Britain can complete negotiating a free trade deal with the EU before Brexit says May

Theresa May leaves 10 Downing Street, London ahead of prime minister's questions at Westminster yesterday PICTURE: Philip Toscano/PA
Theresa May leaves 10 Downing Street, London ahead of prime minister's questions at Westminster yesterday PICTURE: Philip Toscano/PA

Theresa May has said Britain can complete negotiating a free trade deal with the EU before Brexit.

The British prime minister said she was working to get a full deal negotiated before Brexit day, but acknowledged it cannot be signed until after the UK's withdrawal, expected on March 29 2019.

But her comments come after EU chief negotiator Michel Barnier indicated he was working towards reaching a political agreement on the future UK/EU relationship by October 2018, in time for it to be published alongside a new treaty covering withdrawal and transition arrangements.

His comments made clear that he envisages a document falling some way short of a full free trade agreement of the type being sought by Mrs May.

Mrs May also said she still sees a post-Brexit transition period lasting "around two years", potentially putting her at odds with the European Commission, which has agreed it should finish at the end of 2020.

Under questioning at the Commons Liaison Committee, Mrs May said she believes negotiations on a free trade agreement can be completed before Brexit day.

"That is what we are working to and that is what I believe we can do," she said.

"I and others have made the point in the past that of course we start off at a different point from other third countries... because we're already a member and already trading with them on a particular basis.

"As you will know full well, we can't legally sign the new trade agreement with the European Union until we're a third country, until we're out of the European Union – March 29 2019 – but I believe we can negotiate that arrangement in that time."

She added: "The reason I'm confident that we can do this within the time concerned is because we start off from a different point.

"So we haven't got a situation where country A is coming to negotiate with the EU not having had any arrangements with the EU before.

"We come form the point where we're actually a member of the European Union, we're operating on the same basis at the moment, and therefore I think that starts us off from a different position in terms of our negotiations on trade in the future."

Mrs May's comments came as the commission put forward proposals for a transition period which would last from Brexit day on March 29 2019 to the end of December 2020.

The 21-month transition would align the UK's final departure with the end of the EU's seven-year budget, to which Britain contributes.

Downing Street said the EU plan was a matter for negotiation.

"The commission is setting out their negotiating position and those negotiations will get under way shortly," Mrs May's official spokesman.

Mr Barnier said talks on the transition will begin in earnest after a January 29 meeting at which the 27 remaining members are expected to approve negotiating guidelines agreed by the commission in Brussels on Wednesday.

The guidelines make clear that the commission expects the UK to continue to observe EU rules and regulations during the transition, while having no say over them.

Arrangements could be made for the UK to be "consulted" on the allocation of annual fish quotas under the Common Fisheries Policy but Britain will not take part in the decision-making process, Mr Barnier said.

He appeared to indicate that Spain would have a veto on any transitional arrangements covering Gibraltar, saying decisions on the issue would be "made for the 27, unanimously, by consensus".

But Mrs May told prime minister's questions in the House of Commons: "We are not going to exclude Gibraltar from our negotiations from either the implementation period or the future agreement."

Separate negotiations on the post-Brexit relationship between the EU and UK will be presented for adoption by the leaders of the remaining 27 EU states at a scheduled European Council summit in March, Mr Barnier said.

This could lead to a political declaration in October 2018 outlining the shape of the future relationship, but falling some way short of the full free trade agreement of the type being sought by Mrs May.

Mr Barnier warned that "logically speaking", when the UK leaves the European institutions in March 2019, it will no longer be covered by around 750 international agreements – including dozens of free trade deals – negotiated by the EU while it was a member.

Responding to Mr Barnier's suggestion that the kind of free trade agreement likely to be on offer to the UK will not include financial services, Mrs May told the committee: "We are going into a negotiation.

"What I would say is that the City of London is obviously important to us here in the UK, but actually it is of significant importance to the rest of the EU as well.

"I think as we come into discussions, there will be a greater recognition of the role the City plays in financial provisions for Europe as a whole, not just the UK."

She added: "What we are going to have is a negotiation that will look at different areas, and we are very clear that will be goods and services."

Mrs May indicated that, while the UK would cease automatically to adopt the rules and regulations of the EU, it would continue to "align" its standards in areas where both share the same objectives.

In some cases this would mean adopting the same regulations, but in others it would mean pursuing the same goal by different methods, she said.

On nuclear safety following the UK's withdrawal from Euratom, "we will be leaving a particular institution but continuing to operate on a basis that will enable people to have confidence in what the UK is doing", she said.

Mrs May rejected suggestions from SNP MP Angus MacNeil that she had been forced to "beg" for a transition period after losing several weeks' negotiating time to the snap general election.

"I haven't begged the European Union for two more years," said the PM.

"This is not two more years to negotiate with the EU. This is two years when practically both businesses and governments will be able to put in place the changes necessary to move from the current relationship to the future partnership we will have."

Although she did not formally propose an "implementation period" until her speech in Florence in September, she claimed her reference to the need for a "smooth and orderly" Brexit in an earlier speech at Lancaster House in January made clear that this was what she had in mind.

Mrs May also rejected the idea that leaving the EU would necessarily mean increased trade barriers with 94 countries which are either members of the bloc or have trade agreements with it.

She suggested that some of the trade agreements with outside countries could simply be "rolled over" to the UK on withdrawal.

And she said: "Our aim is to ensure not that we see new trade barriers being put in place for the UK, but that we see improved trade relationships throughout the world."