Brexit: EU rejects Theresa May's 'three baskets' trade plan for future relationship

The Brexit trade plan Theresa May is trying to convince her divided Cabinet to rally behind on Thursday would likely be rejected out-of-hand by the EU, according to documents released by the EU ahead of the meeting.

The Prime Minister has taken her squabbling ministers to her official country residence in the Chilterns, where, David Davis joked, they would have to be “locked in a room” to agree on what sort of trade relationship they want with the EU.

Ms May is understood to be trying to convince her colleagues – who are divided between hard Brexiteers such as Boris Johnson and more pro-European figures like Philip Hammond – to back a “three baskets” plan.

Under “three baskets” the UK would look at existing regulations and decide whether it wanted to keep them the same as now, whether it would want to modify its regulations but to achieve the same goals, or whether it wanted to completely break with the EU in certain areas.

But slides drawn up by the European Commission’s negotiators and shown to the council, released just hours before Ms May’s meeting, say the approach is unacceptable.

“UK views on regulatory issues in the future relationship including ‘three basket approach’ are not compatible with the principles in the EuCo guidelines,” the slides say.

The Commission says the proposal breaks four of the red lines set by the EU 27 member states: preserving the autonomy of EU decision-making; preserving the role of the European Court of Justice; and preserving the integrity of the single market; as well as potentially upsetting third countries.

Michel Barnier, the European Commission’s chief negotiator, has repeatedly said that the UK cannot “cherry pick” which aspects of the EU it wants to retain.

The timing of the EU’s announcement could make it more difficult for Ms May to obtain an agreement from her ministers – given that her preferred option for uniting them has been deemed a non-starter by Brussels.

Mr Johnson, in particular, has not ruled out resigning from the Cabinet if the country does not get the sort of Brexit approach he wants.

Mr Davis took to the stage in Vienna earlier this week where he suggested that the UK could withhold its financial settlement from the EU if it did not get the trade agreement it wanted. On trade, he argued that the EU should recognise UK regulations where the two systems had the same objectives – the middle basket of the “three baskets” proposal.