British Prime Minister Theresa May’s office disclosed details Thursday of a plan for customs ties with the European Union that she hopes will unite warring pro-Brexit and pro-EU factions of her Conservative government.
Whether it will get the approval of the bloc is another matter.
May’s Cabinet is due to meet Friday at Chequers, the prime minister’s country retreat, in the hope of finally agreeing on a plan for future trade ties that Britain can put to the EU. With just nine months to go until the U.K. leaves the bloc in March, EU leaders have warned Britain that they must present detailed plans soon or risk crashing out without a trade deal.
That prospect alarms manufacturers and other businesses, who warn they could abandon Britain if the EU and the U.K. cannot strike a deal.
Carmaker Jaguar Land Rover warned Thursday it would reconsider £80 billion ($106 billion) of investment in the U.K. if the government failed to negotiate a deal that protects free trade with the EU.
“We urgently need greater certainty to continue to invest heavily in the U.K. and safeguard our suppliers, customers, and 40,000 British-based employees,” Chief Executive Ralf Speth said.
His comments follow similar warnings from BMW and Airbus.
May’s Cabinet is split between pro-EU ministers, including Treasury chief Philip Hammond, who want to retain close economic ties with the bloc and its market of 500 million people, and pro-Brexit lawmakers such as Foreign Secretary Boris Johnson who want a clean break so Britain can strike new trade deals around the world.
A powerful group of pro-Brexit Conservative lawmakers have warned May she could be toppled by her own party if she opts for a compromise Brexit that keeps Britain closely aligned to EU rules.
One of the thorniest issues concerns the border between Britain’s Northern Ireland and the Republic of Ireland — the U.K.’s only land frontier with an EU member. Britain has promised to maintain an invisible border, free of customs posts and other infrastructure. EU officials are impatient to hear detailed proposals from Britain for how that can be achieved, given May’s insistence that Britain will leave the EU’s customs union.
The proposal May will present to the Cabinet on Friday — dubbed a “facilitated customs arrangement” — calls for the U.K. to use technology at its borders to determine whether goods are bound for Britain or the EU, and charge the appropriate tariffs. It would also commit Britain to keeping its regulations closely aligned to those of the EU.
That would not go down well with pro-Brexit ministers who say it would limit Britain’s ability to strike its trade deals with non-EU countries.
There is also a big question mark over whether the EU would accept any such proposals. Officials in the bloc have repeatedly warned that Britain cannot “cherry pick” benefits of membership, such as access to the customs union and single market, without accepting the responsibilities that come with being in the bloc, including allowing free movement of EU citizens to the U.K.
PM May was meeting German Chancellor Angela Merkel in Berlin on Thursday as she tries to build support for her plans among EU leaders.