EU Is Open to Brexit Transition Lasting Beyond 2020, Sources Say

  • Official negotiation position will say period must be limited
  • U.K. also only wants short arrangement before full trade deal

The Mounting Brexit Troubles for Theresa May

As the European Union presents its plan for the U.K.’s Brexit transition, many governments are willing to push the expiration date beyond the December 2020 deadline they’ll set out as their official stance.

During internal discussions in Brussels, several nations, including Hungary, Sweden and Ireland, lobbied for a more flexible approach to the length of the transition phase than the one finalized by diplomats this week, three people familiar with the talks said. 

Privately, many EU officials believe the transition period will be prolonged as it becomes obvious to the U.K. government that the type of trade deal it wants will be difficult to reach within the the next three years.

If adjustments to the Brexit transition “timetable turn out to be required, I believe it would only be common sense to make them,” Irish Foreign Minister Simon Coveney said Thursday during a speech in Dublin.

The bloc’s conditions for the transition period, which are likely to be accepted almost wholesale by the British government, represent EU membership in all but name, with the country relinquishing the power to vote or influence decisions. While business would be pleased at the prospect of an extendable grace period that would give them time to prepare for the new regime, it would reignite fears among Brexit backers that the country isn’t really leaving the EU at all.

Read more: May Rebukes Hammond For Suggesting Only Modest Brexit Changes

The U.K will remain subject to rulings by the European Court of Justice -- a taboo for U.K. euroskeptics -- and will have to allow EU citizens to live and work in the U.K. as they do now. Britain will also keep up its payments into the EU budget during the grace period, which businesses are desperate to pin down as soon as possible.

The EU has been working on its position for the transition period for nearly two months. It was finalized by diplomats on Wednesday and will be signed off by representatives from the 27 governments at a meeting in Brussels on Monday. Talks with the U.K. will begin shortly afterwards.

According to a draft of the EU’s position, the 27 remaining governments will say the transition should be “clearly defined and precisely limited in time,’’ and “should not last beyond Dec. 31, 2020.’’ But many countries are willing to be much more flexible, the people said. Germany led the group of countries preferring to set out a strict deadline, one of the people said.

As it stands, the wording -- "should" rather than "shall" -- leaves wiggle room, according to another European diplomat, who expects both sides would agree to an extension if it became clear that more time was needed to complete a trade deal.

Read more: Davis Says Britain Wants a No Change Brexit, Risking Tory Anger

While the U.K. government says it aims to have the bulk of a future trading relationship agreed before it leaves the bloc in March 2019, many British officials and the EU think the two sides will spend most of the transition negotiating the future trade deal.

Britain doesn’t rule out the transition being extended in certain sectors to allow the easier arrangements to be implemented first, a U.K. official said. Some on the EU side would be comfortable with the arrangement lasting indefinitely, one of the people familiar with the EU discussions said.

While U.K. officials are relaxed about how long the transition phase could last -- and Prime Minister Theresa May has kept it vague by referring to a period of around two years -- a very prolonged transition would be unacceptable to parts of the Conservative Party.

Hard-line Brexit backer Jacob Rees-Mogg has already expressed alarm at the transition plans. He told Brexit Secretary David Davis this week that forcing the U.K. to accept the rule of the ECJ and abide by the regulations of the single market during the transition period would make Britain “a vassal state.”

Friday Speech

On Friday, Davis will set out his plan for a status quo transition, which will see the “current terms” of EU membership of the single market and customs union extended. 

The U.K. must have the power to negotiate and sign new trade agreements with countries outside the EU during the period after exit day in March 2019, Davis will say. These deals won’t enter into force until after the transition period ends. “Participating in a customs union should not preclude us from formally negotiating — or indeed signing — trade agreements,” he will say on Friday.

— With assistance by Emma Ross-Thomas, Dara Doyle, and Tim Ross

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