In my last blog post, I made my own personal views on transition clear and I also stated what the government had said that their views on transition were. To summarise, I personally believe that, if a free trade agreement (FTA) between the UK and the EU is agreed by midnight on 29th March 2019 and, if a subsequent transitional arrangement is deemed necessary, then this arrangement should last no longer than a year. It should not involve EU membership, single market membership or customs union membership nor should it require the freedom of movement of people from the EU to the UK. The transitional arrangements should solely be a bridging mechanism to take us from being full members of the EU, its single market and its customs union to leaving all three of those institutions with a UK-EU FTA. The arrangement should ensure a gradual and, in the words of Daniel Hannan MEP, “a phased repatriation of powers” from the UK to the EU.
I completely agreed with the Brexit Secretary, David Davis MP, when he said “the end state [at midnight on 29 March 2019] determines the transition”. Here Davis was clearly arguing that the transition should solely be a bridging mechanism from full EU membership to a UK-EU FTA and that major decisions and details regarding the transition could only be decided towards the end of the two-year window set up by Article 50 of the Treaty of Lisbon. He was clearly arguing for a bespoke, unique transitional arrangement which would suit the UK in particular and which would suit our particular circumstances, rather than just an off-the-shelf model like the so-called Norwegian option (an EEA arrangement via EFTA) or a so-called Turkish option (a bilateral customs union). Theresa May, however, has conversely said that there will be a two-year transitional period (which will effectively just be full EU membership without any representation – the worst of all worlds) which will begin at midnight on 29th of March 2019 and which will end at midnight on 29th March 2021, roughly a year before campaigning for the general election begins in 2022.
It is good that we finally have some clarity on the transition and that it is been more clearly defined and time-limited. However, I and many others think that a two-year transition beginning in 2019 is excessive. Here transition is not a transition but it is instead a way of postponing Brexit for as long as possible. As no country has ever left the EU before, the EU has never had to grant a country a transitional deal from being a member to ceasing to be a member. This means that our current situation is unprecedented and that any transition, regardless of the details, will be unprecedented. There is a danger, as Peter Lilley has pointed out, that the government could spend more time discussing the details of a potential transitional arrangement than it could on discussing the details of a potential FTA. Peter Lilley pointed out months ago that, if the government secures the good FTA it is aiming for, it is hard to see why any transitional arrangement would actually be necessary. This is because we will be going from zero tariffs to zero tariffs on almost every good and because, as we have full legal and regulatory equivalence with the EU now which we will still have on day one after Brexit and so we will thus still have access to the incomplete European single market in services.
Individuals and businesses already have the certainty that they require now. They have known ever since Theresa May took office on 13th July 2016 that we will be leaving the EU and they have known that will be leaving the single market and the customs union since 17th January 2017. They’ve also known that every single EU regulation will be transferred into UK law if compatible. If a FTA is secured with the EU, talks will have to conclude by the end of October 2018 at the very latest to allow time for the European Parliament and all of the national and regional parliaments of the remaining 27 EU member states to ratify the deal. This means that businesses and individuals in both the UK and the 27 remaining EU member states will all know the details of the specific deal secured with the EU five months before it actually takes effect. Businesses and individuals have therefore had a year and three months to plan for our exit from the EU, eight months to plan for our exit from both the single market and the customs union and five months the plan for the specific FTA that is secured with the EU. This seems to me to be enough time for both planning and preparation.
Theresa May has clearly decided that some sort of transitional arrangement would be very helpful in providing clarity, certainty and continuity for businesses and individuals in both the UK and the 27 remaining EU member states. However, this transitional period need not last for more than a year and, if it were to last more than a year, would frustrate many voters as it would delay the implementation of the many great benefits of Brexit. It would delay our ability to negotiate sign and ratify our own independent and bilateral FTAs with fast-growing non-EU economies, delay control of our borders, delay control of our money, delay control of our laws, delay control of our regulations and delay control of our tariffs.
Theresa May insisted in the Lancaster House speech on 17th January 2017, on page 65 of the Government’s Brexit White Paper, in the letter invoking Article 50, in the Conservative Party’s manifesto and throughout the general election campaign and this was reiterated in the Florence speech that no Brexit deal at all is better than a bad deal.
I have written an article on why I strongly agree with the Government on this. The government must have exactly the same attitude with regard to the transitional arrangement if the EU says that it must last more than a year or if the EU says we must abide by all of its rules during that period including the implementation of all the new rules laws regulations and directives and including vast annual net payments and the freedom given to people then we should just accept the FTA with no transitional arrangement. This will give us real leverage and real bargaining power. This is because, as David Davis has himself pointed out, the transition is desired more by the businesses governments and individuals of the remaining EU member states then it is by the UK Government, UK businesses and individuals living and/or working in the UK. This is, in part, due to the fact that we have a record high trade deficit with the European Union – £78.1 billion last year.
The Government must, therefore, make it clear that no transition at all is better than a bad transition to ensure that we secure the very best transitional deal.