LONDON _ The U.K. and European Union must agree on the broad shape of the final deal charting Britain's exit from the bloc before starting talks on any transitional arrangements, Brexit Secretary David Davis said.
As he set out options for a future trade deal with the EU, Davis told lawmakers he is open to negotiating a transitional agreement as a kind of "bridge" to help smooth the effect during the "implementation phase" of the U.K.'s departure, if it's needed. He said it is "perfectly possible" to decide "the end game" for the U.K.'s trading relationship with the EU in the two years available for negotiations once official notification is given of the intention to quit.
"Whatever the transitional arrangement is, we need to know where we are going before we decide on the transition," Davis told the House of Commons Brexit committee on Wednesday. "If you build a bridge, you need to have both sides established before you build the bridge, so we need to know where we are going."
Davis's comments represent the most detailed public statement so far of how the U.K. government sees the negotiations unfolding. They are likely to be welcomed by business leaders and politicians who have called for a transition plan to help cushion the blow from Brexit. Prime Minister Theresa May has said she will trigger the formal start of the Brexit talks by invoking Article 50 of the Lisbon Treaty by the end of March.
The premier has said that while she will not give a "running commentary" on Brexit, she will publish a plan for lawmakers to scrutinize before triggering Article 50. Davis told the committee the plan is still being worked on and would not be published before February at the soonest.
"It won't be next month," Davis said. "The policy work is still underway. There are quite a few decisions still to be made." The government would have to be "very careful about what we do publish" to avoid undermining the U.K.'s negotiation position, he added.
Davis said no decision had been taken on whether the U.K. should stay in or leave the European single market, where more than 40 per cent of British exports are sold, or whether it could pay the EU for trading rights. "We're aiming for free access, the maximum free access to all possible markets," he said.
Davis set out the four options he is considering for the U.K.'s relationship with the European customs union, which sets common tariffs with countries outside the group. Ministers say the U.K. will not be free to negotiate its own trade deals with other individual countries such as India or the U.S. unless it first leaves the customs union.
For the first time, Davis said he is looking at replicating Turkey's trade accord with the EU, as he confirmed the Norwegian and Swiss models are also on the table. "You have countries like Turkey, which has an arrangement which puts it inside the customs union for some of its economy and outside for others, which allows it to do very limited free-trade agreements," Davis said.
Davis said his four options for a relationship with the customs union are: "Inside the customs union; a partially-inside Turkish model, if you like; outside but with a free-trade agreement and a customs arrangement, as happens in some parts of the world; and completely outside."
The committee pressed Davis on what he would do if no deal could be achieved after two years of talks. He said he thought it would be possible to reach an agreement to avoid the shock of the U.K. falling out of the EU with no deal at all, which would see World Trade Organization Tariffs imposed on the sale of British goods to the EU. But he assured members of Parliament: "We will do contingency planning for all the likely outcomes."
"The best outcome is a negotiated, free access to markets outcome, and with it a negotiated outcome on justice, home affairs and security," Davis said. Early talks with his European Commission counterpart Michel Barnier will focus on setting the timetable for negotiations, Davis said, but the deals are unlikely to be "done in six months."
In a verdict likely to be welcomed by the aviation industry, Davis argued that the U.K. is "in a good position" to ensure open access to flights to the EU after leaving the bloc. "We have a fair degree of negotiation leverage _ leverage is the wrong word _ but it's in other people's interest to maintain this as well as ours," he said.
