Brexit trade talks rely on “sufficient progress” with divorce settlement

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The European Union is ready to talk to Britain on a future free trade deal before the two sides agree final terms on Brexit, draft EU negotiating guidelines indicate.

As part of a “phased approach”, the UK would just have to show “sufficient progress” on its divorce settlement in a first phase of negotiations and EU states could release a lock and agree to launch trade talks in a second phase.

Chief EU negotiator Michel Barnier expects to launch negotiations in early June, giving him about 16 months to conclude the basics of a withdrawal treaty that can then be ratified by lawmakers on both sides in time for Brexit on March 29, 2019.

The draft says: “In these negotiations the Union will act as one. It will be constructive throughout and will strive to find an agreement. This is in the best interest of both sides.

“The Union will work hard to achieve that outcome, but it will prepare itself to be able to handle the situation also if the negotiations were to fail.”

Over the past nine months, EU leaders and officials have resisted calls for immediate negotiations on a deep and comprehensive free trade agreement to replace the UK’s lost access to the EU single market by ensuring low or zero tariffs and harmonising regulations to encourage trade in services.

Many have insisted Britain must first make good on a divorce settlement that will include it settling outstanding financial commitments – the EU has advanced a ballpark figure of 60 billion euros – agreeing new border arrangements and clarifying the rights of EU expatriates on either side of the new frontier.

Legally, a trade deal cannot be signed until the UK has left and many on both sides believe that, going by typical times to negotiate such accords, it will take several years beyond 2019 before one is in place.

In her trigger letter to Tusk, May called for trade talks to move ahead “alongside” the divorce.

In his draft guidelines, Tusk proposed that if the 27 leaders saw “sufficient progress” towards a withdrawal treaty then negotiations on a future trading relationship could start.

Some governments are firmer than others in refusing trade talks from the start, so the guidelines could change. And there could be difficulties later in securing the agreement of the 27 as a group that progress was sufficient.