Maintaining customs union will sell UK's Brexit short, trade minister says

LONDON, Feb 26 (Reuters) - Britain must leave the European Union's customs union to be able to sign new trade deals with the world's fastest-growing economies or risk squandering one of the main benefits of Brexit, the trade minister, Liam Fox, will say on Tuesday.

The extent of any British post-Brexit involvement in the customs union - which binds members into a trade bloc with common external tariffs - has emerged as one of the main issues of contention between Britain's two main political parties.

The opposition Labour party on Monday attempted to outflank the government by arguing that Britain should permanently stay in a customs union with the EU, potentially setting up a major test of Prime Minister Theresa May's fragile parliamentary authority.

Fox, a long-standing eurosceptic, will say in a speech that the ability to strike new trade deals around the world is one of the key prizes of Brexit, and if Britain stays in a customs union with the EU, it will have to accept EU rules without any say in making them.

"We would be in a worse position than we are today. It would be a complete sell-out of Britain's national interests," Fox will say, according to excerpts from his office.

"A customs union would remove the bulk of incentives for other countries to enter into comprehensive free trade agreements with the UK if we were unable to alter the rules in whole sectors of our economy, as Turkey has now discovered."

Fox will also say that Britain should focus on opportunities outside the EU. He will say that 57 percent of Britain's exports of goods and services now go outside of the EU, compared with 44 percent in 2005.

"We cannot allow the practices and patterns of the past to constrain the opportunities of the future," Fox will say. "Our approach should not be premised on simply identifying how much of our current relationship we want to keep, but what we need to prosper in a rapidly changing global environment."

Labour's announcement on Monday places May's government on a collision course with a number of her own members of parliament, who are planning to back an amendment to a trade bill calling for the government to pursue a customs union, and will now have the backing of the opposition party.

Eight Conservative rebels are backing an amendment and, if they win more support from colleagues, the government could be defeated in parliament on one of its key Brexit policies. (Reporting By Andrew MacAskill; Editing by Kevin Liffey)