No 'frictionless trade' with EU after Brexit, says Malmstroem

"Now we have a country leaving us and the single market, and it will not have the advantages of the single market," Malmstroem told an audience in Brussels.

"It cannot be 100-percent frictionless trade, because they are not in the single market," she added.

Malmstroem pointed out that the EU will have to treat the UK as a third country after March 2019 when Britain leaves the bloc.

Without a trade deal, the UK will have to rely on World Trade Organisation rules, tariffs and quotas.

No roll-over

Malmstroem also said the UK will have to leave EU trade deals once it leaves the bloc.

Existing EU free trade deals, such as with Canada, will not be applicable to the UK, the trade commissioner said.

"When they [UK] leave the EU, they leave the trade agreements," she said.

When asked how the UK should deal with this situation, Malmstroem said "That's their problem."

The commissioner added that she did not think it was possible to "roll over" existing EU trade agreements for the UK.

She said as a third country after March 2019, the UK will have to leave such EU free trade agreements as the one with Canada, South Korea, or the ones under discussion now and possibly concluded by Brexit, for instance with the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay).

EU leaders will decide at a summit next week if Brexit negotiations could enter their second phase that focuses on future relations and the framework of a trade agreement, plus a transition period.

Once the summit has given the green light, Malmstroem said that EU leaders will "have to tell us what to do".

The EU's trade officials could start preparing for a free trade agreement between the EU and UK, and scoping what would be included in a possible future deal.

EU sources said member states in their preliminary discussions focused on working out a free trade agreement with the UK along the lines of the trade deal with Canada (Ceta).

British prime minister Theresa May said in September in her Florence speech that neither the Ceta, nor an European Economic Area membership (for instance as applicable for Norway) is what the UK is looking for post-Brexit.

"Instead let us be creative as well as practical in designing an ambitious economic partnership which respects the freedoms and principles of the EU, and the wishes of the British people," May said.

The prime minister said then there is "no need to impose tariffs".

"We will do everything we can to avoid friction at the border," she added.