The European Union’s chief Brexit negotiator has said that if Britain wants as much access as possible to the bloc’s market after it leaves, it will not have unfettered freedom to subsidise its industry.
Michel Barnier also insisted that the state aid rules in any future trade deal would be more stringent than with nations such as Canada or Japan, simply because of the physical proximity of the departing EU nation.
“If the UK wants an open link with us for the products – zero tariffs, zero quotas – we need to be careful about zero dumping at the same time,” Mr Barnier told a conference in Stockholm.
“I hope that this point is and will be correctly understood by everybody. We will ask necessarily certain conditions on state aid policy in the UK,” Mr Barnier said.
He added that if that is not the case, access to the lucrative EU market will be negatively affected.
The EU has been stressing the need for a level playing field in the upcoming trade deal negotiations, meaning that access will be strictly linked to commitments to social welfare and environmental standards, among others.
Mr Barnier stressed the need for state aid limits too.
As a member state, Britain was bound by strict state aid rules enforced by the powerful European Commission to make sure there would be no unfair competition among EU nations in its vast single market.
Third countries are not immediately bound by such strictures.
Britain has decided to leave the EU by January 31, partly because it does not want to be tied down by EU rules, which it feels impedes its sovereignty.
But negotiating a trade deal will still involve many compromises on rule setting.
Mr Barnier also insisted that Britain’s goal to have a full free trade deal by the end of the year was unrealistic.
“We cannot expect to agree on every aspect of this new partnership,” Mr Barnier said, adding “we are ready to do our best in the 11 months”.
During a transition period ending on December 31, a new relationship between the EU and the UK will be negotiated.
Full trade covers everything from fisheries to the airline industry to medicines, but the EU insists to deal with all these issues in one year is a pipe dream.
British Prime Minister Boris Johnson has insisted he will not agree to any more delays – a vow that has set off alarm bells among businesses, which fear it means the country will face a no-deal Brexit at the start of 2021.