The UK will not be able to start talks on a new trade deal with the European Union until Brexit becomes a reality, according to Cecilia Malmström, the EU trade commissioner.
She told the BBC that, under EU law, the bloc cannot negotiate a separate trade deal with one of its own members, so negotiations on trade arrangements could not start until the UK has left – a process that could take two years. It is also against EU law for a member to negotiate separate trade deals with outsiders, which also means the UK could not do this after the exit is finalised.
“There are actually two negotiations. First you exit, and then you negotiate the new relationship, whatever that is,” she said. "The referendum – which, of course, we take note of and respect – has no legal effect. First there has to be notification, which the next prime minister will do, I hope swiftly. And then that process can start."
Ms Malmström said that, after Brexit had been finalised, the UK would become a “third country” in EU terms, meaning trade would have to be carried out under World Trade Organisation rules, including the imposition of tariffs, until Britain and the EU could reach a new trade deal – something that could take up to a decade.
She accepted that such a situation would mean that both the economies of the UK and the remaining 27 members of the EU would be damaged during this interim period.
Despite the commissioner's remarks, government sources in London said on Thursday that they still expected Brexit talks to run in parallel with negotiations over a trade deal. "EU law notwithstanding, it would be in nobody's interest for talks on a new trade arrangement to be suspended in a vacuum for up to two years," said one official.
Liam Fox MP, a prominent 'leave' campaigner during the referendum and a candidate to replace David Cameron as prime minister, went further and described Ms Malmström's comments as “bizarre, stupid, preposterous and ridiculous”. He said the conduct of Brexit and trade negotiations should be left to the political heads of EU nations, not European Commission officials.
Ms Malmström had earlier told a meeting of the Atlantic Council in Washington that she was still hoping the EU and the United States could still complete negotiations for a free trade deal in the next few months, despite Britain’s vote last week to leave the bloc.
She said that the EU was proceeding with Transatlantic Trade and Investment Partnership (TTIP) on behalf of all members of the EU, including Britain.
“We will do whatever we can to make sure that we make as much progress as possible in the coming month and, if possible, conclude it before the Obama administration leaves office,” Ms Malmström said. “That is still the Plan A and that has not changed even if the (British) referendum is there.”
Some believed that the UK's referendum decision and subsequent discussions within the EU would dash hopes for completing TTIP in the final months of Mr Obama’s presidency but Ms Malmström insisted that the TTIP negotiations would survive.
“There are a lot of uncertainties related to Brexit. We can’t answer them now we will have to wait until we see a clearer picture,” she said. “But for now and for the immediate future, the United Kingdom is a member of the European Union, and we negotiate this on behalf of all 28 members.”
Read analysis of what the vote to leave the EU may mean for for the global mobility industry in Brexit is a reality – a new era for global mobility? by Relocate Global's managing editor, Fiona Murchie.
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