LONDON — As Britain edges closer to the start of Brexit talks with the European Union one of the biggest questions is whether Theresa May will look to negotiate a transitional deal.
The government indicated that it intends to strike a “implementation phase” in its official Brexit White Paper.
It says: “We will seek a phased process of implementation, in which both the UK and the EU institutions and the remaining EU Member States prepare for the new arrangements that will exist between us.”
Adding: “There may be a phased process of implementation to prepare for the new arrangements. This would give businesses and individuals enough time to plan and prepare for those new arrangements.”
Here’s everything you need to know about what a Brexit transitional deal would mean for Britain and the EU.
What is it?
A transitional deal would be a temporary arrangement which would be in place from the minute that Britain leaves the EU at the end of the two-year Article 50 process until a new permanent UK-EU trade deal comes into effect.
Putting it simply, it would be a bridge between Britain officially leaving the EU and the moment a new long-term relationship between Britain and the 28-nation bloc is agreed and put into place.
It goes by a host of other names including transitional agreement, transitional arrangement, implementation period, and phased process of implementation.
It’s difficult to estimate how long it would be in place for until the British government states what it hopes a transitional deal to look like. Realistically, it could be as short as 18 months or last up to a decade.
What would it entail?
Again, it’s difficult to predict the specifics of a Brexit transitional deal before Article 50 talks have even begun.
However, the whole point of a transitional deal would be to prevent Britain’s economy from falling off a cliff by providing a period of stability for British businesses as they prepare for life outside of the EU.
This will likely mean a close trade relationship with the EU that continues beyond 2019. May might choose to keep the country in the European Economic Area (EEA) and continue to enjoy full access to the single market from outside the EU. Britain is already a member of the EEA but whether it would be able to stay in the trade bloc after leaving the EU or instead have to re-apply for membership is a tricky legal question that is yet to be fully clarified.
Either way, a Brexit transitional deal will more than likely keep Britain closely wedded to the EU’s internal market until a long-term trade arrangement comes into effect. It will make Brexit smoother and less bruising, in theory.
This is a sensible move — isn’t it?
Most business people and City figures are pushing hard for a transitional deal, while the vast majority of academics and industry figures have stressed the importance of May successfully negotiating one.
Most MPs agree that it wouldn’t be at all wise to drop out of the EU without a transitional phase agreed, either.
Brexit committee chair Hilary Benn said it’s a matter of “common sense” at an event in central London that Business Insider attended earlier this month. The Labour MP said: “I don’t care what you call it — it’s common sense. If you are going to move from one set of rules and regulations to another you need a process to ease the transition.”
The fact that May and even the most staunch Brexiteers in her cabinet have hinted at a transitional deal indicates that the political and intellectual consensus is leaning in favour of some kind of implementation phase.
So who is against a transitional deal? And why?
Some hardline Eurosceptics are against it because they fear it would mean Britain effectively staying in the EU for years after the Article 50 period has expired — and they may have a point. Sort of.
If Britain was to base its transitional deal on the EEA model, for example, then it would have to continue with the free movement of EU citizens. This is because although a state can be in the EEA without being in the EU, it still needs to play by the EU’s rules if it wants to enjoy full access to its internal market.
Clearly, this would be a tough sell for May, with immigration being such a huge concern for many Leave voters in the June referendum. Even if free movement continued for a period as short as 18 months, it would still likely be spun as a betrayal of the public will by staunch Brexiteers. However, it is one that they are still actively considering. The Brexit white paper states that “There may be a phased process of implementation to prepare for the new [immigration] arrangements,” adding that “this would give businesses and individuals enough time to plan and prepare for those new arrangements.”
Is immigration the only issue?
It isn’t. European leaders like Malta’s Prime Minister Joseph Muscat have said that Britain will remain subject to the European Court of Justice (ECJ) until the transitional deal is over.
“It is not a transition period where British institutions take over, but it is a transition period where the European court of justice is still in charge of dishing out judgments and points of view,” he said last month.
This would be especially frustrating for May, who was a critic of the ECJ as Home Secretary long before succeeding David Cameron as prime minister. This is why prominent Brexit MPs are so hostile towards a transitional deal.
Bernard Jenkin MP, who co-directed the Vote Leave campaign, said last month:”An extended period of transition really is the worst possible scenario for the EU and the UK.”
Will May be put off by angry Brexiteers?
In short: probably not.
May has been reluctant to give much away when it comes to any transitional deal. She’s even avoiding using the phrase “transitional deal” and has used language such as “phased period of implementation” instead.
But the prime minister, Chancellor Philip Hammond and Brexit ministers Boris Johnson and David Davis have all publicly acknowledged the importance of implementing an orderly or “smooth Brexit”, rather than one that crashes Britain out of the EU with no safety net in place.
Will it be easy to negotiate?
Not as easy as some people think.
A transitional deal may only be a temporary measure it will still be subject to approval from all other 27 EU member states just like any other international trade deal. Any single national parliament of an EU member state could veto the deal if they don’t agree with it and put the entire process in jeopardy. A recent example of this was when the Belgian regional government of Wallonia vetoed the EU-Canada free trade deal until the 28-nation bloc agreed to a series of significant concessions. In other words, it will be by no means straightforward.
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