LDN - Business

Progress on Brexit, but not enough to open trade talks

[September 28, 2017] By Alastair Macdonald and Jan Strupczewski

BRUSSELS (Reuters) - The European Union and Britain made progress in the latest round of divorce talks, but not enough to move to the next phase of discussions on a transition period after Brexit or a future trade deal, top negotiators said on Thursday.

"We have had a constructive week, yes, but we are not yet there in terms of achieving sufficient progress. Further work is needed in the coming weeks and months," chief EU negotiator Michel Barnier told reporters, praising a "new dynamic" created by concessions made last week by Prime Minister Theresa May.

She had hoped that a speech she made at Florence on Friday would unblock the three-month-old talks and paving the way for the EU to open discussions on a post-Brexit free trade deal by allowing Barnier to tell EU leaders that there is "sufficient progress" on three key "divorce" issues -- rights for expatriate citizens, the Northern Irish border and how much Britain owes.

Barnier's British counterpart, Brexit Secretary David Davis, said they had made "considerable progress" in four days of talks in Brussels and repeated his eagerness to move on to discuss what happens after Brexit in March 2019.

Barnier highlighted two key areas of disagreement.

First, on citizens' rights, he welcomed a confirmation from Davis that the withdrawal treaty guaranteeing the rights of 3 million EU citizens in Britain should have "direct effect" in British law -- effectively, Britain cannot change them via new legislation. But the Union continues to demand that people also have the right to pursue grievances at the EU's own court.

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Britain's Prime Minister Theresa May speaks at an event to mark the 20th anniversary of the Bank of England's independence, in the City of London, September 28, 2017. REUTERS/Mary Turner

Second, Barnier said Britain had clarified that an offer by May that the other 27 states should not lose out financially from Brexit during the current EU budget period ending at the end of 2020 would cover payments only in 2019 and 2020. That, he said, was not enough. Commitments agreed in the current budget also lead to outward payments in subsequent years.

Further on the money issue, which both sides say has become the most intractable, Barnier said Britain had yet to specify which commitments it would honor after May said that it would do so. The EU has estimated that Britain will owe tens of billions of euros (dollars) to cover outstanding liabilities.

"For the EU, the only way to reach sufficient progress is that all commitments undertaken by the 28 are honored by the 28," Barnier said.

Davis declined to put a figure on what Britain might pay.

The two sides are due to meet again in just over two weeks, on Oct. 9. Were Barnier to judge those have made "sufficient progress" -- a deliberately vague term set by the EU 27 -- he would be in a position to recommend to leaders at a summit on Oct. 19-20 that they let him launch trade talks.

(Reporting By Jan Strupczewski and Alastair Macdonald, editing by Robert-Jan Bartunek)

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