LONDON (REUTERS) - Britain has ruled out being in a customs union with the European Union after Brexit, a source in Prime Minister Theresa May's Downing Street office said on Monday (Feb 5) as the government prepares for a crunch week of Brexit talks.
The extent of any British post-Brexit involvement in the EU's customs union - which binds members into a trade bloc with common external tariffs - has become an issue of contention inside May's government and her Conservative Party.
Membership of the, or a, customs union after Brexit, would prevent London from striking trade deals with countries outside the EU in future.
The divisions over the customs union go to the heart of disagreements over Brexit within the government. They pit those arguing for as little disruption as possible to Britain's relationship with the EU against those who say one of the main benefits of leaving the bloc will be the ability to strike trade deals with other, faster-growing countries around the world.
"It isn't our policy to stay in the/a customs union," a Downing Street official, who spoke on condition of anonymity, said.
"Our policy was set out very clearly in the summer in our customs future partnership paper: we are proposing either two models - a customs partnership or a highly streamlined customs arrangement." A spokesman for May's office declined to comment.
The Confederation of British Industry has called for Britain to stay in a customs union and Finance Minister Philip Hammond last month also left open the possibility of Britain joining a new customs union.
Britain and EU are due to hold their first formal discussions about what their future relationship will look like after Britain leaves the EU this week.
EU chief negotiator Michel Barnier will meet his opposite number, Brexit Secretary David Davis, in London on Monday for the first time since EU leaders told Barnier to negotiate a post-Brexit transition period to ease Britain's departure.
Barnier said on Monday that Britain must respect the rules of the European Union in talks on its exit from the Union.
"We have to respect the red lines of the British government but they have to respect the rules of the Union," Barnier said.
He told Sky News that there was not a minute to lose in divorce talks. "My feeling: we have not a minute to lose because we want to achieve a deal," he said.
Britain wants to secure a tariff-free access deal on trade with the EU as part of the overall agreement May is seeking with the EU. But May has balked at the EU's insistence on continued freedom of movement for EU workers among other conditions.
May will hold two Cabinet meetings on Wednesday and Thursday at which she will try to heal the deep divisions among her ministers over the best way to leave the EU.
