(Bloomberg) -- The U.K. must not enter into a new customs union with the European Union after it leaves the bloc, Trade Secretary Liam Fox said, setting a new red line for Theresa May's negotiations with Brussels and her own party on Brexit.
Fox, a long-standing euroskeptic, told Bloomberg that the U.K. must not sign up to the EU's common external tariff, which binds all EU member countries to the same rates. His comments follow a report in the Financial Times that said May's officials are considering keeping Britain in a new customs union, and the external tariff arrangement.
“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,” Fox said Friday in Shanghai. “One of the reasons we are leaving the European Union is to take control, and that's not possible with a common external tariff.”
The prime minister is wrapping up a three-day visit to China as she seeks to build global trade relationships before the U.K.'s March 2019 departure from the EU. May has put an early focus on courting China -- the world's largest trading nation -- as a partner in a future free-trade agreement.
Fox's comments represent a potentially explosive intervention in the U.K. political debate. May is under pressure from euroskeptic lawmakers in her Conservative party who want her to sever ties with the EU single market and customs union. While still a member of the EU's customs union, Britain isn't free to strike independent trade deals with countries outside the bloc, like China.
Gaining freedom over trade policy is a key prize for euroskeptics such as Fox, Foreign Secretary Boris Johnson, and influential lawmaker Jacob Rees-Mogg. May and her ministers are in the process of defining the final trade deal they will seek from the bloc, but have so far been unable to agree on how closely they want Britain to keep to EU rules.
May is also facing calls at home to raise her game and show a bolder vision for government or quit. In the interview, Fox defended her character and leadership, saying May's “middle name” is “resilience.”
Responding to a leaked and unfinished government analysis of the impact of Brexit, Fox said there would always be some people who refused to accept that British voters chose to leave the EU in a referendum in 2016.
“There will always be an element that will be not reconciled the democratic wish of the British people,” Fox said, comparing the analysis to the pre-referendum warnings of remain campaigners. “We've been given an instruction. I think it's now our duty to carry that out to the best of our ability.”
Fox also said that he hoped to have a link between the London and Shanghai stock exchanges “up and running as soon as we can, as soon as it is a practical option.”
To contact Bloomberg News staff for this story: Tim Ross in London at tross54@bloomberg.net, David Tweed in Hong Kong at dtweed@bloomberg.net.
To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, Brendan Scott, Andy Sharp
©2018 Bloomberg L.P.
With assistance from Tim Ross, David Tweed
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