UK Politics

How can UK avoid Brexit 'cliff edge'?

Ship freight container transporters move amongst freight containers on Tilbury Dock Image copyright Getty Images
Image caption The UK will be looking to strike new international trade deals once it leaves the EU

When Brexit talks formally begin, the UK will have two years to negotiate its departure from the EU.

Ministers hope to have parallel talks about our future trading relationship during that period - but what happens if they take longer?

To avoid a "cliff-edge" scenario, the chairman of the Brexit select committee in the Commons, Hilary Benn, is among those who has argued for a transitional agreement.

What might that look like? One possibility would be for the UK to seek membership of the European Economic Area (EEA) like Norway, Iceland and Liechtenstein.

That would allow the UK to trade goods and services freely with the EU in exchange for financial contributions and the continued acceptance of free movement of people.

But it would take the UK out of the common agriculture and fisheries policies and the customs union, allowing it to strike its own trade deals with non-EU countries.

To join the EEA, ministers would first need to apply for membership of the European Free Trade Association (EFTA).

At a meeting of EFTA countries in Geneva, the current chair, Iceland's foreign minister Lilja Alfredsdottir, told the BBC her country would be keen to see a UK membership application, even if only on a temporary basis.

"From an Icelandic point of view, yes we would welcome that," she said, "because I believe EFTA would be stronger with the UK inside".

Norway's trade minister, Monica Maeland, said there had been "no signal" from the UK that it would want to join EFTA.

If the UK did submit an application, she said there would be a willingness in EFTA to discuss it.

Ms Maeland also indicated that she had discussed the potential need for the UK to have transitional arrangements with Lord Price, who is a minister in Liam Fox's new Department for International Trade.

"That was something Price was talking about... what are we going to do in the meantime? So, we are hoping to discuss several solutions."

Yet the UK government has not yet formally acknowledged that forging new trading relationships might have to be achieved in phases.

Downing Street declined to confirm if that's what the prime minister meant when she spoke of avoiding a "cliff-edge" in her address to the CBI.

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