Theresa May will tell MPs the UK will look to sign trade deals with non-EU countries and prepare new immigration controls during a transitional deal with Brussels.
Having seen EU leaders last week declare “sufficient progress” in Brexit negotiations in order to move on to the next phase of talks, the Prime Minister will outline her aims for her wished-for implementation period.
The Government hopes the terms of a transitional deal will be agreed by March next year, with talks to begin in January.
But, in appearing to set out her red lines for the discussions to come, Mrs May could be preparing the ground for a new battle with Brussels.
The Prime Minister will tell the House of Commons on Monday of a “shared desire of the EU and the UK to make rapid progress” in agreeing the terms of what is expected to be a two-year Brexit transition period.
“This will help give certainty to employers and families that we are going to deliver a smooth Brexit,” she will say.
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The Prime Minister will also suggest – despite leaving both – that Britain will trade on the same terms as the EU’s single market and customs union during the time-limited spell.
At the weekend, Chancellor Philip Hammond was attacked by Brexiteers for suggesting a transition period will “replicate the current status quo” of the UK’s trading relationship with the EU.
Speaking in the Commons, Mrs May will add: “As I proposed in Florence, during this strictly time-limited implementation period which we will now begin to negotiate, we would not be in the single market or the customs union, as we will have left the EU.
“But we would propose that our access to one another’s markets would continue as now, while we prepare and implement the new processes and new systems that will underpin our future partnership.
“During this period we intend to register new arrivals from the EU as preparation for our future immigration system.
“And we will prepare for our future independent trade policy by negotiating – and where possible signing – trade deals with third countries, which could come into force after the conclusion of the implementation period.”
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Mrs May’s promise of negotiating and even signing trade deals with non-EU countries before 2021 will satisfy her Cabinet’s Brexiteers, including International Trade Secretary Liam Fox who has prioritised agreements with the US, Australia and New Zealand.
However, it could spark fresh tensions with Brussels after EU leaders last week agreed their negotiating guidelines for a transition period, which includes Britain signing up to all existing and newly-created EU rules during the period, but losing voting rights.
The bloc also wants the UK to remain under the jurisdiction of the European Court of Justice and comply with EU trade policy – which could preclude the UK signing trade deals with third countries.
Mrs May’s vow to register new EU arrivals might also ruffle feathers, with the European Parliament’s Brexit coordinator Guy Verhofstadt having previously branded such a scheme during a transition period “out of the question”.
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Sky News’ Europe Correspondent Mark Stone said: “This will be a key fight of the next phase: the EU side has been explicit that any participation in it means the four freedoms – and an inability to sign separate trade deals – are all part of the package.”
In an interview with Prospect magazine, the EU’s chief Brexit negotiator Michel Barnier claimed an interim period cannot last longer than two years “for legal reasons”.
He also repeated his warning “there won’t be any cherry picking” for Britain once Brexit talks turn to negotiations on the future EU-UK trading relationship.
The European Commission official said: “We won’t mix up the various scenarios to create a specific one and accommodate their wishes, mixing, for instance, the advantages of the Norwegian model, member of the single market, with the simple requirements of the Canadian one. No way.
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“They have to face the consequences of their own decision.”
Mrs May has previously said the EU and UK can “do so much better” than relying on a Norway or Canada-style agreement for a future trade deal.