The British government has less than a month to make a concession on the Brexit bill in order to guarantee launching trade talks in December, the Guardian understands.
Senior officials in Brussels say talks have stalled since Theresa May’s Florence speech and warn the EU will find it difficult to agree to trade talks at a December summit unless the prime minister offers more on the Brexit divorce settlement.
There remains “a lot to do on financial obligations”, Italy’s Europe minister Sandro Gozi said on Tuesday, after meeting the Brexit secretary, David Davis, in Rome.
One senior diplomat told the Guardian that the EU would not give way on the negotiation timetable, as it wanted the security that the UK would sign up to share the EU’s debts and pension liabilities, although it was not seeking a number. “When we drafted the guidelines we knew we would reach this moment,” the diplomat said, referring to the standoff.
With the British government on the rocks, May’s political future is now an open source of speculation in Brussels. Senior officials wonder if she will be in her job in January and worry that a potential Prime Minister Boris Johnson could throw the talks into confusion.
Despite these concerns, the EU is pressing ahead with preparations for a future trade deal with the UK.
A document obtained by the Guardian reveals the EU’s groundwork and confirms – as Brussels has long said – that it will be impossible for the UK to get a finished trade deal by March 2019.
The eight-page document raises more questions than it answers, but reveals the size of the task to agree a transition and future deal that covers trade, security, defence and foreign policy.
The document asks how the EU can “ensure a level playing field” to stop the UK gaining an unfair advantage, by either subsidising industry or undercutting the EU on environmental, welfare and labour standards.
This question was thrown into sharp relief, after the US commerce secretary, Wilbur Ross, told the UK to scrap EU standards, including rules on chlorinated chicken, if it wanted a trade deal with the US.
EU member states are also yet to agree whether the EU should aim for one or two deals on the future relationship.
The document shows the EU has not agreed an end-date for a transition, or how to treat the UK once it drops out of EU institutions and agencies. “Will there be a need for specific institutional mechanisms given that the UK will no longer be represented in the EU institutions and participate in the decision-making process,” it asks.
For EU officials this document scratches the surface of the negotiations to come and underscores there will be no finished trade deal in March 2019.
In European capitals this has been seen as obvious, but officials have been dismayed by recent statements from May and Davis that appear to suggest a trade deal could be nailed down before Brexit day in March 2019.
May’s recent remarks in the Commons were seen in Brussels as a step backwards, because she gave EU officials the impression she believed a trade deal could be agreed by October 2018. The Brexit secretary’s promise of a “basic deal” in the event of a breakdown in talks is seen as a non-starter. “We would be idiots if we said it is not feasible to have a deal on citizens, but we can have a deal on airlines and the UK can sell into our markets,” one senior source said.
The document emerged after Germany’s finance minister, Peter Altmaier, told a Brussels audience that Brexit could not be “a win-win situation” for both sides. Altmaier, who is Angela Merkel’s chief of staff, recounted a conversation with a British diplomat, who asked him to look for “a win-win situation to get out of this mess”.
Altmaier said: “My answer was, listen, when a couple marries for 40 years, [they have] three children and they have a house, a home, two cars and a boat and decide to get divorced, it is fairly difficult for this couple to have a win-win situation for both sides. It is something that is perhaps a win-win situation for the lawyers.”
Altmaier was speaking at an event to launch Frankfurt’s bid for the European Banking Authority, currently based in Canary Wharf. The Brexit referendum was “a regrettable fact” that had to be accepted, he said.
Looking at the British government and public debate showed “how difficult it is to separate ties that have been grown for more than 40 years within a two-year negotiation process,” he said.
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