Theresa May has been warned that her concessions to Brussels will only be acceptable to Tory Eurosceptics if she delivers a “proper Brexit”.
Britain and the European Commission reached agreement on a transition deal which will allow talks on the future trade relationship to be triggered later this week.
Brexit Secretary David Davis hailed the agreement as a “significant step” following talks with EU chief negotiator Michel Barnier in Brussels.
But there was fury in Tory ranks amid claims that there had been a betrayal of the UK’s fishing industry and the transitional deal would leave Britain bound by rules from Brussels it no longer had a say in.
Mr Rees-Mogg told BBC’s Newsnight: “I make no bones about it, I think this transition agreement is a very unsatisfactory agreement – not just on fish.
“The only thing that makes it acceptable is the hope that it is leading to a proper Brexit at the end of 2020.
“This agreement gives away almost everything and it is very hard to see what the Government has got in return.”
He added: “Somebody said to me the Government had rolled over but had not even had its tummy tickled.”
Some issues remained to be settled, including the thorny question of the Irish border and the governance of the eventual withdrawal agreement.
Countdown to Brexit: key events (PA Graphics)
The European Commission’s proposals for “backstop” arrangements for the Irish border remain in the new text, despite being angrily rejected by Mrs May when first published last month.
They will be the subject of intense negotiation in the months leading up to the deadline for a final agreement in October.
Under the controversial arrangements – to be put in place if the UK fails to come forward with a better solution – Northern Ireland would continue to be considered “part of the customs territory of the Union”, effectively creating a customs border along the Irish Sea.
In a letter to European Council president Donald Tusk following the Brussels breakthrough, Mrs May said she had “made her position clear” on aspects of the approach taken over the Northern Ireland issue.
But she added: “I am committed to agreeing in the withdrawal agreement operational legal text for at least the so-called ‘backstop option’ set out in the joint report, in parallel with discussions of these other scenarios.”
On the key issue of fishing rights, the new text states that the UK will be “consulted” on the allocation of quotas during the transition period.
Mr Davis said this arrangement would apply only to 2019 and included a guarantee that the UK’s share of the total catch cannot be changed, while through 2020 “we will be negotiating fishing opportunities as an independent coastal state”.
But Scottish Tory MP Douglas Ross said: “There is no spinning this as a good outcome, it would be easier to get someone to drink a pint of cold sick than try to sell this as a success.”
Meanwhile, Tony Blair’s former chief of staff Jonathan Powell – who played a major role in the Northern Ireland peace process – warned the Irish border question could bring the Brexit negotiations “crashing down”.
He said Mrs May has committed “the worst possible sin a negotiator can commit” – having “boxed herself in”, in an article for The Independent.