May admits UK cannot implement new trade deals during Brexit transition

Theresa May has acknowledged that Britain will be unable to implement any new trade deals during a Brexit transition phase, telling MPs that although the country would have left the customs union it would still be bound by its rules.

Reporting to parliament on last week’s EU summit, the prime minister said the EU’s negotiating guidelines showed a shared desire to make progress on a transition agreement.

However, Conservative MP Jacob Rees-Mogg called on Ms May to reject the EU’s guidelines, claiming that they would reduce Britain to the status of a vassal state or “serfs” during a transition period.

The prime minister said the transition period was designed to offer certainty to businesses, adding that she expected it to be agreed in the first quarter of 2018.

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Earlier, in a speech to the international affairs think tank Chatham House, Stefaan De Rynck, senior adviser to EU chief negotiator Michel Barnier, said it would not be agreed until a withdrawal agreement was ratified, probably in the autumn of next year.

Priority

Mr De Rynck said the impact of Brexit on Ireland would continue to be a priority for the EU during the second phase of negotiations. He said paragraph 49 was the key passage in the section on the Border in the joint report agreed by Britain and the EU last week.

“It says the UK will try to solve this issue in the context of the future relationship. It also says in the joint report the UK is leaving the single market and the customs union. And we have said if that is the case then frictionless trade is not possible.

“But, okay, let’s have that conversation. If that doesn’t work there is a commitment from the UK to come up with a specific solution for what is called the unique circumstances of Ireland. And, again, we would need to discuss that and see what the specific solution would be.

Full alignment

“And if that would not convincingly solve the issue of having the commitment of no hard Border, no physical infrastructure, no Border checks, which are commitments from the joint report, we have the solution of full alignment of current and future rules for the single market and the customs union for the North-South co-operation, the all-island economy and the Good Friday Agreement. So that is basically the design of the Irish solution for the future.”

Responding to a question from Labour's Hilary Benn, the prime minister confirmed that the agreement reached last week, including its commitments on Ireland, would be put into a legally-binding instrument.