LONDON: Brexit negotiations return to the driver’s seat as the third round of talks in phase one (withdrawal terms) is set to begin on August 28. Last week, the government, facing criticisms of its lacking preparation, released the policy papers on future customs arrangements, and Northern Ireland and the border with Ireland. The UK’s positions, in particular the customs arrangements, triggered criticisms and are expected to delay the completion of the first phase negotiation, limiting the time for the second phase (trade issues). British pound has remained under pressure recently, with GBPUSD hovering around a one-month low and EURGBP firming around the highest levels in 10 months.
At a ‘future partnership paper titled Future Customs Arrangements, the UK signaled it intends to remain part of the EU’s customs union during the transition period after March 2019. It also proposed two options for future relations with the single market. Generally speaking, customs union is a form of economic integration between two or more countries, in which member-states trade with no barriers, but they adopt a common set of trade restrictions with non-members. The degree of integration under customs union is merely higher than free trade agreements, way less than economic union, e.g. EU.
