Britain '˜may be paying into EU budget for next decade in Brexit divorce', warns top MEP

A road traffic sign is in front of the Union Jack and the European Union flag hanging outside Europe House in Smith Square, London. British citizens should be able to choose to keep various benefits of EU membership including the freedom of movement after Brexit, the European Parliament's chief negotiator has said. PRESS ASSOCIATION Photo. Picture date: Friday March 10, 2017. Guy Verhofstadt said he hoped to convince European leaders to allow Britons to keep certain rights if they apply for them on an individual basis. See PA story POLITICS Brexit. Photo credit should read: Yui Mok/PA WireA road traffic sign is in front of the Union Jack and the European Union flag hanging outside Europe House in Smith Square, London. British citizens should be able to choose to keep various benefits of EU membership including the freedom of movement after Brexit, the European Parliament's chief negotiator has said. PRESS ASSOCIATION Photo. Picture date: Friday March 10, 2017. Guy Verhofstadt said he hoped to convince European leaders to allow Britons to keep certain rights if they apply for them on an individual basis. See PA story POLITICS Brexit. Photo credit should read: Yui Mok/PA Wire
A road traffic sign is in front of the Union Jack and the European Union flag hanging outside Europe House in Smith Square, London. British citizens should be able to choose to keep various benefits of EU membership including the freedom of movement after Brexit, the European Parliament's chief negotiator has said. PRESS ASSOCIATION Photo. Picture date: Friday March 10, 2017. Guy Verhofstadt said he hoped to convince European leaders to allow Britons to keep certain rights if they apply for them on an individual basis. See PA story POLITICS Brexit. Photo credit should read: Yui Mok/PA Wire
Top EU officials are taking a tough line as Brexit negotiations approach. Chris Burn reports from the European Parliament in Strasbourg as the battle lines are drawn.

Britain and the European Union are heading for “the mother of all divorce cases”. But there is the looming possibility the UK could end up as an EU member state in all but name for years to come.

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David McAllister, chairman of the European Parliament’s committee on foreign affairs and a German MEP known as ‘Angela Merkel’s man in Brussels’, says it is “entirely impossible” for a deal on Britain’s future trading relationship with the EU to be settled in the two-year departure deadline set by Article 50.

He believes instead that a transitional arrangement - potentially lasting up to a decade - will be required to prevent both the UK and EU suffering from the effects of a ‘cliff-edge Brexit’ in which no deal on future trading arrangements is done in time.

McAllister, who has been named by as one of the 50 most influential people on the Brexit process by the Euractiv Foundation, says such a deal would involve Britain remaining a temporary member of the single market and continuing to pay into the EU budget while a new arrangement is finalised.

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Boris Johnson has said the UK would be “perfectly ok” without a deal, while Theresa May has previously indicated she would walk away from negotiations rather than accept a “bad deal” from the EU.

While not singling out any individuals, McAllister believes British politicians need to be more honest with voters about the likely need for a transitional arrangement.

McAllister is the son of a wartime British Army captain who fought against the Nazis and is deeply proud of his Scottish heritage, with a picture of himself with his beloved Glasgow Rangers football team taking pride of place on the wall of his Strasbourg office in the European Parliament.

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But the politician is clear where his loyalties lie when it comes to Brexit negotiations. “There will no be aggression, no spirit of revenge, no threats. The British will remain our friends and partners. But on the other hand there will be no naivety.”

McAllister says a withdrawal agreement on what, if anything, Britain needs to pay before leaving, needs to be concluded by October 2018 to allow time it to be ratified by other EU member states and the European Parliament.

But he warns that the ongoing process of agreeing the Comprehensive Economic and Trade Agreement (CETA) deal with Canada has taken eight years so far without conclusion and setting out the future relationship with the UK will be much more complex.

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“There are still some politicians who say they believe you can get the future relationship negotiated in two years. That is entirely impossible. CETA negotiations started in 2009 and we are now in 2017.

“We will need transitional arrangements. A cliff-edge Brexit is in nobody’s interests - the EU or the UK. It is in the interests of both sides that we get a smooth withdrawal from the EU.

“We have a good relationship with other countries that are not in the EU like Norway, Iceland and Switzerland.

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“It is not about punishing the British but it is also not about giving them favourable treatment. If you leave the EU, it must be under terms and conditions that fall short of full membership. You can’t have more rights than a member state. The deal will not be better than the status quo.”

He says the uncharted territory of Brexit means nobody can say how long a transitional arrangement will have to be in place for, but strongly believes one will be necessary.

“The key is that the UK remains part of the single market during transition in order to allow businesses continuity. This would mean EU regulations still apply and the UK would still contribute to the EU budget.”

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His comments come in a week where European Council president Donald Tusk, warned that the EU “will not be intimidated by threats” that no deal would be good for Britain.

Tusk said: “I want to be clear that a ‘no deal scenario’ would be bad for everyone, but above all for the UK, because it would leave a number of issues unresolved.”

At almost the exact time Tusk made this point at the European Parliament on Wednesday, back in the UK Brexit secretary David Davis told MPs a full assessment of the potential economic impact of Britain leaving the EU without a trade deal has not been carried out by the Government.

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He said he may be able to quantify such details “in about a year’s time” - but insisted a no deal scenario would be “not as frightening as some people think”.

Someone with a far more bullish view of the Brexit process is Mike Hookem, one of Yorkshire and Humber’s Ukip MEPs, who believes a trading deal could be done “in months”.

Hookem says that if that fails then rather than pursuing a transitional arrangement, the UK should simply repeal the 1972 European Communities Act to end its political union with the EU and fall back on World Trade Organisation rules.

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“This banging on about Canada is a smokescreen. We could sort it out a lot quicker than that, could repeal the 1972 Act and go on to WTO rules, just like the other countries in the world that all act under WTO except the 27 in this place. It is complete rubbish to say we couldn’t work under those rules.”

However, the Government has previously said repealing the 1972 Act before leaving the EU would be “a breach of international and EU law” and “could create a hostile environment in which to negotiate either a new relationship with the remaining EU member states or new trade agreements with non-EU countries”.

Hookem says EU-based businesses want a deal which doesn’t affect their trade in Britain. “The big companies, the Mercedes and BMWs, will say to their Governments you better come up with a deal.

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“They have got a big vested industry in their biggest customer - which is Great Britain. I just see a bright future for the country. We can get trade deals around the world.”

Hookem says he cannot wait to the leave the EU ‘superstate’ behind and says he couldn’t name a single thing he likes about the European Union.

However, Labour MEP for Yorkshire and the Humber Richard Corbett says the massive complexities involved in leaving the EU are yet to be fully understood.

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“We are about to embark on the mother of all divorce cases, with a massive range of issues. People think of new things every day. Some of them are relatively minor things like pet passports.

“Then there are the bigger questions of whether we stay in the customs union or not. If you are outside the customs union, you have a customs barrier and customs checks even if you have zero tariffs.”

Yorkshire and Humber Conservative MEP John Procter says the focus must now be on getting the best possible deal.

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He says compromises will need to be found by both sides but believes a deal will be on the table at the end of the two years.

“An agreement will be reached. It may not be the best deal humanly possible, but what is? It could be negotiated in a relatively short period of time.”

Procter says there would be huge challenges for many industries if Britain simply left the EU with no deal.

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He gave the example of farming, where 40 per cent of our lamb exports are to the EU.

“If they go into WTO rules, they have got a big problem on day one, there is a tariff that applies. That is just one example of one industry.”

He adds that negotiations are complicated by the fact some EU deals, such as Common Agricultural Policy payments to farmers that are scheduled to last beyond Britain’s intended departure date of March 2019.

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Procter says despite the challenges, he believes the Government is prepared for potential problems and is also heartened by the “upbeat” attitudes of the Yorkshire business community.

Meanwhile, German MEP McAllister is still clinging to the hope Britain’s departure can somehow be avoided. “I want to tell people reading The Yorkshire Post just in case life outside the EU isn’t quite what you were looking for, the door to the European house remains open. There is a German saying - ‘Hope dies last’.

“My father served in the WWII on the British side. We are fully aware of what the British did to save Europe, that is why you are such a great European nation. So many countries love the British, we love your culture, we love your language.

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“There are many reasons why people are so sad to see you go but the door remains open.”

EU cuts and bigger national payouts to follow Brexit

Britain’s multi-billion contribution to the EU will result in cuts to the union’s budget and bigger payments for nations like Germany.

David McAllister admits that Britain’s financial contributions to the EU - a net spend of £8.5bn in 2015 alone - will be missed. “You either cut spending in the EU or other countries will be under pressure to pick up the tab. I guess it will be a mixture. It will lead to some cuts in the EU budget but the amount that is left will have to be replaced by net contributing countries. Germany is fully aware we are first in the queue for that.”

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Another layer of complexity to the negotiating process is a potential European Parliament veto to any deal between Britain and the EU, which its chief Brexit negotiator Guy Verhofstadt has said is a possibility.

There is also the further prospect of the European Parliament referring the terms of the intended deal to the European Courts of Justice, holding up the process of the Britain’s departure.