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Expert View

Next, tricky talks over the transition

by David Hannay | 08.01.2018

David Hannay is a member of the House of Lords and former UK ambassador to the EU and UN.

Quite obviously, 2018 represents decision year for the Brexit negotiations. The government’s impetuous and ill-prepared decision in March of last year to trigger the Article 50 process for withdrawal has locked us in and Theresa May seems determined that any key which might offer an escape must be thrown out of the window.

The first few months of the year are likely to be devoted to negotiating a standstill arrangement – what everyone else considers a transition period but which is still oddly and misleadingly called by the government an implementation phase – on which there appears to be broad agreement in principle between the UK and the 27 other EU countries.

The government’s determination to get that nailed down as quickly as possible demonstrates its concern at the haemorrhaging of investment, of a dwindling of the supply of EU workers already here, and at the increasing indications of plans for businesses to move away from the UK that have been fed by uncertainty over Brexit, all of which are feeding into the predictions of sluggish growth in 2018 from every economic forecaster.

Will the negotiations for a standstill arrangement be plain sailing? Not likely. For one thing, the detailed conditions for any such standstill on which the EU 27 are likely to insist are going to be hugely unpalatable to the government’s ultra-Brexiter supporters: continued inclusion in the single market and the customs union, continued free movement of people, continued jurisdiction of the European Court of Justice, acceptance of all new EU legislation and regulatory decisions introduced during the standstill period even though we will have had no say over their adoption.

So we can expect much wriggling by the government, and much tension within its ranks, before they accept the inevitability of agreeing to most, if not all, the EU conditions; and that could well delay the conclusion of this part of the withdrawal deal.

Then there is the question of the duration of any standstill. On the face of it that might appear simple enough, since the EU27 wants it to end on the last day of 2020 and Theresa May’s “about two years” is generally assumed to mean the end of March 2021. But the problem is that neither of these two dates looks like a realistic deadline for the completion of the new partnership negotiations and their entry into force, which almost every commentator believes will take a good deal longer than that.

If so, the cliff edge will merely have been postponed, not avoided; and businesses will have to face two wrenching sets of changes, one at the end of the standstill period and the other when the new partnership, assuming it can be agreed, comes into effect.

The obvious response to that quandary is either to agree a longer standstill period than the 24 or 21 months currently envisaged; or, perhaps more wisely, to provide for the period’s subsequent extension by common accord beyond the period originally agreed. But such a safety valve is likely to be highly contentious on both sides of the Channel, ultra-Brexiters seeing it as a back door to remaining in the EU indefinitely, and the EU being deprived of the neat cut-off date ahead of their next seven-year budgetary cycle. Nevertheless, a standstill without a degree of flexibility as to its duration is all too likely to be a flawed concept.

So the standstill negotiations of the next three months are not going to be a brief technical interlude between the divorce negotiations and those for a new partnership. Rather they have the potential to add to the already long list of drawbacks to Brexit which will need to be weighed up by Parliament when it has to decide whether or not to approve any overall package deal.

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Edited by Bill Emmott