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Institute of Directors spells out Brexit transition options

04 Aug 2017

Mid shot of cranes and trading ships in a dock

The Institute of Directors has today called on the Cabinet to come to a collective decision on how to approach a transitional agreement as soon as possible. The Chancellor has in recent weeks spoken of the need for interim arrangements between ‘exit day’ in March 2019 and the point at which a new trading arrangement with the EU is completely finalised. There are, however, different options for transition and for businesses to be able to plan ahead, they need to know what route the Government will pursue, the IoD said.

In an new report, Bridging the Brexit Gap: Options for transition, the business group puts forward a range of options for a business-friendly transition to consider, outlining practical details and potential trade-offs between them. These include:

  • Prioritising an agreement to extend the Article 50 deadline – on paper this would be the simplest solution for all, giving the UK government more time to negotiate a new trading relationship with the EU as part of its withdrawal agreement, and would be the easiest to square with the World Trade Organisation. It would be a very politically challenging option, however, both for the EU and parts of the House of Commons
  • Membership of the European Economic Area – this is an ‘off-the-shelf’ model, which would give the UK a degree of autonomy in implementing EU rules. It is not straightforward, however, and tight time constraints could complicate negotiations
  • Agreement to prolong the application of EU law (the ‘acquis’) – This has been cited as an option by the EU Council in its original negotiating guidelines, and could work more easily with time limitations. It is more comprehensive than other options, but likely to leave the UK with less control or input than the EEA option
  • Transitional customs agreement – To accompany the above options and replicate the benefits of being in the EU Customs Union, which the UK likely is have to leave upon exit. It includes maintaining Common External Tariff alignment and continuing to transpose EU customs & VAT legislation

Allie Renison, Head of EU and Trade Policy at the Institute of Directors, said:

“Businesses will be pleased that Ministers increasingly acknowledge the importance of a transition period in the Brexit process to minimise economic disruption. There is now a window of opportunity for the Government to flesh this out as a policy objective in order to reassure companies that a smooth and orderly Brexit is on the cards. 

"Prioritising interim arrangements and thereby mitigating the risks of EU exit means the eventual opportunities aren’t diminished by short-term chaotic cliff edges. The IoD has put forward this range of options for transition in the hopes that it sparks a proper debate on the practicalities of how best to Brexit. We look forward to engaging with both the Government and the EU on these proposals.”

Bridging the Brexit Gap: Options for transition 

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