Such a move would be simpler than negotiating full Brexit, which the committee believes is close to impossible in the planned two year timeframe, and will take pressure off the negotiators, the Telegraph reports.
“We do not think it will be possible to negotiate a comprehensive UK-EU free trade agreement within two-years. The Government therefore needs to have a clear ‘game plan’ for possible transitional arrangements before Article 50 is invoked,” said the Lords’ report, written by the Internal Market and External Affairs Sub-Committees.
“Although this would require clarity on the principles of what the UK is transitioning to, it would not delay the UK’s withdrawal. But it would safeguard current trade and provide adequate time for negotiations.”
So far, the Lords argue, the Government has not given enough thought to its planned post-Brexit trade arrangements, and so a transitional agreement would help minimise disruption and allow more time for a thoughtful setup.
“We are concerned that the Government appears not yet to have given sufficient consideration to the implications of leaving the EU’s customs union,” the report said.
There are currently no estimates of the administration costs to the government and to businesses of re-introducing customs checks, for example, and the committee is worried about what an exit could mean for the border with the Republic of Ireland.
As a result it proposes a transitional deal based on remaining in the customs union.
“The Government should consider the merits of remaining a member of the EU’s customs union as an interim arrangement, until the terms of the UK’s future trading relationship with the EU have been settled,” the report said.
“We are also conscious of the practical challenges of introducing full customs controls within two years.”
Other options include using the basic World Trade Organisation rules as a default, which the Lords warn would lead to a “dramatic” change in trading arrangements.
“Trade in goods would face significant tariffs, and trade in services would be subject to much greater restrictions,” said the report, noting that the rules would also not cover standards and regulations.
Whichever arrangement is reached, the government needs to allocate more resources to the task, the Lords said.
“We are not convinced that the level of engagement and expertise within government are commensurate with the scale of this unprecedented task,” the report said.
“The Government appears to be underestimating the resources required to negotiate a bespoke deal with the EU, to adopt its WTO schedules, and to agree future trading relationships with third countries.”
The committee wants the government to set out a plan detailing how many staff it needs in the Department for International Trade and the Brexit Department, and is also worried that there will be too few workers in place by the time Article 50 is triggered.
