The Government has set itself the target of triggering Article 50 by March 2017. Under current EU rules this should give the UK two years to negotiate its exit, unless EU nations vote to extended the period. In speeches in the autumn, Prime Minister Theresa May suggested that she will be prioritising immigration curbs over access to the single market in negotiations, sparking fears that this position would result in a ‘hard Brexit’ with the UK excluded from European trade blocs.

Whilst still remaining coy about what Brexit will actually mean for the country, government ministers have said the UK will remain “as close as possible” with European neighbours after Britain becomes the first state to cede from the EU. Given the lack of concrete information available from government on one of the biggest events in post-war Britain, the House of Lords’ EU Committee is this week releasing an advent-calendar style series of reports, giving insight on various aspects of the tumultuous change.

Tuesday’s report from the Lords’ EU Internal Market and External Affairs Sub-Committees envisions four possible EU-UK trade scenarios post-Brexit. These are:

• Trying to remain part of the European Economic Area (EEA), like Norway and Iceland, would be the least disruptive option for trade, but this won’t be compatible with Theresa May’s ambitions for curbing freedom of movement, or give the UK voting rights on EU legislation;
• Remaining in a customs union with the EU would mean no border checks for goods between the UK and EU, but would restrict the UK’s ability to sign trade deals with the rest of the world (remaining part of a custom union was a key recommendation of the Lords’ committee’s first report, which looked at UK-Ireland relationships post-Brexit);
• A Free Trade Agreement (FTA) would be the most flexible option and could lead to a bespoke deal, but would be complex and take a long time to negotiate. Lords noted that even the most advanced FTAs do not provide terms for UK-EU trade equivalent to membership of the Single Market;
• Trade under World Trade Organisation (WTO) rules would have the most dramatic effect on trade, resulting in significant tariffs for goods and increased restrictions on services. Establishing independent WTO schedules will not be straightforward either; in evidence gathering sessions for  the Committee’s Ireland report, witnesses warned that agricultural tariffs could be expected to reach 60-70% if the UK is forced to revert to trading with EU partners on World Trade Organisation terms post-Brexit

The Sub-Committees said that if the government goes down the route of negotiating a Free Trade Agreement with the EU, ministers will need to agree a transitional trade arrangement, leaving the EU and full implementation of new trade terms, as the process will undoubtedly take longer than two years. They said temporary extension of participation in the customs union could be one bridging strategy. Peers want the Government to establish a clear ‘game plan’ for a transitional arrangement at the outset of negotiations under Article 50.

The government has come under fire for its silence on both the specifics of Brexit and on policy changes that will result from the UK’s exit (and the impacts the process will have on various groups in Britain). November’s High Court ruling, that Parliament must vote on whether the government can even trigger Article 50, also suggests that the government must be more transparent about the terms of Brexit.

Commenting on Tuesday, Baroness Verma, Chair of the External Affairs Sub-Committee, said a free trade agreement could be the best option for balancing open trade with “Exercising sovereignty”, but said, “A free trade agreement cannot be easily agreed in two years” and added that it is “Crucial that the timetable [for Brexit] is designed in such a way that we recognise it is complex, and it might not take two years.”

She said, “The Government should focus on trade with the EU and its World Trade Organisation (WTO) schedules. Deals with non-EU countries are contingent on the outcome of these negotiations, and need to be sequenced accordingly. The complexity of the issues and the tight timetable require a significant scale-up in capacity in government departments and clear leadership across Whitehall.”

In his statement on the release of the report, Lord Whitty, Chair of the EU Internal Affairs Sub-Committee, countered the government’s optimistic pronouncements on the outcomes of Brexit negotiations. he said, “Trade-offs will need to be made in whatever trading framework we eventually agree. The Government is committed to curbing the free movement of people and the reach of the European Court of Justice. This is incompatible with full Single Market membership”

“While an FTA would provide the greatest flexibility, and no commitment to freedom of movement, there is no evidence that it could provide trade on terms equivalent to membership of the Single Market.”