THE EU’s chief negotiator has left Theresa May’s latest Brexit plan in tatters, after unequivocally rejecting one of its key proposals.

Central to the Prime Minister’s Chequers agreement, set out in a White Paper a fortnight ago, was a “facilitated customs arrangement”, under which tariffs charged at the border would be passed on to either the British or EU authorities depending on the destination of imported goods.

Appearing alongside new Brexit Secretary Dominic Raab after their second round of talks in Brussels, Michel Barnier left no doubt that this was not acceptable to the EU.

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“The EU cannot and the EU will not delegate the application of its customs policy and rules and VAT and excises duty collection to a non-member who would not be subject to the EU’s governance structures,” he said.

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Any customs arrangement or union “must respect this principle”.

Anti-Brexit campaigners seized on the comments as proof May’s exit strategy is “dead” and described the press conference as a “drive-by”.

Barnier also hit out at UK attempts to go over his head and win the backing of European leaders.

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He said: “Anyone who wants to find a sliver of difference between my mandate and what the heads of government say they want, is wasting their time, quite frankly.”

Raab signalled that he is looking for compromise from Brussels in response to May’s White Paper, noting that the EU was able to take an “innovative” approach “when the political will has been there”.

He added: “With ambition and pragmatism and energy on all sides, we can get there in October.”

Raab appeared to be making an attempt to separate the thorny issue of the Irish border from the rest of the withdrawal agreement which is due to be settled by then, repeatedly referring to a “protocol” on Northern Ireland.

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The EU negotiator bluntly rebuffed Raab’s suggestion that the UK might tear up its promise to pay a £39 billion “divorce bill” unless it got a good deal on future trade.

Barnier told him that, while the commitment to a financial settlement made by May in December was not yet in its final legal form, the 27 remaining EU members and European Parliament regard it as “agreed for good”.

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He also made clear that Brussels still has reservations about May’s proposed “backstop” arrangement for the Irish border, which would see the whole UK matching EU trade tariffs for a period if a trade deal is not reached by 2021.

“We have no objection in principle to this but we have doubts that it can be done without putting at risk the integrity of our customs union or commercial policy or regulatory policy,” Barnier said.

The Chequers plan has been studied “carefully” and there are some areas of “common ground”, he said, adding: “There are other points on which we have a problem because they contradict, they clash with, the European Council guidelines.

“They contradict my clear nego- tiating guidelines. Indivisibility of the four freedoms, the integrity of the single market, these are key points.

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“This is our main asset. We are not going to negotiate on that. The United Kingdom has known that from the outset.”

Meanwhile, former Waitrose managing director and ex-international trade minister Lord Price warned a no-deal Brexit would push up the cost of fruit and veg, meat and dairy products because they cannot be stockpiled.

The Conservative peer, who left the Government in September, said what while it is straightforward to stockpile food stored in bottles, packets and tins, the same is not true for fresh produce.

He said: “We only produce in this country about 25% of the fruit and veg we consume – on fruit 30% comes from Europe, the rest comes from around the world, but on vegetables 80% comes from Europe.”