The chairman of the Treasury select committee has called on prime minister Theresa May to clarify her government’s stance on transitional arrangements following the completion of Brexit negotiations in 2019.
Speaking on Monday (9 January), Andrew Tyrie said UK businesses needed to know whether the new regime negotiated between the UK and the European Union would come into force immediately, or whether there would be a “standstill”.
He said the issue was “very important”, but “apparently little understood”.
Ms May has committed to triggering Article 50 by the end of March, beginning the two-year Brexit negotiations at the end of which Britian will no longer be a member of the European Union.
However, Mr Tyrie pointed out that at that time, the new regime does not necessarily have to apply immediately.
Under Article 50, the UK could apply to delay the implementation for a set period, to give businesses time to prepare for the new rules.
These so-called “transitional arrangements” can be agreed upon by the EU Council of Ministers through qualified majority voting, or QMV.
An extension to the two-year negotiation period, on the other hand, would require the unanimous approval of the Council of Ministers, making it more difficult for the UK to secure.
“A ‘standstill’ at the completion of the negotiations under Article 50 could provide certainty, both about the operating environment for a specified period, and about the point at which the ‘standstill’ would expire,” Mr Tyrie said.
Many UK businesses, he said, could “not afford to wait until the completion of the negotiations to find out what action they may need to take to preserve their shareholders’ interests”.
He said: “They make the reasonable point that, in the absence of a ‘standstill’, they may need to take pre-emptive action soon, with a cost in jobs and GDP to the UK."
Mr Tyrie also called on Ms May to provide clarity on whether or not the UK would seek to remain in the single market and the customs union.
On the former, he said: “Clarity on this point would enable Britain to start making a crucial point to our counterparties: the four freedoms of the single market [free movement of goods, services, labour and capital] are neither immutable nor irretrievably interdependent.
“In any case, the EU will have to address the consequences of flows of people within its borders on a scale not envisaged when the Treaty of Rome was signed in 1957.
On the customs union, Mr Tyrie said the choice facing the government was “relatively clearcut”.
“From inside a customs union, the UK would continue to share the EU’s common external tariff, leaving little scope for global leadership in free trade,” he said.
"From outside, the UK would have the freedom to pursue an independent trade policy, albeit at the cost of new administrative impediments to UK-EU trade.”
Mr Tyrie's comments come a week after the UK ambassador to Europe, Sir Ivan Rogers, resigned his post. He was replaced by Sir Tim Barrow.
In his farewell letter to staff, Sir Ivan warned of the challenges facing the UK Brexit negotiators.
He said: "Contrary to the beliefs of some, free trade does not just happen when it is not thwarted by authorities: increasing market access to other markets and consumer choice in our own, depends on the deals, multilateral, plurilateral and bilateral that we strike, and the terms that we agree."
james.fernyhough@ft.com
