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Mr Hammond, speaking at the Mansion House in London, said an “implementation period outside the customs union, but with current customs border arrangements remaining in place” should continue until “new long-term arrangements are up and running”.
[...] the chancellor has also recognised that in the interim period in an “associate customs union” with the EU after Brexit — possibly lasting several years — Britain would almost certainly be unable to finalise its own bilateral trade deals.
The chancellor said last weekend: “If we’re restricted on being able to enter into new free-trade deals with third countries during an interim period that won’t stop us negotiating and preparing. Normally these deals take quite a long time to negotiate.”
Mr Hammond believes Britain should prioritise EU trade during the transitional period and should only quit the “associate customs union” if trade secretary Liam Fox has nailed down big trade deals that would offset the loss of trade with Europe. [...]
Lord Mandelson, former EU trade commissioner and business secretary, said he was sceptical about whether future third-country trade deals would offset the damage caused by a rupture from the EU, the destination of 44 per cent of UK exports.
“In pursuing international trade agreements outside the EU, we are trying to replace our existing rights to massive trade in Europe with entirely speculative gains elsewhere,” he said.
“We may well be able to get tariff-free trade in goods this way but it is very unlikely that we will replace the current benefits of cross-border trade in services with equivalent rights elsewhere.” [...]
He also hinted that he was willing to see some EU financial oversight over the City of London as a price for maintaining good access to the single market.
“There are genuine and reasonable concerns among our EU colleagues aboutoversight of financial markets that will then be outside EU jurisdiction, but which provide a vast proportion of economically vital financial services to EU firms and citizens,” he said. [...]
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