Brexit: Theresa May accepts need for transitional deal but uncertainty remains

Any interim arrangement would need to keep Britain's existing obligations to bloc almost entirely intact to work as intended

Theresa May delivers a speech at the Japan-UK Business Forum in Tokyo (Reiri Kurihara/Reuters)

Britain's exit talks with the European Union resume this week — following the release of position papers on what the UK government intends, and a notable change of approach by the Labour Party. Up to a point, these developments are encouraging, but the basic problem remains: Prime Minister Theresa May's government is moving far too slowly.

The UK has now officially embraced the idea of a transitional deal to bridge the gap between exit in March 2019 and the conclusion of a long-term agreement. That's crucial. There's no chance of designing a final deal by that fast-approaching deadline.

Trouble is, it still isn't clear what kind of transitional deal May and her ministers want. To work as intended, this interim arrangement needs to keep Britain's existing obligations almost entirely intact. Over the weekend, Labour belatedly announced it has come around to this position. The government, so far, has not.

There's no point in seeking a transitional deal that will be almost as contentious and complicated as the final one. To be done quickly, it has to be simple. More than that, it also has to put the UK in a plainly disadvantageous position.

Britain is the supplicant in this process, and the transitional proposal shouldn't ask for favours, much less demand them. It should say, in effect, Britain will abide by EU rules until the long-term deal is done, even though it will no longer have a say in deciding what those rules are. That's the price of being granted an orderly rather than chaotic departure.

The government's paper on future customs arrangements suggests “two broad approaches” — one that requires a customs border with the EU, and one that doesn't. Pending agreement on that eventual outcome, Britain wants “a model of close association with the EU Customs Union for a time-limited interim period.”

That could mean a lot of things. It would be better to say that Britain wants to remain a member of the EU's customs union until the longer-term deal has been finalised. Even that, by the way, would not be as simple as it sounds. But a deal that leaves the UK half in and half out of the customs union would be much more complicated and does not meet the immediate need.

Another of the government's papers looks at dispute settlement and the role of the European Court of Justice (ECJ). This softens the government's earlier position that the ECJ should have no jurisdiction over the UK once Britain leaves the union. Instead, it entertains the possibility of a joint court with UK and EU representatives, guided but not bound by ECJ rulings. (The European Free Trade Association court works this way.)

That's promising — as part of a lasting deal. But again, for now, the UK should agree to be bound by ECJ rulings, at least on matters relating to trade. Negotiating anything else is unlikely to be possible before the 2019 deadline.

The greatest need of all is to prepare the UK for disappointment. Even on the view that Brexit might ultimately succeed, what's required in the interim is an agreement that, from Britain's point of view, is worse than the deal the country already has. This arrangement should be seen as a holding action involving short-term political and economic costs — justified because it avoids the outright disaster of a so-called cliff-edge Brexit.

It's good that Labour has adopted this position, despite the risk of offending hard-line Brexiteers in its ranks. And the government, too, may be inching toward recognising this hard truth. But with time running out, inching isn't good enough.

Bloomberg