Trade

Commission debates extending Brexit transition

The European Commission has not ruled out extending a Brexit transition period beyond 2020, the deadline set by chief negotiator Michel Barnier in December.

Ambassadors from a number of EU countries raised the possibility of a longer transition at a meeting in Brussels on Wednesday, according to four diplomats.

“The Commission didn’t rule out that it could be prolonged,” said a senior diplomat who was in the room.

British Prime Minister Theresa May called for a two-year transition period in a speech in Florence in September in which she also said the U.K. would continue to make annual payments into EU budget during this time.

Barnier said last month it would be logical for the transition to end on December 31, 2020 because that was the last day of the EU’s current seven-year budget.

The U.K. government wants to secure agreement on a transition by March 2018 in order to provide business with clarity about what happens when Britain is due to leave the EU in March 2019.

But awkward questions remain: What happens if a final deal on trade and the U.K.’s future relationship with the EU is not completed by the end of a transition period? Won’t the likely transition terms just create another cliff edge for businesses and regulators a bit further down the line?

At Wednesday’s meeting, some member countries asked whether the possibility of an extension should be included in the text of the guidelines, but the Commission said this would send the wrong message, another diplomat said.

A third senior diplomat confirmed the account, adding that the Commission pointed out an extension could be complicated because it would overlap with the new European budget which starts in 2021.

However long the transition, the EU27 are united in the view that the U.K. must continue to abide by EU law and contribute to the budget during this period.

“If there’s an extension that overlaps with new budget, London will have to pay,” one of the diplomats explained.

The Commission also refused to set a deadline for the implementation of what was agreed in the first part of Brexit talks on the financial settlement, citizens’ rights and Ireland, several diplomats said.

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