Downing Street has insisted Britain will leave the EU customs union after Brexit amid claims of Tory disunity over the UK-EU future relationship.
Theresa May has faced calls to spell out what she wants from the talks ahead of the UK’s departure in March 2019.
In a customs union the UK would have tariff-free trade within the EU, but would lose the ability to strike its own deals with other countries.
It comes ahead of a meeting with the EU chief negotiator Michel Barnier.
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The prime minister and Brexit Secretary David Davis will meet Mr Barnier ahead of the next round of negotiations getting under way.
Later, talks between officials will focus for the first time on the transitional period planned for after Brexit.
Potential sticking points include citizens’ rights, with the UK insisting EU nationals arriving during this time should not have the same rights as those who arrived before Brexit day.
Mr Davis and Mr Barnier are expected to reveal the progress of negotiations on Friday.
‘Not going to surrender’
How close the UK will remain to the EU’s single market and customs union has been a topic of debate among leading Brexiteers and some of those closest to the prime minister.
On Sunday Eurosceptic Tory Bernard Jenkin accused the government of being “vague” and “divided”, saying Chancellor Philip Hammond was not sticking to the approach put forward by the prime minister.
Home Secretary Amber Rudd – who was a leading figure in the Remain campaign – played down the divisions in the cabinet, telling the BBC’s Andrew Marr Show on Sunday: “I have a surprise for the Brexiteers, which is the committee that meets in order to help make these decisions is more united than they think.”
Ms Rudd said they agreed on the need for “frictionless trade”, the ability to strike international trade deals and to avoid a hard border in Ireland, hitting back at those who question whether such a deal can be secured.
“We want to have a bespoke agreement,” she said. “Now we’re not going to surrender before we have that battle.”
She said Mrs May had an “open mind” on how customs will be managed after Brexit.
Quizzed on what the model might look like, she said she was “not intimidated at all” by critics’ warnings about customs unions membership.
Mr Hammond has said he hopes the UK and EU economies will only move “very modestly” apart after Brexit. But some Brexiteers say this would hamper the UK’s ability to strike free trade deals with other countries after it leaves the EU.
The 10-strong Brexit cabinet sub-committee is due to meet on Wednesday and Thursday.