Global powers lobby to stop special Brexit deal for UK
One EU source close to the talks said: “We have been approached by a number of [non-member] countries expressing concerns and making it clear that it would constitute a major problem for them if suddenly the UK were to get better terms than they get.”
The official said that once the UK is out of the single market and customs union in March 2019, there could be no replication of the terms of the current trading relationship, or anything close to it, and no special treatment.
“It is not just an indication of some strange rigid principle. It is because things won’t work,” he said.
“First and foremost we need to stick to this balance of rights and obligations, otherwise we will be undermining our own customs union and single market. Second, we cannot upset relations with other third countries,” the official said.
“If we were to give the UK a very lopsided deal, then the other partners with whom we have been engaging and who entered into balanced agreements would come back and question those agreements.”
The comments underline the difficulties May and the government will face as the Brexit talks enter phase two in the new year. She and her ministers have repeatedly said they are seeking a bespoke deal that will allow “frictionless” trade with the EU and as much access as possible to the single market.
The EU warnings came as senior EU and UK diplomats predicted it would be impossible for London and Brussels to complete any new trade deal within the two-year timeframe May envisages for a transition period after the UK leaves in March 2019.
Lord Kerr, the former diplomat who drafted the article 50 process for leaving the EU, said: “The chances of concluding even a modest deal [like the EU- Canada deal] and getting it ratified in all 27 [EU member] countries, during a two-year standstill period, verge on zero. So the cliff-edge still beckons: the standstill only postpones it.”
Nick Macpherson, former permanent secretary at the Treasury, said: “Trade agreements are long and complex and invariably take more than five years to agree. It is therefore very likely that the transitional period after the UK leaves the EU will last until 2024.”
Any extension of the transition agreement beyond two years will further alarm pro-Brexit MPs already uneasy at having to comply with EU rules, including free movement of people and the European Court of Justice, after 2019.
Nicky Morgan, the Conservative MP who chairs the cross-party Treasury select committee, said there was already pressure from business for a longer transition period and more legal clarity over how it would work.
“Definitely, people in the City are calling for more than two years. I can see why Theresa May is setting two years as a limit for political reasons. But these are things that will need to be unpicked as we move in to phase two,” she said.
While the deal struck by May received a favourable initial reception from Tory MPs and ministers, there were increasing signs that pro-Brexit figures in the party believe too much has been ceded to Brussels in the first round of negotiations. One prominent Tory Brexiter said: “We are being quiet for now. But, yes, we are worried.”
There was also a backlash among some Tories after Michael Gove appeared to undermine the prime minister by saying any deal could be undone later by voters in an election. The environment secretary was accused of trying to appear as a “king across the water” and gearing up for another tilt at the leadership.
Anti-Brexit Tory MP Anna Soubry said: “I was a bit disappointed at what looked like a bit of a rowback. I think it is important that everybody puts their own ambitions to one side and unites behind Theresa May. We should be seeking to build a consensus – one we appeared to have on Friday morning.”
Meanwhile, May, who will make a statement to parliament on the deal tomorrow, could also face her first defeat over her Brexit legislation this week, as rebels prepare to force her to hold a “meaningful vote” over the UK’s EU exit deal. Tory ministers fear they may not be able to prevent a defeat without further concessions.