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Free AccessREPEAT: MNI: Brexit Mistrust Haunting UK Tory Leadership
Repeats Story Initially Transmitted at 06:35 GMT May 4/02:35 EST May 4
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
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.