Stephen Hammond – who has been branded a “mutineer” by pro-Brexit newspapers – announced he would table amendments to the Trade Bill.
“It will give the whole house the opportunity to discuss EFTA (staying in the European Free Trade Association),” Mr Hammond said.
The Government has repeatedly ruled out a Norway-style arrangement – under which Britain would join EFTA at least in the short term – because it would require retaining free movement of EU citizens.
But a growing number of Conservative backbenchers have suggested it as an option, to avoid a damaging “cliff edge” for businesses if the talks to agree a transition period falter.
Mr Hammond revealed his move at the end of a debate on EFTA in Westminster Hall, the second Commons chamber, during which he described the Government’s stance as “disappointing”.
“The feeling I detect from the chamber is that the whole house would like to have the chance to reflect upon this,” he said, stating his amendment would be tabled later on Wednesday.
During the debate, a further nine Tory MPs expressed some support for the EFTA option – potentially enough to defeat the Government, if Labour also voted for it.
James Cartlidge, MP for South Suffolk, said EFTA offered “the best transition”, adding: “If Carlsberg did off-the-shelf, last-minute Brexit deals that pleased everybody, it would look an awful lot like EEA-EFTA.”
Another Conservative MP, Paul Masterton, told ministers that EFTA did not have to be a “final destination”, but offered “a safe harbour, a staging point” while a free trade agreement was reached.
And Antoinette Sandbach, also a Tory MP, argued that EFTA would provide a “soft landing” if a deal was not reached with the EU before the 2019 exit date.
The amendment will be the second Conservative challenge to the Prime Minister’s strategy, using the Trade Bill – needed to set in place post-Brexit trading rules – as the vehicle.
Responding in the EFTA debate, Brexit minister Robin Walker said the Government also opposed the idea because the UK would have to accept new EU rules with no say over them.
But he added that ministers “do not currently plan to seek membership” of EFTA – the word “currently” immediately raising eyebrows.
The EFTA is made up of Norway, Iceland and Liechtenstein, plus Switzerland, with all but the latter also members of the European Economic Area (EEA) – and therefore, in the single market.
The Independent revealed, last year, that Britain risks a fight in international courts if it tries to quit the EEA without formally telling its other members 12 months in advance, to avoid disrupting their trade.
Meanwhile, Mr Clarke said the “vast majority” of MPs supported staying in the single market and the customs union.
“If you introduce tariffs, if you introduce customs barriers, train customs officers, start introducing checks, if you start having regulatory differences either side of the border, you damage your economy,” the former Chancellor said.
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