Britain will be free to negotiate trade deals as soon as ‘Brexit day’ strikes, despite still having to follow EU rules, David Davis will insist on Friday.
In a keynote speech in Middlesbrough, the Brexit Secretary is expected to spell out the Government’s aims for an “implementation period” after leaving the bloc in March 2019.
Though the UK will effectively follow the regulations of the single market and customs union, it should also be allowed to open negotiations with other countries unhindered by Brussels.
But Davis is prepared for a clash with EU Chief Negotiator Michel Barnier over the prospect of carrying out independent trade talks and brokering deals which would come into force once the transition period is over.
The intervention comes after Davis clashed with prominent Tory Eurosceptic Jacob Rees-Mogg over the terms of the transition period which the influential backbencher claimed will leave the UK a “vassal state”.
The leading backbencher, who as head of the European Research Group (ERG) has the backing of at least 60 MPs, has also accused negotiators of being “cowed by the EU”.
Labour, meanwhile, said the Government were deeply split over Brexit and policy on the transition period “should have been resolved months ago”.
Davis will say: “As an independent country, no longer a member of the European Union - the United Kingdom will once again have its own trading policy.
“For the first time in more than 40 years, we will be able to step out and sign new trade deals with old friends, and new allies, around the globe.”
Highlighting the importance of emerging markets in Asia and the Americas, Davis says the fastest-growing export destinations between 2005 and 2014 included China and Brazil.
“We will be able to do so much more with them, when we are an independent trading nation, outside of the EU,” he will say.
“Of course maintaining access to each other’s markets on current terms means we will replicate the effects of the EU customs union during the implementation period.
“But participating in a customs union should not preclude us from formally negotiating - or indeed signing - trade agreements.
“Although, of course, they would not enter into force until the implementation period has ended.”
Giving evidence to MPs on Wednesday, Davis indicated “there may well be an argument” on the issue because “there are people within the union who want to restrict any advantage for us”.
The EU will demand that European law continues to apply in the UK during the planned transition period after it leaves the bloc, according to the latest negotiating guidelines drawn up in Brussels.
The guidance, obtained by Channel 4 News, says any changes to the EU “acquis” - the accumulated body of case law and legislation - should “automatically” apply to Britain during the transition, even though it will have no say in the decision-making process.
The confirmation that the UK will have to abide by any new EU laws and rulings by the European Court of Justice (ECJ) during the transition - expected to last almost two years - will heighten the concerns of pro-Brexit Tory MPs.
The guidance, setting out the negotiating mandate for the EU’s chief negotiator Michel Barnier for the transition talks, is expected to be formally adopted by foreign ministers of the remaining 27 member states in Brussels on Monday.
It states that the “full competences” of the EU institutions - “in particular” the ECJ - should be preserved during the transition period, which should not run beyond December 31 2020 - 21 months after Britain formally leaves the bloc.
Keir Starmer, Labour’s Shadow Brexit Secretary, said: “The Government has got to stop the double-speak and be clear about exactly what it wants to achieve from a transitional deal with the European Union.
“This issue should have been resolved months ago. However, the Government are fundamentally split on this issue, with many in Theresa May’s party wanting to rip the UK out of Europe at any cost.
“Ministers should put the national interest first and guarantee a deal that will protect jobs and the economy.”