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Abu Dhabi, UAEWednesday 19 December 2018

UK may not be able to strike trade deals with non-EU countries for three years after Brexit

It comes after British chancellor Philip Hammond won a cabinet battle for the present customs agreements to stay in place for an interim period

British chancellor Philip Hammond outlined plans for introducing a "temporary customs union" with the European Union in a government position paper published on August 15, 2017. Marcos Brindicci / Reuters
British chancellor Philip Hammond outlined plans for introducing a "temporary customs union" with the European Union in a government position paper published on August 15, 2017. Marcos Brindicci / Reuters

Britain may not be able to strike trade deals with countries outside of the European Union, including those in the GCC, for three years following the UK’s departure from the European Union.

It comes after British chancellor Philip Hammond won a cabinet battle for the present customs agreements to stay in place for an interim period.

Mr Hammond outlined plans for introducing a "temporary customs union" in a government position paper published on Tuesday, which is designed to allow businesses to move goods across the border with other EU states — without filling in additional paperwork.

Under the customs union as it currently exists, companies within the EU exchange products without tariff charges and must impose the same tariff charges on nations outside the union.

The temporary agreement outlined by Mr Hammond, which must be agreed on by the EU's other 27 member states, would see the rules of the customs union left in place for up to three years — and, according to one lawyer who spoke to The National, will mean the UK is unable to make trade deals with countries outside of the bloc during this time.

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Aline Doussin, a partner at international law firm Squire Patton Boggs, said the news had been welcomed by many of her clients who were anxious about the prospect of Britain leaving the bloc without any kind of European trade deal being made.

But Ms Doussin warned that making trade deals with non-EU states would be impossible during such a transitional period under the current rules of the customs union.

“From a legal point of view, it is impossible that the UK will be able to bring into effect any trade deals with third countries during the interim period, such as those included in the GCC, whatever they might look like,” she said.

Mr Hammond’s plan will be a blow to many in the Conservative Party, including trade secretary Liam Fox, who had hoped to sign deals with non-EU countries as soon as Britain leaves the bloc in March 2019.