In the capreform.eu blog, he said it is in the EU’s interest to maintain as close an economic relationship with the UK as possible, and it should be willing to enter into the Brexit negotiations with the UK.
“However, I fear that even with this goodwill, we will not avoid a situation in which tariffs will be re-imposed,” he says. Trade tariffs could seriously damage Irish food and drink exports into the UK of €4.4bn per year.
Tariffs would also apply to imports from the UK to Ireland.
“The most reasonable assumption is that the exit process would be triggered perhaps at the December European Council meeting.
“This would then mean the UK would have left the EU by the time of the next European Parliament elections, scheduled for May 2019.”
He predicted a period, however short, in which the UK has left the EU, but has only ‘third country’ status, with no special trade relationship.
“Negotiating the new trade relationship would likely take much longer than negotiating the withdrawal agreement which will mainly be about the technical details of any divorce.
Even when the nature of the future trade relationship that both sides want to pursue is agreed, the EU Council would then have to agree a mandate on a proposal from a commission to pursue these negotiations, which could easily eat up the first 12 months of the two-year period envisaged under Article 50 for withdrawal negotiations to take place.
“It is thus hard to avoid the conclusion that trade, including agricultural trade, will face third-country tariffs in both directions for at least a period.”
“It would take an awful lot of goodwill, as well as a lot of creative legal thinking, to avoid this outcome,” he says.
Prof Matthews says whether this goodwill is forthcoming or not depends on the two main political positions within the EU on how to negotiate with the UK with the French president, the Belgian prime minister and president Juncker of the commission and supported by president Schulz of the European Parliament favouring a quick triggering of Article 50 and a quick exit.
“They cite the need for certainty. They see UK exit as an opportunity to push ahead with further wide-ranging integration options. They favour a ‘hard line’ in negotiating a future relationship with the UK to send a signal to other doubters that it is not possible to have the benefits of EU membership without the obligations,” he says.
However, the Dutch, Danes and central European countries, supported by chancellor Merkel until now, say the UK should be given time to resolve its internal political difficulties.
“However, whether these leaders are prepared to take a softer approach on the terms of negotiating a future trade relationship is less clear.
Relevant to this is that there will be elections in important EU countries next year, beginning with the Dutch general election before March 2017, the French presidential elections in April and May, and German elections in September or October.
“Depending on the outcome of these elections, the UK could be negotiating with a rather different EU in 12 months’ time.”