EU Trade Chief: No Deals with U.K. Until Exit Is Completed

The European Union is legally banned from working out new trade deals with the U.K. until Britain completes the process of exiting from the bloc, according to Trade Commissioner Cecilia Malmstrom.

“First you exit, and then you negotiate the new relationship,” she tells BBC News.

Malmstrom explains that last week’s referendum vote has no legal bearing on the U.K.’s membership in the EU. The formalities of leaving are likely to take two years and must be initiated by England’s next prime minister.

In the meantime, she says, EU rules prohibit the U.K. from negotiating its own trade terms with other countries, including the EU’s own members. Other rules prevent the EU from negotiating special trade terms with one of its own members, namely, the U.K.

Taken literally, the two rules mean the U.K. cannot conduct trade talks until it completes its exit from the EU. Until then, BBC says, Britain has two options. One is a Norway-style deal that enables the U.K. to continue to treat the EU as a single market—but only by continuing to abide by EU laws. The second would involve conducting trade under World Trade Organization rules until the U.K. can negotiate an entirely new trade pact with the region.

BBC notes that Canada, which pursued the latter option with the EU, spent seven years to agree on a deal, which now awaits at least one more year of ratification by all EU member nations.