The international trade secretary poured cold water on reports that the government was considering a deal under which trade in goods would be covered by a customs union arrangement with the EU, but the UK could retain independent trade policy on services.
The Financial Times reported on Friday that the idea is actively under consideration by the government’s Brexit advisers and is favoured by the chancellor Philip Hammond and business secretary Greg Clark.
Speaking to Bloomberg TV in China, on the final day of the prime minister’s three-day visit, Fox said being part of a customs union would not allow Britain to set its own trade regulation.
“It is very difficult to see how being in a customs union is compatible with having an independent trade policy because we would therefore be dependent on what the EU negotiated in terms of its trading policies and we’d be following behind that,” he said.
Asked if he was ruling out any form of customs union in future, Fox said: “We have to be outside of that to take advantage of those growing markets. One of the reasons we are leaving the European Union is to take control and that’s not possible with a common external tariff.”
Speaking to Sky News on Friday in Shanghai, Theresa May was more vague about the government’s intention. The prime minister said there was much the UK could do to improve trade with China while inside the EU.
“What I want to do is ensure that we have got the best possible trade arrangements with China and with other countries around the world once we have left the European Union,” she told Sky News. “I do want to do those free trade agreements. There is more trade that we can do even before we get to those free trade agreements.”
Fox said the Chinese were impressed with May’s visit and said it should silence her backbench critics. “Theresa May’s middle name is resilience,” he told Bloomberg. “And that’s exactly what she’s showing and I do wish more people could have seen the commitment she was showing to Britain’s national interest on this trip to China.”