MNI INSIGHT: Brexit Mistrust Haunting UK Tory Leadership

By Kevin Woodfield

     LONDON (MNI) - Division is deepening between the two camps within UK Prime

Minister Theresa May's so-called Brexit 'war cabinet' and the risk is growing

that her precarious government will collapse or the UK will crash out of the

European Union without a future deal -- or both, MNI understands.

     Two competing views of the Brexit process have long bedevilled the UK

government's capacity to present a coherent negotiating position to Brussels. A

gnawing suspicion over tactics as well as substance at the top of Whitehall can

now be added to the combustible mixture.

     The two camps have coalesced around competing schemes to form the framework

of the UK's future trading relationship with the EU. May and her

negotiator-in-chief Ollie Robbins favour a so-called 'customs partnership',

which is vying with the 'maximum facilitation' approach advanced by the European

Reform Group (ERG) -- 60-odd 'hard' Brexiteer Tory MPs led by Jacob Rees-Mogg.

     In an air of growing unreality, both proposals have already been roundly

rejected in Brussels on the grounds, respectively, of being politically

unacceptable and unfeasible. They were first advanced by the UK last August,

with very little embellishment in the intervening months.

     May's self-appointed Brexit 'war cabinet' reportedly voted 6-5 Wednesday in

favour of the scheme worked up by Rees-Mogg and the ERG. But it is understood

that May and her adjutant Robbins have not given up on their preferred approach.

More work has been ordered on how a 'customs partnership' would work, despite

the ERG issuing a 30-page paper denouncing the plan.

     --CUSTOMS UNION BY BACK DOOR

     The Brexiteers are amplifying their opposition to the 'customs partnership'

scheme because they fear it could end up with the UK in a customs union with the

EU by the back door. The idea is that the UK would remit to Brussels any duty

differential on third party goods transiting the UK destined for the EU market.

It is anathema to the EU as it breaches its self-contained legal basis and May's

camp concedes it would take several years to implement the necessary

infrastructure.

     This gives rise to the possibility that the UK could seek to largely extend

the status quo by entering into a customs union with the EU for several years

beyond the end of the transition period -- currently set for the end of 2020 --

until the UK and the EU are ready to move to any new and agreed arrangement.

     --WALK OUT

     So-called 'soft' Brexiteers -- and many across the EU -- would welcome a

more relaxed timetable in which the complexities of re-negotiating the trading

relationship could be carefully managed and offer business on both side of the

Channel the prospect of least disruption. 

     But such an outcome angers Brexiteers as it would put back the UK's right

to negotiate third party trade deals -- one of May's four negotiating red lines

-- to the medium term, if not indefinitely, and extend the UK's position as a

'vassal' of the EU (absorbing EU regulations with no say in their formulation).

     The difficulty for the Brexiteer camp is that their inelegantly-named 'max

fac' proposal -- using technology to track the flow of goods and their sources

of origin across borders -- is not taken seriously by trade experts who say it

would produce a mountain of red tape. By extension, it is not seen as a viable

answer to the vexed question of avoiding a hard border on the island of Ireland.

     Meanwhile, there are those in the 'soft' Brexit camp who believe that

Rees-Mogg and his clan are pushing for the UK to effectively walk out of the

talks with Brussels in the hope that the EU would return to the table in a more

cooperative mood on discussing a future free trade agreement.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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