There will be no winners from a post-Brexit EU-UK trade agreement, EU leaders warned on Wednesday (7 March) as they unveiled the blueprint for a new partnership with Britain.
The six-page document agreed by the EU-27 proposes a free trade agreement providing zero-tariff trade in goods and covering services. It also proposes continued access to UK fishing waters for EU vessels as part of the deal.
“Being outside the Customs Union and the Single Market will inevitably lead to frictions,” the paper warns.
“Divergence in external tariffs and internal rules, as well as the absence of common institutions and a shared legal system, necessitates 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 state.
Outside trade, it advocates continued UK membership of EU programmes in research and development, education and culture, in exchange for contributions to the bloc’s annual budget.
It also adds that police and judicial co-operation “should constitute an important element of the future EU-UK relationship”, and that there should be “no gap” in co-operation on security, defence and foreign policy.
The draft guidelines have been circulated ahead of a European Council summit on 22 and 23 March, where leaders will seek to sign off on a 21-month transitional arrangement after the UK formally leaves the EU in March 2019 and begin talks on a successor agreement.
“We don’t want to build a wall between the EU and Britain,” said Tusk, at a press conference in Luxembourg where he unveiled the guidelines.
But he insisted that future EU-UK trade would not be “frictionless” and that a new FTA would “make it more complicated and costly than today. This is the essence of Brexit.”
“This will be the first FTA in history that loosens economic relations instead of strengthening them,” said Tusk.
“There will be no winners from Brexit, both sides will be losers. Minimising the losses is the challenge,” said Luxembourg’s Prime Minister Xavier Bettel.
“Not a hard Brexit, not a soft Brexit, but an intelligent Brexit,” would be possible, he said.
Tusk remarked that any future agreement would have to maintain “the balance of rights and obligations”.
“We cannot grant the rights of Norway with the obligations of Canada. There’s no prospect of exclusive access to the Single Market,” he said
Last week, UK Prime Minister Theresa May reiterated that the UK would leave the single market and customs union, instead advocating a free trade pact in which the UK would seek associate membership of a series of EU regulatory agencies.
In February, May called for a separate treaty with the EU covering defence and security policy.
“When I listened to Theresa May’s speech I didn’t learn much more than I knew before,” added Bettel.
“It is not clear exactly what they want,” he added.
EU leaders and officials also complain that the UK is yet to offer any solutions on how to avoid a hard border between Northern Ireland and the Republic.
Next week in Strasbourg the European Parliament will also adopt its own resolution on the Brexit talks ahead of the summit.