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EU Chief Negotiator, Michel Barnier was in London this week to begin formal discussions with the UK, following the approval by EU-27 ministers of their position on transitional arrangements last week and the statement from Downing Street over the weekend that the UK will be “categorically leaving the customs union” after Brexit.

The EU is seeking a “status quo transition”, whereby the UK will be bound by all EU rules and in turn would maintain all their rights under EU membership, except that they will no longer have a say in the EU decision making process, but rather will be consulted on decisions on a “limited, exceptional and a case by case basis”. The UK will also be barred from acting against the EU’s interest, with the EU retaining the right to cut it off from single market benefits if it violates the exit agreement.

The EU’s proposal is for a transition period which would last until 31st December 2020. This marks the end of the current EU multi-annual budget, for which the UK has agreed to uphold its committed financial contribution. While it would be possible to extend this transition period further, it would likely require the UK to make a financial offer in order to continue to access the single market and customs union.

ICOS has long called for transitional arrangements which will ensure no changes to customs procedures, are clear and are supportive of the current trade and supply lines. We support the EU’s approach, although we seek flexibility in the length of the transition period should it be necessary. While there is the difficulty that any extension of transitional arrangements would only risk further pushing out uncertainty for businesses, there is a greater risk if the UK was leave the single market and customs union, without a new relationship agreement being in force.

The EU position also seeks to extend citizens’ rights to freedom of movement throughout the transition period (originally agreed in December to end in March 2019 – a position Downing Street has already taken issue with.

Once the UK leaves the EU in March 2019, it will automatically lose the benefits of the 700 market access and trade agreements the EU has with 168 third countries, although it will be required, as a participant in the single market, to uphold their access to the UK market. The UK has therefore begun speaking to these countries to out in place arrangements to roll over its rights to access their markets during the transition period.

Both sides aim to reach a political agreement on the transition before the next EU Council Summit, on March 22-23. At this meeting EU leaders then aim to formally agree to the deal, so that talks can begin on the framework of the future EU-UK relationship. Work has already begun internally in the EU27 on a position, which will be agreed by leaders in a supplementary document at the meeting.

Alison Graham

European Affairs Executive