UK urged to accept EU laws during transition

AN influential committee of MPs has thrown its support behind a Brexit transition agreement that sees EU laws continue to reign supreme, stressing that it would be a “price worth paying” for stability after March 2019.

The Treasury Select Committee is urging the British Government to put forward transition deal proposals that are straightforward and “simple” enough to “negotiate within a matter of weeks,” before businesses start activating their Brexit contingency plans that include moving operations and staff.

“Speed is of the essence,” Conservative MP and Treasury Select Committee chair Nicky Morgan said.

The UK Government should be prepared to accept transition deal terms offered by the EU, she said, adding that delays caused by “arguments over arcane points of principle” risk damaging the economy.

“This may well include accepting EU rules beyond those of the Single Market and Customs Union; and it is likely to involve retaining, on a temporary basis, the jurisdiction of the ECJ (European Court of Justice), and the direct effect and supremacy of EU law. That is a price worth paying for stability and certainty after 30 March 2019,” she said.

The recommendations come after a leaked copy of the EU’s draft guidelines for future Brexit talks detailed potential terms of a transition agreement.

The document, as reported by the Financial Times, suggested that the UK will have to comply fully with EU trade policy and not strike its own deals, even though it is due to fall out of EU agreements with more than 50 other nations when it leaves in 2019.

In addition, the European Council is set to look at the question of the ECJ’s jurisdiction in the case of a transition period.

The Treasury Select Committee said that for certain sectors including financial services, an effective “standstill” transition period – which would see the same or similar rules of trade applied immediately after the UK leaves the EU – would likely require a separate “adaptation period” once the terms of a future trading relationship are hammered out.

Without a similar agreement, the committee said there is a risk of a “no deal” Brexit that would force the UK back into World Trade Organisation tariff arrangements.

“The consequences of failing to reach an agreement are dramatic and damaging. Many businesses will begin to prepare for a ‘no deal’ outcome – moving jobs and activity, and incurring potentially unnecessary expenditure - early next year,” Ms Morgan said.