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Europe Daily Bulletin No. 12011
Contents Publication in full By article 39 / 41
The B-word: Agence Europe’s newsletter on Brexit / The b-word

Customs disunion

With a week off from Brexit talks in Brussels, the drama shifted back to London, where the House of Lords caused a stir about customs union membership.

The UK government insisted it would be quitting the EU’s customs union despite the Lords’ vote to keep the country in, via an amendment to the UK’s withdrawal bill - the draft law that repeals the UK’s EU membership and temporarily transposes EU rules into domestic law.

UK home secretary Amber Rudd then shook things up when she told reporters at a press lunch that the government had yet to “arrive at a final position” and that remaining in “a” customs union was not a government “red line”. She tweeted a clarification about leaving “the” customs union.

While the Lords’ move and Rudd’s comments are encouraging for Remainers, it is not yet clear whether it will shift the government’s position.

The Government does not have a majority in the Lords. There are 245 Conservative peers to 289 combined Labour and Liberal Democrat members while Remainers from all parties have joined forces to push key amendments to the withdrawal bill.

But the government does enjoy a majority of sorts in the Commons. Out of 650 seats in the lower house, the Conservatives have 315, plus support from the 10 Democratic Unionists. Labour has 257 seats, so even with the Scottish National Party’s 35 and the Lib Dems’ 12, this does not give them enough of a majority overall.

Out of those 315, there are 60 hard line Brexiteer Tory MPs that want to stay out of the customs union. A rival group of 25 pro-European Tories supports it.

The Eurasia group think-tank says that “on paper”, the Remainers have the votes to defeat the Brexiteers if they combine with opposition parties to defeat the government once the bill returns to the House of Commons at the end of next month.

“Pro-Europeans hope that privately, [prime minister Theresa] May might not lose too much sleep over such a defeat,” the Eurasia group said in a note last week. “She could tell Eurosceptics she had tried to avoid a customs union, but would know that such an outcome would help to resolve the Irish border issue.”

However, the defeat could prove humiliating for May, and shake her alliance with the DUP, which has threatened to bring down the government if a customs union amendment goes through.

UK negotiators, meanwhile, are hamstrung, not able to move talks forward with the EU, neither on the backstop nor on future customs arrangements (which they hope will make the backstop redundant).

They are waiting for what they hope will be a ‘big bang’ moment on the withdrawal bill in mid-May or on the final Brexit treaty in October.

Meanwhile, Irish Taoiseach Leo Varadkar said in Leuven this week that there must be “further progress in June, and if we’re not making further progress, then we have to ask serious questions as to whether there can be a withdrawal agreement at all”.

And a leak this week of letters and briefing papers from Northern Irish civil servants to their Whitehall counterparts shows the extent of the worry in Belfast over Brexit.

Many of the papers note that remaining in the customs union would not avoid the need for border checks in Northern Ireland.

The letters also warn of trade disruption from tariffs and diverging product standards, particularly on food and drink.

And several of the documents raise concerns about services trade in Northern Ireland - including banking and telecommunications - which are not part of current Brexit talks.

Further votes on the withdrawal bill are scheduled in the Lords next week, while the final reading is on 16 May. All changes will then go back to the Commons in late May.

In July, there will also be votes on two crucial pieces of legislation: the trade bill, to replicate exiting EU trade agreements with third countries post-Brexit, and the customs bill, which would allow the Government to set up a new customs regime.

In October, the Commons will vote on whether to approve Article 50 and the final EU-UK withdrawal agreement.

Brexit talks resume next week in Brussels. (Sarah Collins)

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COUNCIL OF EUROPE
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