Tuesday

25th Sep 2018

EU offers only free trade deal to post-Brexit UK

The EU offered a classic free trade agreement covering limited services and with zero tariffs and no quotas on goods to the UK for the post-Brexit period, in draft guidelines published on Wednesday (7 March), prepared for the next phase of negotiations.

The EU's starting position on how the future relationship should look like dismisses British prime minister Theresa May's approach that the bloc should allow access to parts of the single market, and membership in its specialist agencies after Brexit.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

At its core, the EU is offering an "ambitious" free trade agreement to the UK as the UK wants to pull out of the single market and the customs union as it leaves the EU.

"It should come as no surprise that the only remaining possible model is a free trade agreement. I hope that it will be ambitious and advanced – and we will do our best, as we did with other partners, such as Canada recently," EU Council chief Donald Tusk said, adding, "but anyway it will only be a trade agreement".

The EU-Canada trade deal took seven years.

Tusk said the EU and UK should also maintain close cooperation on fighting terrorism and international crime, defence and foreign affairs, research and education.

EU officials are arguing that the bloc cannot offer what seems to be the request from London, i.e. a "single market light" or a "customs union light", as one senior official described it.

"The EU cannot grant the rights of Norway, with the obligations of Canada," Tusk said, who described May's approach as "pick and mix".

Norway has access to the single market, and takes most of EU regulation over as part of the European Economic Area. Canada and the EU has singed a free trade agreement that entered into force last year.

EU officials however concede that May's speech last Friday on Brexit was "more realistic", but "important contradictions" remain.

"I fully understand, and of course I respect, Theresa May's political objective to demonstrate at any price that Brexit could be a success and was the right choice," Tusk told reporters in Luxembourg Wednesday. "Sorry, it's not our objective," he added.

Officials in Brussels argue that the single market only functions with one set of rules, and with one court overseeing those rules, which the UK ruled out as a post-Brexit scenario.

A free trade agreement can align two countries economically tightly close together, but it goes with the two retaining their own rules and regulations.

Officials warn that because of diverging rules between the EU and the UK, frictionless trade will not be possible, border checks will have to be installed.

The six-page guidelines published Wednesday will be subject to change as member states start debating them ahead of the summit of EU leaders at the end of March when they are expected to be adopted.

Based on the guidelines, UK and EU officials are expected to negotiate a political framework agreement on the future relationship that will be attached to the Brexit withdrawal agreement, but actual trade talks will only start once the UK is not an EU member.

Unlike the withdrawal agreement, the future trade deal or deals will have to be ratified by all the regional and national parliaments of the EU.

The devil in the details

The guidelines say that as in other free trade agreements, rules of origin will have to apply, aims for a continued reciprocal access to fisheries resources, and an agreement on aviation is needed to continue smooth air travel.

The EU also wants the UK to respect the 'level playing field', making sure that the UK will not undercut the EU in taxes, or massive state subsidies.

"The UK is big and is closer to us [EU], it is a competitive economy, therefore we believe this should be required in this particular case," one senior EU official said about demanding a level playing filed between the EU and the UK.

The EU would be able to use "remedies" if the UK attempts to unfairly undercut the bloc on competition or taxes.

On services, a key issue for the UK with London being a world financial centre, the EU says "host state rules" should apply. May last week proposed a "comprehensive system of mutual recognition" for financial services, which an EU official described as an unclear concept.

The draft guidelines also touch on dispute settlement, arguing that if EU legal concepts are used then the European Court of Justice (ECJ) needs to have a role, which is usually a red line for the UK.

EU ambassadors had their first discussion of the draft guidelines on Wednesday.

To set the mood, the former Polish prime minister did not skip the opportunity to put Brexit into historical context.

"[…] Because of Brexit we will be drifting apart. In fact, this will be the first FTA in history that loosens economic ties, instead of strengthening them," Tusk said on Wednesday.

"Our agreement will not make trade between the UK and the EU frictionless or smoother. It will make it more complicated and costly than today, for all of us. This is the essence of Brexit," the EU council head said.

UK seeks flexible transition length after Brexit

Britain wants to negotiate with Brussels the end date of the Brexit transition period - without saying what their preferred end date would be. The UK's position paper disagrees with the EU on other key points too.

Barnier warns UK Brexit transition period 'not a given'

After one of the tensest week so far in Brexit talks, 'substantial' disagreements remain between the UK and the EU over transition, with Michel Barnier insisting London needs to decide on the future relationship and Ireland for Brexit to happen.

Opinion

No precedents for post-Brexit Irish border

Glib comparisons with the US-Canada border, or municipal boundaries within London, do not stand up to scrutiny - or the reality of an internal Irish border with 275 crossing points in a land beset by 30 years of armed conflict.

No-deal Brexit could cost €65bn a year

A no-deal Brexit would cost UK and EU firms £58 billion (€65bn) a year, but the cost could be just £31 billion if the UK stayed in a customs union.

News in Brief

  1. Stalemate in Sweden as parliament ousts prime minister
  2. Migrant rescue ship heading to French port
  3. EU angry at British tabloids on Brexit
  4. UK to allow EU flights in no-deal Brexit
  5. Greek reporters arrested after story on 'mishandled' EU funds
  6. Austrian minister urges police to out foreign sex offenders
  7. ECB's Draghi set to clarify role in secretive G30 group
  8. Half of EU states at risk of missing recycling target

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  2. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  3. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  4. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  5. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  6. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  7. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  8. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  9. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  10. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  11. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  12. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow

Latest News

  1. EU court delivers transparency blow on MEP expenses
  2. Russian with Malta passport in money-laundering probe
  3. Cyprus: Russia's EU weak link?
  4. Missing signature gaffe for Azerbaijan gas pipeline
  5. Every major city in Europe is getting warmer
  6. No chance of meeting EU renewable goals if infrastructure neglected
  7. Brexit and MEPs expenses in the spotlight This WEEK
  8. Wake-up call on European Day Against Islamophobia

Stakeholders' Highlights

  1. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  2. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  3. Mission of China to the EUChina: Work Together for a Better Globalisation
  4. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  5. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  6. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  7. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  8. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  9. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  10. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  11. FIFAGreen Stadiums at the 2018 Fifa World Cup
  12. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development

Join EUobserver

Support quality EU news

Join us