EU warns United Kingdom on impact of exiting customs unions

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"The only thing I can say is without a customs union and outside the single market, barriers to trade in goods and services are unavoidable", he said.

"Because I read for example, "we don't want a soft Brexit", I read "we don't want a hard Brexit", I read "we don't want a customs union", I read "we don't want to contribute to the EU budget in the future".

The comment comes as Britain seeks to clarify its position ahead of a new round of talks between Britain and the EU.

While Davis hailed the constructive talks, Barmier was firm that United Kingdom government must respect the rules of the Union during the two-year transitional period ending December 2021 with no say in shaping them.

Broadly ministers are divided among those like Mr Hammond whose priority is to keep Britain as closely aligned with the European Union as possible to preserve current trade arrangements and those like Mr Johnson who want the maximum freedom to strike deals with countries outside the bloc. Such deals wouldn't be possible while remaining in a customs union because the EU executive negotiates trade deals on behalf of members of the bloc.

Some ministers believe the country could remain in the customs union for a year or two longer, until new infrastructure is built at ports and before any new global trade deals are ready for implementation.

"This approach involves utilising the UK's existing tried and trusted third country processes for UK-EU trade, building on EU and global precedents, and developing new innovative facilitations to deliver as frictionless a customs border as possible", the paper said.

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European Union countries last week set out that "provisions of the citizens' rights part of the withdrawal agreement should apply as from the end of the transition period". The EU says its rules should still apply during the transition period, as will rulings of the European Court of Justice.

Mr Davis hit back though, insisting it was "perfectly clear what we want to do".

The customs union is a somewhat looser trade arrangement under which many, but not all, exports face no charge when sold in the EU.

Confirmation of the UK Government's approach on the customs union may placate Tory MPs and ministers who are keen for a Brexit arrangement which allows the UK to strike trade deals around the world - something which a customs union could have prevented.

The issue is set to be front and centre of crunch meetings of senior ministers this week to decide the Government's Brexit strategy as negotiations resume.

"We are very keen that we continue to have an extremely good and close relationship, that relationship be on economic and other grounds, and that it will continue in long term", Davis said. It also limits checks and other bureaucracies at borders between members. Literally it means that cars manufactured in France can be dispatched to Italy without surfacing tariffs or a customs check at the border.

"Both Northern Ireland and Ireland have to, by law, be identical".