Delivering the ‘best possible access for goods and services to the European market’, prioritising the control of UK borders, and coming out of European court scrutiny ‘will be difficult’, says the first report of the UK parliamentary’ select committee in charge of scrutinising the Brexit process.
The cross-party committee of 21 MPs highlighted a clash between Prime Minister Theresa May’s stated objectives on controlling borders and those of Brexit Minister David Davis on future trading relationships.
It also said it is “clearly in everyone’s interests to resolve the position of EU nationals in the UK and of UK nationals in other EU member states as quickly as possible so as to provide certainty and reassurance to the individuals, their families and the businesses and services that rely on them”.
It added that the UK’s relationship with the EU is “deep and complex, not least in terms of the legal rights of parties in both the UK and EU-27” and it would be “unsatisfactory and potentially damaging to both sides were the UK to leave with no agreement having been reached”.
The committee urged Mrs May to set out her negotiation plan fully by mid-February in the form of a formal white paper to give MPs time to ‘scrutinise’ it, including her objectives with regard to the single market and the customs union.
Economic assessments of the different options for market access and trade, including risks and opportunities, should be published alongside the plan “in so far as it does not compromise the government’s negotiating hand”.
The government should also now publish a list of what debates it plans to hold in the run up to triggering Article 50, the committee said.
The report also notes the short time-frame available for negotiations following the triggering of Article 50 and the difficulties that may arise if ‘divorce’ proceedings have to be separated out from an agreement on the future EU-UK trading relationship.
Potentially, after two years the UK could leave “without a new [trading] relationship in place”, the MPs said.
They said it would be preferable for the two aspects to be negotiated in parallel and that there was “clarity” on the future relationship after leaving, but noted this “will not be in the government’s gift to deliver” because both sides must agree.
The Article 50 ‘divorce settlement’ will include as a minimum matters such as UK financial obligations and expat rights.
The MPs said if the ‘divorce’ agreement was ‘mixed’ (ie. including trade) it might have to be agreed not just by the ‘qualified majority’ of EU leaders referred to in Article 50 of the Lisbon Treaty, but by all of them, as well as potentially up to 34 national and regional parliaments.
This means the government should give early clarification on whether or not this is likely and what the divorce deal might cover.
The MPs said the same complex ratification process would also apply to any separate trade deal that is agreed.
Whatever the divorce contains, an “enormous amount of ground” will have to be covered in what “may be as little as 18 months in order to provide time for any deal to be properly scrutinised by member states and their parliaments, the European Parliament and, of course, the UK Parliament and the devolved national parliaments”.
The report calls on Parliament to be kept informed throughout the negotiation – and to have a vote on any trade deal.
It adds: “A return to tariffs and other regulatory and bureaucratic impediments to trade would not be in the interests of UK businesses and the government should strive to ensure this does not happen”.
The government should also aim to ensure continued access to EU markets by UK financial services and that the industry has “confidence” that it will be able to “carry on doing business”.
The committee also noted that in the interests of UK-Irish relations and the Northern Ireland settlement, the Irish devolved assembly and executive needed to be involved at all stages including before Article 50 is triggered.
A solution will have to be found to the fact that the Northern Ireland Assembly is facing a snap election after power-sharing arrangements collapsed, and is not sitting.
Other points raised include:
Brexit will be the highest priority for some years across the civil service and is causing “strain” on various ministries. The “additional burden” and “new functions” it needs to take on requires recruitment, including “bringing in people from a range of backgrounds to ensure it is up to the task”. Working out the practical implications of Brexit involves “an extraordinarily complex range of activity across a wide range of domestic and international policies” and is a “gargantuan exercise”.
If the UK leaves the customs union it may need more customs officers and may also need more people for border control.
A draft of the planned ‘Great Repeal Bill’ must be published for scrutiny by Parliament as soon as possible, because it needs to be in place to provide legal certainty in the UK on the day after ‘Brexit day’. (This would incorporate the whole of existing EU law into UK law, for possible piecemeal repeal afterwards).
It will be essential to maintain cooperation with the EU on defence, foreign policy, security and the fight against terrorism.
If the UK seeks to control migration, it should bear in mind the importance of skilled EU workers to the UK.
A “cliff edge” change after Brexit – with no transitional arrangements regarding the future relationship – would be “extremely disruptive” to business “whether it be the need to adjust to new provisions for regulatory approval, new customs requirements, or the need to adjust to new costs or restrictions in employing EU workers”.
If there is a risk of this, some businesses might leave before it happens.
The government should say at the outset of negotiations that if trading arrangements change, then an “adjustment period” for UK services firms will be sought. If the future relationship has not been agreed by the time the UK exits then transitional agreements should be made in respect of single market access for goods and services.
If the UK ultimately trades according to ordinary World Trade Organisation rules for third-party states, a range of tariffs would apply – on average only 3.5%, but higher on certain products such as 20% on most food and drink (36% for daily products), 10% for cars and 10-20% on clothes.
The report says that by the time the UK exits there must be clarity on:
The institutional and financial consequences of leaving, including resolving all budget, pension and other liabilities and the status of EU agencies based in the UK;
Border arrangements between Northern Ireland and the Republic of Ireland;
The status of UK citizens in the EU and EU citizens in the UK;
The UK’s ongoing relationship with EU regulatory bodies and agencies;
The status of ongoing police and judicial cooperation; and of UK participation in ongoing common foreign and security policy missions; and
A clear framework for UK–EU trade; and clarity on allocation of former EU powers to national and devolved governments.
