Analysis: EU's Brexit Guidelines Show Sticking Points And Signs Of Light

The two sides are still far apart on key issues
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Theresa May’s call for the UK to “cherry pick” what it wants in a Brexit trade deal with the EU seems to have fallen on deaf ears.

The European Council has unveiled what it wants from the Brexit trade talks with the UK – and there is still a great deal of difference between the two sides.

But it is not all bad news for the UK, with the EU offering some points of agreement.

However, it is clear that May has been willing to make more compromises than the EU on many key areas.

Here are the stumbling blocks and signs of light

1) Sign of Light - Phase 1 Agreement

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Earlier this month, Theresa May said “no UK Prime Minister” could sign up to the EU’s draft legal text which would effectively keep Northern Ireland in the customs union if no other deal was reached.

That document – which was Brussels interpretation of the conclusion of phase 1 of the talks in December – looked to have thrown a spanner in the works of the negotiations.

However, the most recent guidelines suggests that is still all up for grabs. It notes that the European Council wants “intensified efforts on the remaining withdrawal issues” and adds “nothing is agreed until everything is agreed.”

2) Sticking Point - No Cherry Picking

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In her Mansion House speech, the Prime Minister was clear that the EU needed to show flexibility in its approach to trade negotiations if the UK and EU are to strike a deal. She singled out the oft-repeated phrase from European politicians that there can be no “cherry picking” of parts of the Single Market by the UK.

The negotiating document shows Brussels is unmoved by this:

“The European Council recalls that the four freedoms of the Single Market are indivisible and that there can be no “cherry picking” through participation based on a sector-by-sector approach, that would undermine the integrity and proper functioning of the Single Market.”

While the EU has always been clear that the free movement of goods, capital, services, and labour are indivisible, ruling out a sector-by-sector approach will be worrying for the UK. The EU is essentially saying there will be no special deal for financial services or the car industry.

3) Sticking Point - No Invisible Borders

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The Government’s language on the UK’s post-Brexit trade with the EU has changed from “frictionless” to “as frictionless as possible”.

But according to the draft guidelines, there’s going to be a lot of friction. “Being outside the Customs Union and the Single Market will inevitably lead to frictions”, the guidelines read, adding there will need to be “checks and controls to uphold the integrity of the EU Single Market as well as of the UK market. This unfortunately will have negative economic consequences.”

The guidelines are clear that this language only comes into play once there is a “divergence in external tariffs and internal rules”, but even so, it somewhat undermines the UK’s suggestion of an invisible border with Ireland.

4) Sign of Light - No Tariffs on Goods

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The EU does not want to start introducing tariffs on goods, or limiting how many goods can be sold into the Single Market. This may seem like an obvious point, but let’s take the wins while we can.

5) Sticking Point - EU Fishing Rights

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For many coastal communities, the influence of the EU on the UK’s fishing industry was a key reason to vote leave.

Brussels is not going to give up its access to UK waters without a fight, and the guidelines insist that “existing reciprocal access to fishing waters and resources should be maintained.”

Such a move would be blocked by Environment Secretary Michael Gove, who has already ruled out keeping the UK in the Common Fisheries Policy after Brexit.

6) Sticking Point...For Jeremy Corbyn

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Brussels and London may disagree on many things, but one area where they seem to be in step is on state aid. In her Mansion House speech, Theresa May said the UK “may choose to commit some areas of our regulations like state aid and competition to remaining in step with the EU’s.”

This sentiment is echoed in the draft document, with the European Council saying it would be unacceptable for the UK to start “undercutting” EU rules in these areas.

Labour leader Jeremy Corbyn is opposed to such an agreement. In his Brexit speech in Coventry he cited state aid as an area he would like to see reformed in the UK’s relationship with Brussels.


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