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Donald Tusk says UK plan for trading relationship will not work

Today (September 20th, 2018) the European Council's President, Donald Tusk, confirmed the EU's position on the UK's 'Chequers Plan' - namely that it was not acceptable as it would undermine the EU's single market.

The EU regards the attempt to operate a common rule book for trade in goods, but not services, as 'cherry picking' which would run counter to the idea of a single marketplace. While Mrs May has played down this as a negotiating tactic, it is clear that there is a great deal of work still to be done before the next EU Council meeting in October as the possibily of a no-deal Brexit moves another step nearer.

Michel Barnier and Dominic Raab

The EU negotiator, Michel Barnier, had previously rejected a key element of the Chequers White Paper on the future trading relationship between the UK and the EU - namely that the UK would apply the EU's trade policy and tariffs on goods coming into the UK, but destined for the EU.

According to Mr Barnier (speaking at a joint press conference in Brussels - 26th July, 2018), "the EU cannot and will not delegate the application of its customs policy and rules, VAT and duty collection to a non-member who would not be subject to the EU governance structures".

This follows the publication of the Chequers White Paper:

Summary of key points

The UK Government's Brexit White Paper (The Future Relationship Between the UK and the EU, July 2018) is a formalisation of the UK government's position regarding how it wishes to see the future economic relationship between the UK and the EU once the UK leaves the EU in March 2019. The full White Paper is available here.

The key points are:

A new EU-UK free trade area

A new free trade area using a common rulebook for trade in goods (including agri-food). The common rulebook would be applied by the UK parliament (and devolved governments) only when necessary to provide frictionless trade at the border.

The continued participation in EU agencies that facilitate goods coming into the EU market.

A new Facilitated Customs Arrangement (FCA).

A phased introduction of a new Facilitated Customs Arrangement (FCA), that would remove the need for customs checks and controls as if the UK and EU were in a combined customs territory, as well as enable the UK to control tariffs for its own trade with the rest of the world and ensure businesses pay the right tariff.

The UK would apply the EU's trade policy and tariffs on goods coming into the UK, but destined for the EU, while applying its own policy and tariffs on goods coming into the UK and destined for the UK - a proposal already rejected by the EU's chief negotiator, Michel Barnier.

The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue and employ a trusted trader scheme.

New arrangements on services and investment

New trade arrangements on services and investment that provide 'regulatory flexibility', incuding new arrangements on financial services which help preserve the mutual benefits of integrated markets while protecting financial stability, noting that these could not replicate the EU’s passporting regimes.

Mobility

The ending of free movement by introducing a new framework which enables the UK to control its borders, and allows UK and EU citizens to continue to travel and businesses and professionals to provide services, as well as help students and young people to enjoy the opportunities and experiences available in the UK and the EU.

Digital trade

The introduction of new arrangements on digital trade to enable the UK and the EU to respond quickly to new opportunities and challenges presented by emerging technologies.

Fair competition

The application of a common rulebook relating to the promotion of open and fair competition, including common rules on state aid, and the reciprocal maintenance of standards relating to the environmental and employment.

Co-operation

It is hoped that cooperation in many areas, including energy and transport policy, will continue after Brexit.

Independent trade policy

The establishment of an independent trade policy , with the UK representing itself at the WTO.

The UK will also be seeking specific arrangements for the Crown Dependencies, Gibraltar and the other Overseas Territories, taking into account the 'significant and mutually beneficial economic ties' between these economies and EU Member States.

For more on Brexit, go to Brexit Update.


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