Ministers hope to strike a temporary deal with the European Union to retain the key benefits of the customs union for an interim period after Brexit, to avoid cross-border commerce grinding to a halt.

The government will use a position paper published on Tuesday to reveal that, for a brief period, it will seek a deal allowing the transit of goods across borders to continue as now – perhaps by striking a “temporary customs union”.

Ministers hope this will avoid economic disruption by giving businesses and officials time to gear up for a new customs regime; while sidestepping the constraint that full members of the customs union are not allowed to strike independent trade deals with non-EU countries.

The government will say it wants to create “the freest and most frictionless possible trade in goods between the UK and the EU”.

The paper will also reject the idea of a lengthy transition period, during which the status quo is maintained while negotiations drag on: an option favoured by pro-EU Tories, and business groups including the CBI.

No specific time limit for the interim deal has been spelled out by the government, but ministers involved in the negotiations believe anything longer than two years would be unlikely to secure the backing of Britain’s EU partners. In particular, they fear a more drawn out period would be likely to require the approval of individual member states’ national parliaments – a time-consuming process.

One senior cabinet minister told the Guardian a long transition was “not a flier”, because it would not be in line with the referendum result, and was likely to be rejected by the rest of the EU.



The threat of cumbersome new customs checks is one of the key issues causing anxiety among businesses and senior ministers, alongside fears about intricate manufacturing supply chains being broken and long queues of lorries at cross-border ports when Britain leaves the EU.

On Sunday, Liam Fox and Philip Hammond, the latter previously regarded as a champion of a “soft Brexit”, published a joint statement in the Sunday Telegraph saying Britain would be outside the customs union during the post-Brexit transition phase and at that point it would be “a ‘third country’, not party to the EU treaties”.



Hammond was accused of caving in to the demands of the Brexiters, but the paper will make clear that the government is keen to retain the full benefits of the customs union in the short-term – albeit without formal membership. The EU will have to decide whether it would accept such an arrangement.

Tuesday’s paper will also set out more details of how the government hopes to achieve frictionless trade with the rest of the EU in the long term: the aim set out by Theresa May in her Lancaster House speech in January.



The government is examining two options: either a highly streamlined new arrangement “in which the UK would manage a new customs border” but would seek to make any checks minimal; or a new customs partnership, which would see Britain replicate the EU’s approach so closely that it would “negate the need for a customs border”.

Keir Starmer, the shadow Brexit secretary, dismissed what he said were “incoherent and inadequate proposals designed to gloss over deep and continuing divisions within the cabinet”.

The first proposal suggests a new customs border with the EU could be introduced without disrupting trade – apparently to be managed by the UK, making it the first customs union in the world to be managed by just one country. The second suggests a new borderless customs partnership could somehow be agreed while Britain also signs external trade deals.

The proposals are being published in advance of the next round of negotiations in Brussels – despite the fact the EU has insisted it won’t discuss post-Brexit trade arrangements until a series of other issues, including the financial settlement, are resolved.

The prime minister’s spokesman said the government had concluded from the early talks, which kicked off in earnest last month, that it could not make more progress without a clearer sense of what the future relationship might look like.

He said: “We’ve had the first round of the negotiations, and those talks have shown that many of the withdrawal questions can only be settled in the light of our future partnership. So now is the time to set out our approach to that partnership, to inform the upcoming negotiations, and to provide citizens and businesses at home and across Europe with a deeper understanding of our thinking.”

In particular it is difficult to hold substantive talks about the future of the land border between Northern Ireland and the Irish Republic – another of the EU’s early demands – without knowing what the customs relationship will be. The government will publish further proposals on the Irish issue on Wednesday.

After the last round of negotiations in Brussels, Michel Barnier expressed some frustration at the lack of detail from the British side – particularly on the financial settlement. The EU’s chief Brexit negotiator said: “This week’s experience has quite simply shown that we make better progress where our respective positions are clear.”

The government’s critics said the plans were fresh evidence that David Davis and May had not yet accepted the trade-offs it would be necessary to make once talks got under way.



The Liberal Democrats’ Brexit spokesman, Tom Brake, said: “The only way to ensure ‘free and frictionless’ trade with the EU is to remain a full member of the customs union and single market.

”It doesn’t matter how it’s dressed up or how long it’s postponed: the government’s extreme Brexit will end up leaving Britain poorer.”

The CBI’s deputy director, Josh Hardie, welcomed the publication of fresh details of the government’s aims for a new customs deal. However he called for rapid progress on a wider trade deal, including what tariffs and other barriers would be imposed on exports to the EU.

“Business wants to see as frictionless a customs system as possible, with a strong emphasis on digital systems that make it easier to trade,” he said. “But to secure frictionless trade, negotiations on regulation, tariff and non-tariff barriers will have to take place. All efforts should be made to deliver a single-step transition, so that businesses don’t have to adapt twice.”