Transition period needed to avoid Brexit ‘cliff-edge’
The UK must have a ‘transition period’ after leaving the EU to avoid an economically-damaging ‘cliff-edge’ change, key British cabinet ministers have agreed – however they have ruled out the country staying in the customs union or single market during this time.
The chancellor, Philip Hammond, and International Trade Minister Liam Fox state that they want special trading measures to stay in place for an unspecified ‘time-limited’ period, even though they also expect the UK to immediately be a ‘third country’ to the EU once it leaves (currently expected to be at the end of March, 2019).
Leaving the customs union would ensure Britain is free to pursue trade deals with non-EU countries without waiting until the end of the transition, which Mr Fox has previously conceded might have to last two or three years.
In a joint statement published in The Telegraph they said: “We are clear that during this period our borders must continue to operate smoothly; goods bought on the internet must still cross borders, businesses must still be able to supply their customers across the EU, and our innovative, world-leading companies must be able to hire the talent they need, including from within the EU.”
It is not clear to what extent the UK would be willing to continue payments to the EU in order for such arrangements to be made, or whether the EU will agree to this.
The government is expected to shortly release some new ‘position papers’ on its aims for certain key areas before negotiations on the UK’s exit resume on August 28. The most pressing issues will be ironing out the two sides’ differences on expat rights, and clarifications on what the UK agrees to pay in the ‘exit bill’ and on future arrangements for the border between Northern Ireland and Ireland, which is set to become the UK’s only land border with the EU.
The hope is that ‘sufficient progress’ may be made by October, when EU leaders will hold a summit, in order for them to give the green light for parallel talks to start on the ‘future relationship’, including trade.
This is expected to form part of a separate agreement to the ‘exit deal’ and which will not be finalised until the UK has left the EU.
Former Labour leader David Miliband is among several politicians and commentators who are calling for Britain to remain in the wider European Economic Area (EEA) during the transition – if not indefinitely. However this is likely to be opposed by many Leavers since it would involve continued free movement, contributions to the EU budget and being subject to a European court.
Writing for The Observer, Mr Miliband called Brexit “an unparalleled act of economic self-harm” and said a transition period was “vital”, but warned that “a slow Brexit does not mean a soft Brexit”.
“I favour the closest possible relationship with the EU, but not only for economic reasons,” he said. “Europe represents a vital and historic alliance of democracies, founded on the idea that social, economic and political rights go together and that countries best defend them in unison not isolation.”
Campaigner Gina Miller, who led the court action which required the UK parliament to vote on triggering article 50, has urged the UK government to ask for an extension to the negotiating period for the exit deal “as soon as possible”, arguing that there may not be enough time to deal with all the complexities involved before the current cut-off date.
This would also give more time to work out such matters as whether the UK may join the wider EEA or Efta trade groups of European states, she says in The Guardian.
If the UK is to leave in March 2019, it has been suggested that a draft deal must be reached by around October 2018 to allow it to be approved, including a debate in the European Parliament.
An extension to the exit negotiations would also give the UK more time for such matters as planning for how it will replace the work of the many EU agencies to which it currently belongs, Ms Miller says.
