06 Mar 2019

The House of Lords has an opportunity on 6 March to vote on amendments to the Trade Bill, including a proposal for a new clause that reads:

It shall be the objective of Her Majesty's Government to take all necessary steps to implement an international trade agreement which enables the United Kingdom to participate after exit day in a customs union with the European Union.

Tabled by a cross-bench group of peers, the amendment resumes a discussion that has been delayed since the Trade Bill completed its House of Commons stages on 17 July 2018. If the House of Lords were to vote in favour of the customs union amendment, it would certainly not compel the government to reverse its current policy, which involves leaving both the customs union and the EU single market. However, it would require the amendment to be brought back to the House of Commons for a further vote. The circumstances in which that further vote would take place depend on the outcome of the "meaningful vote" on the Withdrawal Agreement, expected by 12 March. If the government's Withdrawal Agreement were once again to be rejected, then the question of a "soft Brexit" would undoubtedly arise, and the potential continuation of "the" customs union or the creation of "a" customs union would be a live issue.

The House of Lords vote takes place in extremely contentious circumstances. During its House of Commons stages Trade Bill amendments seeking to bind the government to a customs union were rejected. The government also deflected House of Lords attempts to press for a customs union in the Taxation (Cross-Border Trade) Act 2018 by designating it as a "supply Bill", meaning that it could not be amended by the Lords. That procedural move sparked a series of angry speeches from peers, making it clear that the question of a customs union would be revived when the Trade Bill was eventually put onto the order paper.

If the Lords were to adopt the amendment, then it would be open to the House of Commons to follow their lead when the Trade Bill returns to the lower chamber in late March – possibly only days before 29 March, defined by the EU (Withdrawal) Act 2018 as "exit day". A House of Commons vote in favour of a customs union with the EU would need to be confirmed by a full Act of Parliament to override the restriction imposed by section 31, Taxation (Cross-Border Trade) Act 2018. Under that section, the UK government's power to enter into any form of customs union with the EU depends on specific Parliamentary approval through primary legislation.

If the mood of Parliament were to swing towards a customs union, then the House of Lords' amendment to the Trade Bill would require further wording in order to avoid falling foul of section 31. Rather than merely stating that government must "take all necessary steps", the Trade Bill would have to include express authorisation of a specific customs union proposal – whether to continue "the" customs union, or to implement "a" customs union. In essence, political will would have to be matched by political skill.

For businesses seeking to prepare for Brexit, the continuing Parliamentary manoeuvres mean that clarity will come very late in the process, perhaps with only a day or so to spare. In the meantime, an important practical steps that business can take to ensure Brexit resilience is to apply for, and obtain, an Economic Operator Registration and Identification (EORI) number.

An EORI number will allow a business established in the UK to import goods from, or export goods to, the EU following Brexit. Applications are currently processed in about 3 working days, though that period might extend if there is a late rush for registrations.

Details of the application process are here.