim Ross reported yesterday.

Rudd, one of the most pro-European members of May’s team, was later forced to tweet that “of course when we leave the EU we will be leaving the customs union.” This morning, as Foreign Secretary Boris Johnson arrived at a meeting with his counterparts at NATO, he reiterated that the U.K. would quit.

Amber Rudd MP @AmberRuddHR
Thanks to the Press Gallery for hosting me at a challenging yet enjoyable lunch. I should have been clearer - of co… https://t.co/a8UHbl2dVg

But the story doesn’t stop there. The cabinet is also divided over what sort of customs relationship it should have instead. In recent days (but not for the first time), European Commission officials briefed the bloc’s 27 remaining governments that the U.K.’s two alternative plans – where Britain collects tariffs on the EU’s behalf and where it uses technology to minimize checks – are “unworkable,” both in themselves and as a way of solving the problem of how to keep the Irish border invisible. Senior members of the cabinet are pressing the prime minister to drop the former plan.

Whether to remain in the customs union has quickly become one of the most contentious issues in Britain’s withdrawal from the EU. Lawmakers from across the political divide lined up yesterday in a debate in the House of Commons to press the government to change its mind. At some point in the next two months, there will be a vote that could force May’s hand if enough of her party oppose her.

It was for exactly this reason, of course, that EU leaders inserted what they called an “evolution clause” in their first vision for the U.K.-EU future relationship last month, in case May & Co. change their minds before a summit in June. In a speech in Sofia yesterday, the EU’s chief Brexit negotiator, Michel Barnier, sounded his usual tough tone. “We can’t change our rules; our rules will remain the same,” he said. In a customs union “you don’t have autonomy anymore.” Privately, EU officials are trying to make it easy for May to make a U-turn, hinting that the U.K. could have some say in future EU trade deals.

As for Rudd, once tipped to be May’s successor, her position now looks shaky. “I’m just thinking about staying in the game,” she said.

Today’s Must-Reads

  • It’s not just customs – May’s cabinet is also fighting over fish
  • No Britain, the EU doesn’t “desperately need the City of London.” At least that’s what Michel Barnier said as he warned the U.K.’s banks can’t expect any favors
  • Leaving the customs union is “indefensible,” says Michael R. Bloomberg, the founder and majority owner of Bloomberg LP, in a comment piece, adding that “nothing short of a major political crisis seems capable of breaking the collective paralysis” over Brexit.

Brexit in Brief

Data Conundrum | Banks are worried about the EU’s General Data Protection Regulation – sweeping new EU data rules that come into effect next month. A major financial-industry lobby called for urgent action to answer the question of how data will flow across the Channel after Brexit. “It is essential that there is clarity as to the ability for businesses, including banking and investment firms, to continue to transfer personal data,” the Association for Financial Markets in Europe said.

Can’t Agree | The U.K.’s proposals on avoiding a hard border between Northern Ireland and the Irish Republic are “legally unworkable,” the chairman of the regulator and trade group for Irish lawyers said. “The U.K. has failed to advance any workable proposals, still less solutions that might be agreeable” to the EU on the border, said Paul McGarry of the Council of the Bar of Ireland.

Cliff-Edge Risks | Europe needs to urgently address the risk that Brexit poses to trillions of dollars of financial contracts, Deutsche Bank’s head of regulation said after EU authorities indicated that they wouldn’t take action. “The clock is ticking and action to address cliff-edge risks is urgently required,” Sylvie Matherat, the German bank’s chief regulatory officer, wrote in an article published on the Eurofi website.

It’s Complicated | Tension and voices were high as Facebook Chief Technology Officer Mike Schroepfer was questioned on Thursday by a U.K. parliamentary committee investigating the impact of social media on recent elections. Schroepfer, who’s the latest to give evidence to U.K. lawmakers in the wake of revelations concerning Cambridge Analytica, was forced to defend numerous activities of his company. 

Patent Progress | The U.K. has ratified the international agreement to set up a Unified Patent Court for Europe, a move that enforces “unitary patents” across member states, the Financial Times reports. The newspaper says there had been concern ever since 2016’s Brexit vote that Britain wouldn’t ratify the deal, but on Thursday the government notified the European Commission in Brussels.

Cheesed Off | Amid fears over the obstacles Brexit might bring, Irish dairy farmers are considering switching from cheddar to cheeses with wider export potential, such as mozzarella, the Economist reports.

Seen It All Before | Veteran pro-EU Conservative and former Chancellor of the Exchequer Ken Clarke was asked in the Commons debate whether, during his 48 years as a member of parliament, a government had “knowingly taken a decision of this gravity which will make the country poorer?” Clarke’s reply: “Not deliberately” -- then added with expert timing: “But accidentally, several times.”

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