‘No Swiss-style deal, and we can do better than Canada’s treaty as well’
Prime Minister insists that a bespoke trade agreement can be the cornerstone of a prosperous partnership
THERESA MAY yesterday pledged to be the EU’S “strongest friend and partner” upon leaving the European Union as she set out her vision for a “new era” after Brexit.
The Prime Minister said that the UK has never “felt totally at home” in the European Union because it is not “an integral part of our national story”.
But she said that after Brexit the UK and the EU can form a “partnership of interests, a partnership of values, a partnership of ambition for a shared future.
She abandoned previous threats to turn Britain into a Singapore-style, tax-cutting economy if it leaves the EU without a deal, instead saying that Britain would not seek to attain an “unfair competitive disadvantage”.
She also opened the way for the UK to pay the EU at least €20billion during a transition period, and opened the possibility of paying a significant divorce bill afterwards.
She said: “But as we meet here today, in this city of creativity and rebirth, let us open our minds to the possible; to a new era of cooperation and partnership between the United Kingdom and the European Union; to a stronger, fairer, more prosperous future for us all.”
A two-year transition period What she said:
The Prime Minister confirmed for the first time that the UK wants a transition period of “around” two years, meaning that the UK will not effectively leave the EU until 2021.
She proposed that during the transition period the UK will access the single market “on current terms”, meaning that it must accept continued free movement of EU migrants and the jurisdiction of the European Court of Justice.
The move proved contentious with Tory Eurosceptics, who want the UK to leave the European Union as quickly as possible so that it can strike new free trade deals.
The only significant change by Mrs May during the transition was for migrants who arrive after Brexit day to have to “register”. Those arriving after Brexit day are likely to be subject to a new migration system.
Mrs May said: “Businesses and public services should only have to plan for one set of changes in the relationship between the UK and the EU. So during the implementation period access to one another’s markets should continue on current terms.
“At the heart of these arrangements, there should be a clear double lock – a guarantee that there will be a period of implementation giving businesses and people alike the certainty, and a guarantee that this implementation period will be time-limited, giving everyone the certainty that this will not go on forever.”
The transition represents a significant win for Philip Hammond, the Chancellor, and a blow for Boris Johnson, who had initially favoured a sixmonth transition.
What she didn’t say:
While the Prime Minister said that the transition period would be “strictly time-limited” and will not go on “forever”, she did not set out exactly how long it would last.
She instead said it would last “around” two years, which Eurosceptic Tory MPS fear will open the door for a significantly longer transition period.
Cash for the EU What she said:
The Prime Minister said for the first time that the Government would “honour commitments” made during its membership, which in practice means the UK will pay at least €20billion during the transition period.
She said: “I am conscious that our departure causes another type of uncertainty for the remaining member states and their taxpayers over the EU budget.
“Some of the claims made on this issue are exaggerated and unhelpful and we can only resolve this as part of the settlement of all the issues I have been talking about today.
“Still I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. The UK will honour commitments we have made during the period of our membership.”
What she didn’t say:
The Prime Minister did not specify how much the UK will pay during the transition. The UK’S Budget contribuproposed tions will be €20billion, but theoretically Britain could pay more.
She also refused to rule out paying a significant Brexit divorce bill on top of the transition payments. The issue is the subject of a deep Cabinet split with Mr Johnson, the Foreign Secretary, arguing that the EU is owed less than they claim.
The future trade deal What she said:
The run-up to Mrs May’s speech was dominated by a row between the Foreign Secretary and the Chancellor, over a future trade deal.
Mr Hammond was said to favour a Norway or Swiss-style model, under which the UK would continue to pay into the EU Budget and accept free movement, while Mr Johnson wanted a Canada-style model, which would eliminate tariffs without budget contributions.
The Prime Minister was withering about the prospect of membership of the European Economic Area. She said: “European Economic Area membership would mean the UK having to adopt at home – automatically and in their entirety – new EU rules. Rules over which, in future, we will have little influence and no vote.
“Such a loss of democratic control could not work for the British people. I fear it would inevitably lead to friction and then a damaging re-opening of the nature of our relationship in the near future: the very last thing that anyone on either side of the Channel wants.”
However, she also criticised the Canada approach as too restrictive, saying, “we can do so much better than this”. The rejection of the EEA model was, however, enough for Mr Johnson to declare victory.
What she didn’t say:
The Prime Minister did not say what kind of trade deal she favours, instead calling on the EU to help her develop a “creative solution” rather than an offthe-shelf model. A Cabinet source said that the row over a trade deal has merely been deferred.
EU citizens’ rights What she said:
The Prime Minister resisted calls by the European Union for the rights of EU citizens living in the UK to be overseen by the European Court of Justice.
She instead proposed a compromise, under which British courts would “take account” of rulings by the European Court of Justice.
She said that EU citizens would be free to come and live and work in the UK during a transition period, but will have to register.
What she didn’t say:
Mrs May did not disclose future restrictions on EU migrants arriving after Brexit in March 2019. A leaked Home Office paper suggested they will be subject to quotas and caps.
Security What she said:
The Prime Minister made an “unconditional” commitment to defending the security of the European Union after Brexit. Mrs May said: “What we are offering will be unprecedented in its breadth, taking in cooperation on diplomacy, defence and security, and development.”
What she didn’t say
The position was in stark contrast to an implicit threat earlier this year that the UK could withdraw cooperation on defence and security if it does not secure a trade deal. That threat, made in a letter to the EU council earlier this year, now appears to be off the table.
‘ I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave’
‘A loss of democratic control could not work for the British people. I fear it would inevitably lead to friction and then a damaging re-opening of the nature of our relationship’