Tusk rejects May’s proposal, claims there will be ‘negative consequences’

The European Union on Wednesday rejected Britain’s calls for completely free trade after Brexit, saying in its longawaited guidelines for future ties that frictions were inevitable.

The draft negotiating guidelines released by EU President Donald Tusk warned that there would be “negative economic consequences” as a result of Britain’s vote to leave.

The rebuff came just days after British Prime Minister Theresa May called for the “broadest and deepest possible agreement,” and as her finance minister urged a special deal for the City.

Tusk’s draft red lines, which must now be adopted by the remaining 27 member states, said the EU was bound by Britain’s self-imposed conditions for leaving the European Union.

“Being outside the Customs Union and the Single Market will inevitably lead to frictions,” said the draft guidelines seen by AFP. “This will unfortunately have negative economic consequences.”

The EU guidelines added that “there can be no ‘cherry-picking’” – Brussels jargon for getting free access in certain sectors including financial services without the obligations and costs of membership, including respecting freedom of movement of people from European Union countries.

They did not specifically mention London’s call for its financial services industry to continue having unfettered access to European markets, but said that in “trade in services” Britain would be treated as a third country with different rules to the EU.

Former Polish premier Tusk was due to formally unveil the guidelines at a press conference in Luxembourg with the tiny duchy’s prime minister Xavier Bettel.

The leaders of the remaining 27 EU states must then approve the plans at a Brussels summit on March 22, setting the template for EU negotiator Michel Barnier in trade talks that could start as soon as April.

A political declaration on future relations will be attached to the Brexit divorce agreement between Britain and the EU, which Barnier wants in place by November at the latest.

Any actual trade deal will have to wait until after Brexit day on March 29, 2019.