Remarks come after ministers fail to reach a consensus and EU rejects both plans

This article is more than 2 years old

This article is more than 2 years old

The Brexit secretary, David Davis, has said the government’s two options for the UK’s future customs relationship with the EU27 remain alive, after ministers failed to reach agreement.

To outer space, via David Davis's looking-glass world of Brexit Read more

On Wednesday, the new home secretary, Sajid Javid, sided with hardline Brexiters to reject Theresa May’s favoured option of a customs partnership, in which Britain would collect tariffs on the EU’s behalf.

Sources have said that option could not command a majority among senior ministers during Wednesday’s discussions. However, Downing Street has refused to take it off the table formally.

Pro-Brexit ministers prefer the alternative of maximum facilitation, or “maxfac”, in which technology would be used to minimise cumbersome border checks. Both plans have been rejected by Brussels as unworkable in their present form.

Q&A What is a customs union? Show Hide A customs union means that countries agree to apply no or very low tariffs to goods sold between them, and to collectively apply the same tariffs to imported goods from the rest of the world. International trade deals are then negotiated by the bloc as a whole. For the EU, this means deals are negotiated by by Brussels, although individual member state governments agree the mandate and approve the final deal. The EU has trade deals covering 69 countries, including Canada and South Korea, which the UK has been attempting to roll over into post-Brexit bilateral agreements. Proponents of an independent UK trade policy outside the EU customs union say Britain must forge its own deals if it is to take advantage of the world’s fastest-growing economies. However they have never explained why Germany manages to export more than three times the value in goods to China than Britain does, while also being in the EU customs union. Jennifer Rankin

Davis told MPs on Thursday: “Both of these approaches have merits and virtues, both have some drawbacks and that’s why we’re taking our time over the discussion on this.”

The chancellor, Philip Hammond, and the business secretary, Greg Clark, have urged their colleagues to reach a resolution as soon as possible, or risk businesses losing confidence in being able to trade freely with the EU after Brexit.

Hammond and Clark believe the customs partnership approach is the only one that could potentially avoid a hard border in Ireland.

Davis acknowledged the urgency of the issue, but refused to set a deadline for the cabinet to resolve it.

“It’s frankly incredibly important that we get this right, not just for trade but for the extremely sensitive issue of maintaining the peace process in Northern Ireland. I don’t undertake to put an artificial deadline on something as important as that,” he told the Commons.

Allies of Davis say he backs the maxfac option, though he has loyally kept both plans alive in public. He told MPs the customs partnership was “a brand new idea: it’s never been tested anywhere in the world”.

The prime minister’s spokesman sought to play down the significance of Wednesday’s deadlock. “There’s an ongoing process of putting together the plans that will allow us to leave the EU in the smoothest possible way,” he said.

Davis also reiterated the government’s commitment to leaving the customs union, a policy for which it is unclear whether May could command a majority in the Commons.

Peers have inflicted 10 defeats on the government’s key piece of Brexit legislation, the EU withdrawal bill, in the House of Lords, passing amendments including one urging May to pursue a policy of remaining in the customs union.

Continued membership of the customs union would allow tariff-free trade with EU countries but would require the UK government to levy tariffs on goods from outside the EU and would prevent the UK from negotiating independent trade deals.

Asked how certain he was that the UK would leave the customs union, Davis said: “Will 100% do?”

He argued that the “vast majority” of future trade growth would be with countries outside the EU, adding: “Our explicit aim is to make the most of that, and that means we have to leave the customs union.”