Brexit - MPs argue technology can not solve the problem of the Irish border

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A contentious issue in the Brexit debate, the customs union sets tariffs for all EU member states meaning goods can be moved from one country to another within the bloc without further taxes being imposed.

Unconfirmed reports on Tuesday night said that Chancellor Philip Hammond has thrown his weight behind a customs partnership proposal thought to be favoured by the prime minister but branded "cretinous" by critics.

Downing Street has spent the last few days intensely lobbying ministers including David Davis, Liam Fox and Boris Johnson on the benefits of the so-called hybrid model, under which the United Kingdom would collect European Union import tariffs on behalf of Brussels.

Theresa May and Cabinet ministers have expressed "strong disappointment" at a string of fresh defeats in the House of Lords over the EU withdrawal bill, with Liam Fox accusing unelected peers of trying to block the United Kingdom from leaving the European Union.

Business leaders do not like British Prime Minister Theresa May's preferred post-Brexit customs option, according to the consultancy group KPMG.

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Ashton Whiteley analysts say a customs union is one of the biggest points of contention in the negotiations over Britain's looming departure from the European Union and hardline Brexiteers do not take kindly to any proposal that the United Kingdom may maintain any such an association with the European Union.

She today faces a showdown with her "war cabinet" after sixty Eurosceptic Tory MPs sent a 30-page report to Downing Street savaging the plan. "I don't think there is a customs union that could ever be acceptable", he said.

"The technology is challenging for the hybrid option; but if you solve it, it solves the Irish border question", said a Whitehall source.

The paper acknowledges, though, that the European Union would be required to implement equivalent arrangements at its borders to make any such scheme a success.

HMRC permanent secretary Jon Thompson told a select committee last September that the customs partnership could take up to five years to be introduced.

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And he acknowledged that this will depend on persuading Brussels to negotiate 40 or more workstreams simultaneously.

When her official spokesman was asked whether this meant more than two options were now on the table, he replied: "Work has been ongoing on two options".

Brussels is apparently concerned both by the prospect of "porosity" on the EU's external border and by the risk of creating a precedent which might be copied elsewhere, while Tory Brexiteers fear the scheme could indefinitely trap the United Kingdom within the EU's customs arrangements, as well as being expensive and complicated to operate. However Wednesday's meeting is not expected to reach a final decision on the proposals.

"I think Theresa May's position would be extremely hard in the Conservative party if she were to agree to something which effectively amounted to bring in the customs union or something very close to that", he told CNBC's "Squawk Box Europe".

He said: "Businesses need to know at the beginning of the implementation period what it is they are going to implement, so we have to have it nailed down - even legally - at the beginning of the implementation period. As the Prime Minister said, there are a number of ways to proceed".

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