- Donald Tusk sets out EU's approach to Brexit talks
- Brexit fury as Brussels bans UK from cutting tax as price of trade deal
- In full: the EU's draft guidelines for Brexit negotiations
- Trade deal talks could begin once "sufficient progress" is made
- Tusk rules out parallel talks on exit and future relations
- Outrage as Spain given "effective veto over future of Gibraltar" under EU plans
- European leaders to formally reject Theresa May's Brexit timetable
- UK takes back right to deport as Britain repeals powers from EU
- Chopper's Brexit Podcast Episode 5 - listen now
European leaders will insist that the UK rules out tax dumping as part of any trade deal struck during Brexit negotiations, it emerged today.
Matthias Machnig, the German deputy economy minister, called for a “reasonable framework” in tax and regulation, and warning “a race to the bottom in tax and regulation matters would make trade relations difficult”.
Donald Tusk, the European Council president, also warned this morning that a deal must “ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through, inter alia, fiscal, social and environmental dumping”.
The fear is that unless the trade deal which binds the UK into the European standards on tax, competition and state aid the UK will lead a regulatory "race to the bottom".
Speaking at a press conference in Malta, Mr Tusk told reporters that parallel talks on exit and future relations with Britain "will not happen".
It came as the EU's draft negotiating guidelines, which call for a "phased approach giving priority to an orderly withdrawal", were leaked moments before he addressed reporters.
Mr Tusk said that negotiations on future trade relations between the UK and EU can only begin after "sufficient progress" has been made on disentangling Britain from the ties and obligations of its 44-year membership.
He said: “Once, and only once, we have achieved sufficient progress on the withdrawal, can we discuss the framework for our future relationship. Starting parallel talks will not happen.”
The draft of guidelines will now be sent to all European leaders for approval ahead of the two years of negotiations.
Mr Tusk insisted that EU leaders will not pursue punitive approach, because "Brexit in itself is already punitive enough".
UK's commitment to European security is 'unconditional'
Boris Johnson has insisted the UK's commitment to the defence and security of Europe was "unconditional".
I want to stress one thing, the UK's commitment to the defence and security of this region, of Europe, is unconditional and it is not some bargaining chip in any negotiations that may be taking place elsewhere in this capital.
We make an unconditional commitment to the defence and the security of Europe.
'Theresa May is blackmailing Europe'
Theresa May is blackmailing Europe by linking security to a Brexit deal, François Fillon the presidential candidate for France's main conservative party, warned on Friday.
Mrs May threatened to withdraw cooperation with the EU on security on Wednesday within hours of invoking article 50 as France and Germany refused to begin trade talks before Britain agrees to pay a Brexit “divorce bill”.
In the formal letter that notified the European Union of Britain's intention to leave, Mrs May warned that the failure to strike a deal on any future relationship would have consequences for security.
"In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened," she wrote in the letter to European Council President Donald Tusk.
In a press conference on defence and security, Mr Fillon, 63, former prime minister in Nicolas Sarkozy's administration, said: "This shocks me."
"The security problem concerns all European countries. Indeed, the British were struck only a few days ago on home soil. The question of defence and security of the European continent faced with Islamist terrorism is non-negotiable. It is not a question that can be bandied about as condition for who knows what trade deal. I cannot imagine this reflects Mrs May's deep thinking. You don't pose conditions in terms of security."
Once the frontrunner, Mr Fillon's presidential campaign has been hampered by corruption allegations, and he is currently polling to come third - on around 18 per cent of voter intentions - in the first round of the election on April 23.
Centrist Emmanuel Macron and far-Right Marine Le Pen are currently polling to reach the runoff. However, around 40 per cent of the French are still undecided, leading Mr Fillon's camp to suggest that many Right-wingers could yet swing things his way.
Report from Henry Samuel in Paris
'Theresa May has been taken to Tusk today'
Commenting on the release of the draft European Council negotiation guidelines, Liberal Democrat leader Tim Farron said:
These guidelines show the strength of the EU in these negotiations, and the carelessness of the UK government in isolating themselves from our European allies.
The terms are clear: no sector by sector deals, no bilateral negotiations and no new trade deal until the withdrawal terms are agreed. This leaves no doubt that Davis’ comments about special arrangements for the car industry or financial sector are worthless.
It is still possible for the British people to stop a Hard Brexit and keep us in the Single Market. And if they want, it is still possible for the British people to choose to remain in the European Union. The Liberal Democrats are the only party opposing this hard, destructive Brexit.
Tory cabinet ministers talk about securing a deal with Europe that secures the UK exactly the same benefits as before. Theresa May has been taken to Tusk today.
Peter Foster's analysis of Doanld Tusk's guidelines
If Theresa May tried to set a positive tone for the coming Brexit negotiations in her Article 50 letter - calling for a “deep and special partnership” with the EU - then the response from Donald Tusk this morning was all business.
Beyond some pro forma promises to be “constructive throughout” and “strive to find an agreement” this was a cold, legalistic document in which Europe clearly presented itself as the boss in the coming negotiations and Britain as the supplicant.
Mr Tusk’s draft guidelines said that the European Council will monitor progress of the talks and “determine” when sufficient progress has been achieved to proceed to the next phase of the negotiations. Britain, in his view, has no say.
The European side says it is prepared for the negotiation to “fail” and pledged to minimise disruption caused by Britain’s abrupt departure from the EU only “to the extent possible”.
Beyond this distinctly uncollegiate and declaratory tone, the document then sets outs a series of substantive conditions and tests that - in the view of the European side - Britain must meet before discussions can begin on the comprehensive trade deal that Mrs May is seeking on behalf of the European Union.
Divorce terms, before trade talks
Echoing the French and German leaders after Mrs May delivered her letter, the European Council is clear that Britain must agree to the terms of its divorce before the door can be unlocked to discussions on a trade deal.
This flatly contradicts Mrs May’s request that the two negotiations take place “alongside” each other. To quote David Davis, the Brexit secretary Britain believes it is “unrealistic” to expect the UK to agree to a financial settlement without being clear what the shape of a future trade deal looks like.
But Mr Tusk says the “main purpose” of the negotiation will be to finalise the terms of the UK’s withdrawal and discussions on the future neighbourhood agreement will be secondary.
Specifically, that means that Britain must “settle the disentanglement” from previous financial and other commitment and provide as much clarify and “legal certainty” to EU citizens, businesses and stakeholders on what will happen to them after Brexit.
Mr Tusk wants a “single financial settlement” from the British before the date of withdrawal that will cover outstanding budgetary commitments and a host of other liabilities, including “contingent liabilities”.
Contingent liabilities, which cover a host of notional UK budget pledges to future EU projects that were made in the past are the biggest bone of contention in the coming talks and the main way that the EU side reaches its controversial figure of a 60bn euro settlement – a number not simply recognised by the British side.
But Mr Tusk appears determined to hold Britain to ransom over this, refusing the UK trade talks until both sides have at least agreed the basis for calculating Britain’s final liabilities, even if the precise number isn’t calculated until Brexit day itself.
British officials are clear, however, that this won’t wash.
Any financial settlement will have to be linked ultimately to the depth of Britain’s trade deal.
No going behind our backs
This is not so much a condition as a warning. If Britain seeks to ‘divide and rule’ by playing off the interests of one member state against another, then that will damage the UK’s chances of getting a good deal.
Mr Tusk is explicit on this point, noting that “so as not to undercut the position of the Union” the only negotiations will be between the European Commission’s negotiating team and the UK negotiating team.
This is an acknowledgment of risk that conflicting interests among EU member states will sow divisions among them when the trade talks do finally begin.
Some want to protect free movement, for example, while others are more agnostic on the subject; some have an interests in stealing a share of UK financial services, while others want minimum disruption to EU capital markets.
British negotiations have a detailed understanding of members offensive and defensive interests and, in practice, will quietly work to play off these interests against each other in order to shape a non-punitive deal that is in everyone’s interest.
However this clause will give EU member states who don’t want to play the game carte blanche to rebuff British backdoor approaches, referring diplomats back to “point 2” on the core principles of the EU’s negotiating guidelines: no going behind our backs.
Britain must ‘buy in’ to Europe to win a trade deal
One of Europe’s biggest fears is that if the EU grants the UK too-generous a trade deal then an economy as large and dynamic as the UK’s will find way to both “free ride” on the single market while using its new –found freedom to undercut the EU in global markets.
The fear is that unless the trade deal which binds the UK into the European standards on tax, competition, state-aid the UK will lead a regulatory ‘race to the bottom’.
European alarm was deepened on this point by Theresa May’s Lancaster House speech in January where she threatened that the UK could drastically re-orientate its economy if Europe did not come to terms.
Matthias Machnig, the German deputy economy minister, made the same point in interviews this morning, calling for a “reasonable framework” in tax and regulation, and warning “a race to the bottom in tax and regulation matters would make trade relations difficult.”
This is why Mr Tusk warns that a deal must “ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through, inter alia, fiscal, social and environmental dumping”.
In practice, this is what modern trade deals do – harmonizing standards across economic areas – but given the discrepancy in size between the two markets the fear among some Brexiteers is that Europe will effectively use its market size to dictate terms, tying British hands and reducing many of the potential benefits of quitting the EU.
And if there is a transition, then EU law must apply
Mrs May is very clear – as is the EU - that Brexit must be accomplished within 2 years, but both sides also recognise that in practice nailing down the details of any deal will take longer.
Accordingly, most people involved in the talks say that there will need to be transition period – what Mr Tusk calls a “time-limited prolongation of the Union acquis” – where the status quo pertains in some areas to give everyone more time to work the “modalities” of customs and other regulatory agencies.
But there is a kicker.
Mr Tusk says that this would require “existing Union regulatory, budgetary, supervisory and enforcement instruments and structures” to apply – in other words, some budget payments and continued writ of the European Court of Justice.
Unless Mrs May can negotiate acceptable alternatives or compromises, this will not feel like the real clean break that many Brexiteers feel they have been promised.
Analysis by Peter Foster
EU citizens will be able to 'move freely'
Michael Gove, one of the chief architects of Brexit, has said he envisages that EU citizens will be able to "move freely" in and around the UK after the pull-out is completed.
Speaking in Dublin, the prominent Tory and former cabinet minister said:
One of the things that I envisage is, after we leave the European Union, EU citizens will be able to move freely into the UK.
It is just they won't have the same rights to work and secure access to public services and welfare benefits.
Report from PA
'Just the principles'
EXCL - PM of Malta says UK's final Brexit payment will NOT have to be agreed before trade talks can begin. Just the principles. #A50— Carl Dinnen (@carldinnen) March 31, 2017
EXCL - Muscat; "it's not about having a number it's about what goes into the calculation" #A50— Carl Dinnen (@carldinnen) March 31, 2017
'It will not be a war'
Joseph Muscat, the prime minister of Malta, which currently hold the EU presidency, said any transition agreements would need to be governed by European institutions.
Speaking at the same conference as Donald Tusk, he said:
It will be a tough negotiation, but it will not be a war.
At the end of the day the two sides need to remain close to each other as friends.
But it is obvious for the 27 that membership of the European Union is the superior option.
No 10 responds to Tusk
A Government spokesman said:
These are draft guidelines and we look forward to beginning negotiations once they have been formally agreed by the 27 member states.
It is clear both sides wish to approach these talks constructively, and as the Prime Minister said this week, wish to ensure a deep and special partnership between the UK and the European Union.
The EU's draft guidelines for Brexit negotiations
No trade negotiations without divorce settlement
The Union and its Member States stand ready to engage in preliminary and preparatory discussions to this end in the context of negotiations under Article 50 TEU, as soon as sufficient progress has been made in the first phase towards reaching a satisfactory agreement on the arrangements for an orderly withdrawal.
Any such transitional arrangements must be clearly defined, limited in time, and subject to effective enforcement mechanisms. Should a time-limited prolongation of Union acquis be considered, this would require existing Union regulatory, budgetary, supervisory and enforcement instruments and structures to apply.
Reciprocal rights a priority
Agreeing reciprocal guarantees to settle the status and situations at the date of withdrawal of EU and UK citizens, and their families, affected by the United Kingdom's withdrawal from the Union will be a matter of priority for the negotiations.
A single financial settlement should ensure that the Union and the United Kingdom both respect the obligations undertaken before the date of withdrawal. The settlement should cover all legal and budgetary commitments as well as liabilities, including contingent liabilities.
No hard border with Ireland
In view of the unique circumstances on the island of Ireland, flexible and imaginative solutions will be required, including with the aim of avoiding a hard border, while respecting the integrity of the Union legal order. In this context, the Union should also recognise existing bilateral agreements and arrangements between the United Kingdom and Ireland which are compatible with EU law.
ECJ should remain competent to adjudicate
Arrangements ensuring legal certainty and equal treatment should be found for all court procedures pending before the Court of Justice of the European Union upon the date of withdrawal that involve the United Kingdom or natural or legal persons in the United Kingdom. The Court of Justice of the European Union should remain competent to adjudicate in these procedures.
No tax cuts or bonfire of regulations
Any free trade agreement should be balanced, ambitious and wide-ranging. It cannot, however, amount to participation in the Single Market or parts thereof, as this would undermine its integrity and proper functioning. It must ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through, inter alia, fiscal, social and environmental dumping.
Spain and Gibraltar
After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom.
Trade negotiations could begin in Autumn
Negotiations on future trade relations between the UK and EU could begin as early as this autumn, European Council president Donald Tusk has indicated.
But the move, much desired by Downing Street, will only take place once "sufficient progress" has been achieved in talks on the arrangements for Britain's withdrawal.
The EU27 does not and will not pursue a punitive approach. Brexit in itself is already punitive enough.
After more than 40 years of being united, we owe it to each other to do everything we can to make this divorce as smooth as possible.
Speaking in Malta, Mr Tusk said he will visit London for talks with Theresa May ahead of a special summit of the 27 remaining EU states in Brussels on April 29, when they are expected to approve the negotiating guidelines, clearing the way for talks to begin in earnest.
'There is a lot of goodwill'
Speaking as he arrived for a Nato summit in Brussels, Foreign Secretary Boris Johnson said: "We really are moving forward now, and there's a lot of goodwill, a lot of willingness to achieve what the Prime Minister has said she wants to achieve, which is an orderly transition and then a deep and special partnership between a strong EU and a strong UK."
Boris Johnson: We really are moving forward now, there is a lot of goodwill #brexit— Steven Swinford (@Steven_Swinford) March 31, 2017
In full: Donald Tusk's statement
First of all I would like to thank Prime Minister Muscat for his hospitality and the extraordinary job already done by the Maltese presidency.
A steady, solid and superb rotating Presidency of the Council is even more important in times like these. So thank you again for your work, Joseph.
The main point on our agenda was obviously Brexit.
Today my task is to propose the draft negotiating guidelines on Brexit to the 27 EU leaders. To the 27, because from Wednesday, after triggering Article 50, the United Kingdom is now on the other side of the negotiating table.
We have worked very fast, because, as you know, the Treaty gives us only two years to reach an agreement.
Allow me to outline the main elements and principles of my proposal. We treat them as fundamental and will firmly stand by them.
Our duty is to minimise the uncertainty and disruption caused by the UK decision to withdraw from the EU for our citizens, businesses and Member States. As I have already said, in essence it is about damage control.
We need to think of people first. Citizens from all over the EU live, work and study in the UK.
And as long as the UK remains a member, their rights are fully protected. But we need to settle their status and situations after the withdrawal with reciprocal, enforceable and non-discriminatory guarantees.
Second, we must prevent a legal vacuum for our companies that stems from the fact that after Brexit the EU laws will no longer apply to the UK.
Third, we will also need to make sure that the UK honours all financial commitments and liabilities it has taken as a Member State.
It is only fair towards all those people, communities, scientists, farmers and so on to whom we, all the 28, promised and owe this money.
I can guarantee that the EU, on our part, will honour all our commitments.
Fourth, we will seek flexible and creative solutions aiming at avoiding a hard border between Northern Ireland and Ireland. It is of crucial importance to support the peace process in Northern Ireland.
These four issues are all part of the first phase of our negotiations. Once, and only once we have achieved sufficient progress on the withdrawal, can we discuss the framework for our future relationship.
Starting parallel talks on all issues at the same time, as suggested by some in the UK, will not happen.
And when talking about our future relationship, we obviously share the UK's desire to establish a close partnership between us. Strong ties, reaching beyond the economy and including security cooperation, remain in our common interest.
Let me conclude by saying that the talks which are about to start will be difficult, complex and sometimes even confrontational.
There is no way around it. The EU27 does not and will not pursue a punitive approach. Brexit in itself is already punitive enough.
After more than forty years of being united, we owe it to each other to do everything we can to make this divorce as smooth as possible.
This is also why Prime Minister May and I have agreed to stay in close and regular contact throughout this process. I intend to visit Theresa May in London before the April European Council.
'We need to settle EU citizens status and situation'
Donald Tusk says it is the "duty" of the EU to minimise the uncertainty caused by the UK decision to withdraw from the EU for "our citizens, businesses and member states."
We have to think of people first. Citizens from all over the EU live, work and study in the UK, and as long as the UK remains a member their rights are fully protected.
But we need to settle their status and situation after the withdrawal with reciprocal, enforceable and non-discriminatory guarantees.
Our duty is to minimise uncertainty, disruption caused by Brexit for citizens, businesses & Member States. It's about damage control.— Donald Tusk (@eucopresident) March 31, 2017
EU will extract 'divorce bill' from Britain
Donald Tusk hints that the EU is determined to extract a "divorce bill" from Britain.
We will need to make sure that the UK honours all financial commitments and liabilities it has taken as a member state.
It is only fair towards all of those people - communities, scientists, farmers and so on - to whom we, all the 28, promised and owed this money.
I can guarantee that the EU, on our part, will honour all our commitments.
'Security cooperation as a bargaining chip'
Donald Tusk tells the press conference that terrorism is a shared problem and any interpretation of the issue as a bargaining chip is a "misunderstanding"
No one is interested in using security cooperation as a bargaining chip.
Strong ties reaching beyond the economy, and including security co-operation remain in our common interest.
'EU will act as one'
Britain's unprecedented decision to withdraw creates "significant uncertainties that have the potential to cause disruption, in particular in the UK but also in other member states," said the draft guidelines unveiled by Donald Tusk.
They state that the EU will "give priority to an orderly withdrawal", and will take a phased approach, with the first phase aiming to settle the terms of the UK's removal from the rights and obligations derived from membership, and provide "as much clarity and legal certainty as possible" to citizens and businesses.
Only once "sufficient progress" has been achieved on this phase will talks move on to the future relationship.
In a clear warning to the UK not to attempt to gain advantage by using "divide-and-rule" tactics to cut special deals with national capitals, the guidelines state that the EU will "act as one".
So as not to undercut the position of the Union, there will be no separate negotiations between individual member states and the United Kingdom on matters pertaining to the withdrawal.
The guidelines promise the EU will take a "constructive" approach to negotiations and hopes to keep the UK as a "close partner" in the future.
But they stress that the EU's overall objective will be "to preserve its interests, those of its member states, its citizens and its businesses".
EU will ban UK from cutting tax or scrapping regulation
Angela Merkel will insist that the U.K. rules out tax dumping as part of any trade deal struck during Brexit negotiations, a senior official from the German economy ministry has said.
"We don't want to erect barriers to trade, but we need fair dealings," German Deputy Economy Minister Matthias Machnig said in a Bloomberg Television interview.
We can only conclude a fair trade agreement with advantages for both sides if there are reasonable framework conditions in the areas of tax, regulation and the like.
A race to the bottom in tax and regulation matters would make trade relations difficult.
'My first divorce'
"This is my first divorce and I hope my last one", Donald Tusk tells journalists.
Donald Tusk just can't get over Brexit: “This is my first divorce and I hope my last one."— Matt Dathan (@matt_dathan) March 31, 2017
'Brexit in itself is already punitive enough'
He says EU leaders will not pursue punitive approach, because "Brexit in itself is already punitive enough."
Talks will be "difficult and confrontational," he adds.
After more than 40 years of being united, we owe it to each other to do everything we can to make this divorce as smooth as possible.
EU27 does not, will not pursue punitive approach. Brexit in itself is already punitive enough.— Donald Tusk (@eucopresident) March 31, 2017
Trade talks could begin once 'progress' made in talks
Donald Tusk is now speaking in Malta where he says the negotiations on future trade relations between the UK and EU can only begin after "sufficient progress" has been made on disentangling Britain from the bloc.
It its draft negotiating guidelines for the upcoming withdrawal talks, the European Council has not ruled out trade talks beginning within the two-year period leading up to Brexit.
Mr Tusk said he hoped a judgment would be made in the autumn on whether sufficient progress had been made in talks to enable trade negotiations to begin.
"It must be clear that EU, as 27, decides if sufficient progress has been achieved, probably in the autumn, at least I hope so", he said.
Tusk says parallel talks on exit and future relations with Britain "will not happen".
The United Kingdom is now on the other side of the negotiating table.
Our duty is to minimise uncertainty, disruption caused by Brexit for citizens, businesses and Member States.
It's about damage control.
Only once we have achieved sufficient progress on the withdrawal, can we discuss framework for the future.— Donald Tusk (@eucopresident) March 31, 2017
'It's intended as a carrot'
EU source: Tusk will make clear the withdrawal talks are 'first phase' and new relationship with Britain can only be discussed when agreed— Tamara Cohen (@tamcohen) March 31, 2017
Tusk won't say how long 'first phase' will take but will warn Britain it has to be done first. "It's intended as a carrot", says EU source— Tamara Cohen (@tamcohen) March 31, 2017
Tusk to set out EU's approach to Brexit talks
The EU's approach to the talks that will establish Britain's new relationship with the remaining 27 member states is to be set out by European Council president Donald Tusk this morning.
We will have all the latest from Malta, where Mr Tusk will be leading a press conference at 8:45am.
Following the triggering of the Article 50 withdrawal process by Theresa May on Wednesday, Mr Tusk is to circulate his draft guidelines for the forthcoming negotiations to the other EU leaders.
The guidelines are not expected to be published, or sent to Downing Street, because they are still only in draft form.
European leaders are expected to formally reject British demands to hold trade talks at the same time as negotiating the terms of the UK’s "divorce" from the EU, leaving both sides heading for an early stand-off in the Brexit talks.
The hardline EU response will be outlined in draft negotiating guidelines that will be distributed by the European Council to the remaining 27 member states at a closed-door meeting in Brussels.
Theresa May’s request that the terms of the future UK-EU partnership be negotiated “alongside” the terms of the divorce – rejected by the German chancellor Angela Merkel on Wednesday - was shot down again on Thursday, this time by the outgoing French president, Francois Hollande.
The draft guidelines, which have been drawn up by Donald Tusk, the European Council president, will be circulated to member state capitals for a month of discussions ahead of an EU summit on April 29 to finalise the language.
Once agreed, they will be converted into a detailed, legally binding negotiating “mandate” for Michel Barnier, the chief EU Brexit negotiator.
With Europe’s two major powers apparently united in agreement on the issue, senior EU officials said that it was “highly unlikely” that the 27 EU members states would substantially shift their positions on the sequence of the talks.