The UK would like to ask Brussels to let it remain in dozens of the European Union’s free trade deals, other preferential trade arrangements, and hundreds of international agreements during the two-year transition period after Britain leaves the EU, two officials involved in the Brexit talks have told BuzzFeed News.
Trade experts believe the move would represent an important shift towards a more realistic stance compared with earlier iterations of Britain’s negotiating position.
Liam Fox, the secretary of state for international trade, boasted at the Tory party conference in October that the UK would easily replicate the EU's existing free trade agreements before leaving the EU.
"I hear people saying 'Oh, we won't have any [free trade agreements] before we leave.' Well, believe me, we'll have up to 40 ready for one second after midnight in March 2019," Fox told a party fringe event in Manchester.
However, asking Brussels to temporarily retain the UK's place in these agreements during the transition period would be fraught with political and legal obstacles – and, crucially, would in effect require a gesture of goodwill from the EU's remaining 27 member states because, technically, Britain's place in hundreds of international agreements and arrangements ends on Brexit day.
After publishing a paper about future customs relations with the EU last August, the UK government stated that its goal was to replicate the EU’s existing free trade agreements (FTAs) and other arrangements by the time the UK exits the EU in March 2019.
At the time, raising questions among trade experts, the Department for International Trade (DIT) told BuzzFeed News that the government didn’t have a backup plan if it failed to reach the necessary agreements with dozens of countries outside the EU to replicate the existing deals. The government was so confident of success, it said it didn’t feel it needed a contingency plan.
Since those plans were so assuredly set out there have been a number of media reports suggesting heightened worries within the government about the difficulties it is facing with replicating the agreements.
As a member of the EU, Britain is party to FTAs with some 50 countries, such as South Korea and Canada, and as part of Brexit needs to also renegotiate more than 750 international treaties, on matters ranging from aviation and data sharing to nuclear accords and procurement, including nearly 300 other trade arrangements.
On top of the complexity that comes with the sheer number and diversity of the agreements the UK needs to sort out, government insiders suggest there is now “growing alarm” about the legal status of these deals once the UK exits the EU and enters the transition period next year because the UK’s place in hundreds of agreements falls away on Brexit day.
Michel Barnier, the EU’s chief Brexit negotiator, warned before Christmas that, legally speaking, once the UK stops being a member of the EU in March 2019 it will no longer be covered by the EU’s approximately 750 agreements.
Remaining party to the EU’s existing agreements during the interim phase would effectively give Britain more time to deal with replicating the arrangements – and, government sources point out, would also mean that businesses and public services would only have to plan for one set of changes in the relationship between the UK and the EU, as aspired to by prime minister Theresa May in her speech in Florence last September.
Trade experts believe this path is more feasible than trying to replicate the agreements over the next 14 months.
“This is a sensible approach. The idea that we would have all 40 or so agreements replicated and ready to go in time for March 30 was always little more than a ministerial pipe-dream,” Sam Lowe, research fellow at the Centre for European Reform, told BuzzFeed News.
Lowe added: “While convincing the EU that assisting the UK in carrying these over through the transition is of mutual interest will not be easy, it is the only option available to the UK.”
Government officials would not be drawn on the UK’s negotiating objectives for the transition period, but a DIT spokeswoman said: “The government is committed to securing continuity in its current trade and investment relationships, including those covered by our membership of the EU, so we can provide certainty and stability for our businesses, consumers, and trading partners.
“Discussions with trading partners will take account of the UK–EU negotiations on an implementation period. The reactions from our partner countries have so far been positive, and we will continue to consider each EU trade agreement on a case-by-case basis.”
Retaining participation within the EU’s existing arrangements after 2019 will, however, not be straightforward.
Any approval to allow the UK to stay party to the EU’s trade deals and other international agreements during the interim period will need to be signed off by the EU’s remaining 27 member states – and they have yet to set out their position on this specific issue.
According to a report in the Financial Times published on Monday, the EU27 are set to demand that the UK seek authorisation during the transition period to enter agreements to replicate the lost trade deals.
An EU official told BuzzFeed News: “Technically, the UK’s place in these agreements lapses in 2019, and ultimately it’s up to the UK to replicate them. If the UK asks to roll over the agreements during the transition, it will be a political decision for the 27.”
But a senior eurozone government official predicted that “nobody will die in the trenches on this [issue].”
Still, it’s not easy to see what legal framework would be needed to allow for the UK to remain in existing arrangements while it seeks to put in place new ones.
“Working out how to justify this legally will be challenging – the UK will be a third country following Brexit, despite the transition, and to all extents and purposes no longer covered by the EU’s FTAs – but I think doable,” Lowe said.
“It essentially boils down to the EU and UK staring down the partner countries, providing a convincing legal justification, and saying ‘this is how it is going to be’. Even if they don’t like it – and there’s little reason to think they wouldn’t – the partner countries would find it nearly impossible to prove harm. To all extents and purposes everything will have stayed the same.”
Meanwhile, adding an additional layer of complexity to the dealings, the EU would continue to negotiate new trade deals with the likes of Japan, Australia, New Zealand, and the Mercosur countries of Argentina, Brazil, Paraguay, and Uruguay – and it’s unclear what status and scope the UK would have in shaping these.
A spokesperson at the Department for Exiting the EU said details of the implementation period would be a matter for negotiations. They insisted the UK’s position had not changed since the prime minister’s Florence speech.