Tag Archives: Brexit

UK government says to introduce EU ‘repeal bill’ to parliament next week

Britain's Secretary of State for Exiting the European Union David Davis leaves Downing Street after a cabinet meeting in London, Britain July 4, 2017. REUTERS/Hannah McKay

LONDON (Reuters) – Legislation to begin the process of transferring European Union law into British law will be presented to parliament next week, Prime Minister Theresa May’s spokesman said on Tuesday.

The spokesman said Brexit minister David Davis had given colleagues an update on the “Repeal Bill”, which will shift EU legislation into British law as part of the Brexit process, at a weekly meeting of May’s top team of ministers.

“He said the legislation, which is the start of the legislative process for Brexit, is expected to be tabled next week,” the spokesman told reporters.

Tens of thousands of EU-related laws have made their way onto the British statute book during more than 40 years of membership of the bloc and unpicking that complex legislative web is likely to take many years.

The repeal bill, which the government says will help achieve a smooth transition as Britain leaves the EU, will transpose EU law and repeal the 1972 European Communities Act which formalizes Britain’s EU membership.

It will also give parliament the power to change existing laws to make sure they work after Brexit.

(Reporting by Kylie MacLellan, editing by Elizabeth Piper)

EU fears Brexit delay, uncertainty after shock UK vote

Britain's Prime Minister Theresa May leaves the Conservative Party's Headquarters after Britain's election in London, June 9, 2017. REUTERS/Peter Nicholls

By Alastair Macdonald

BRUSSELS (Reuters) – European Union leaders fear Prime Minister Theresa May’s shock loss of her majority in the snap British election will delay Brexit talks due to start this month and so raise the risk of negotiations failing.

“We don’t know when Brexit talks start. We know when they must end,” tweeted Donald Tusk, the EU summit chair overseeing negotiations that the EU had planned to start on June 19.

His reference to the March 2019 deadline when Britain will be out of the European Union with or without an agreed deal to avoid legal limbo for people and businesses reflected mounting concern that British chaos could further disrupt all of Europe.

“Do your best to avoid a ‘no deal’ as result of ‘no negotiations’,” Tusk said, calling for urgency to avert the risk that, having bound Britain in March to a two-year countdown to Brexit, May’s failed electoral gamble could waste further time.

Guenther Oettinger, the German member of the EU executive, warned that a weak British leadership was a problem for the Union: “We need a government that can act,” he told the Deutschlandfunk radio station. “With a weak negotiating partner, there’s the danger that the negotiations will turn out badly.”

Oettinger’s boss, European Commission President Jean-Claude Juncker, told a German paper: “It’s up to the British to make the next move … We’ve been ready to negotiate for months.”

Juncker’s Brexit negotiator Michel Barnier made clear talks could only now start once Britain has a team in place: “Brexit negotiations should start when UK is ready,” he tweeted.

“Timetable and EU positions are clear. Let’s put our minds together on striking a deal.”

French Prime Minister Edouard Philippe was quick to scotch any suggestion that Britain might do a U-turn and ask to stay in the EU – something that would need EU agreement.

Few Europeans voiced much sympathy for May. Some compared her to her predecessor David Cameron, who sought to silence Eurosceptic fellow Conservatives by calling the referendum on EU membership which ended his career and shocked Europe.

“YET ANOTHER OWN GOAL”

“Yet another own goal, after Cameron now May, will make already complex negotiations even more complicated,” tweeted Guy Verhofstadt, the liberal former Belgian premier who is the European Parliament’s point man for the Brexit process.

German conservative Markus Ferber, an EU lawmaker involved in discussions on access to EU markets for Britain’s financial sector, was scathing: “At the most untimely point,” he said, “The British political system is in total disarray. Instead of strong and stable leadership we witness chaos and uncertainty.”

May, who had campaigned against Brexit last year, delivered her terms for withdrawal on March 29 that included a clean break from the EU single market. She then called a snap election hoping for a big majority to strengthen her negotiating hand.

That was also the broadly desired outcome in Brussels, where leaders believed that a stronger May would be better able to cut compromise deals with the EU and resist pressure from hardline pro-Brexit factions in her party to walk out without a deal.

Elmar Brok, a prominent German conservative member of the EU parliament, said Europeans would be disappointed: “Now no prime minister will have that room for manoeuvre,” he said.

European leaders have largely given up considering the possibility that Britain might change its mind and ask to stay.

Most now appear to prefer that the bloc’s second-biggest economy leave smoothly and quickly. Having recovered from last year’s shock, Germany, France and other powers see Brexit as a chance to tighten EU integration without the awkward British.

As news of British mayhem broke, Juncker was launching a new push for an expanded EU defence project which Britain long opposed, fearing a clash with the U.S.-led NATO alliance.

FEAR OF COLLAPSE

A breakdown in negotiations could lead to Britain ceasing to be an EU member without having in place the kind of legal agreements that would avoid a chaotic limbo for people and businesses. That would also make it improbable that Britain could secure the rapid free trade agreement it wants with the EU after it leaves.

In a note to clients, UBS wrote that a breakdown in talks was now more likely and would make it harder to reach a trade deal: “A tighter political balance could make it easier for Eurosceptics … to prevent the government from offering the compromises needed to secure a trade deal.”

Talk in Britain that a different ruling coalition could seek a “softer” Brexit than May has proposed, possibly seeking to remain in the single market, is also problematic for the EU.

While the other 27 states would quite possibly be willing to extend to Britain the same kind of access to EU markets they offer to Norway or Switzerland, they have made clear that would mean Britain continuing to pay into the EU budget and obey EU rules, including on free migration across the bloc, while no longer having any say in how the Union’s policies are set.

“Maybe there won’t be a hard Brexit,” Norwegian Foreign Minister Boerge Brende said. “Maybe Britain will have to show greater flexibility in the negotiations.”

But EU officials question how any British government could persuade voters to accept a Norway-style package and so would be wary of starting down the path of negotiating it for fear of ending up without a deal that both sides could ratify in 2019.

(Editing by Janet Lawrence)

EU leaders united on Brexit demands – for now

European Heads of State meet during a EU summit in Brussels, Belgium April 29, 2017. REUTERS/Virginia Mayo/Pool

By Farah Salhi and Jan Strupczewski

BRUSSELS (Reuters) – European Union leaders endorsed a stiff set of divorce terms for Britain at a summit on Saturday, rejoicing in a rare show of unity in adversity but well aware that may start to fray once negotiations begin.

Meeting for the first time since British Prime Minister Theresa May formally triggered a two-year countdown to Brexit in late March, the 27 other EU leaders took just a minute as they sat down to lunch in Brussels to approve 8 pages of negotiating guidelines hammered out by their diplomats over the past month.

“Guidelines adopted unanimously. EU27 firm and fair political mandate for the Brexit talks is ready,” summit chair Donald Tusk tweeted. Leaders applauded, officials said, after formally adopting unmodified the text drafted by their aides.

The guidelines were published here: http://www.consilium.europa.eu/en/press/press-releases/2017/04/29-euco-brexit-guidelines/

Those will bind Michel Barnier, their chief negotiator, to seek a deal that secures the rights of 3 million EU expats living in Britain, ensure London pays tens of billions of euros Brussels thinks it will be owed and avoids destabilizing peace by creating a hard EU-UK border across the island of Ireland.

“We are ready,” Barnier said. “We are together.”

They also rule out discussing the free trade deal May wants until they see progress on agreeing those key withdrawal terms.

“Before discussing the future, we have to sort out our past,” Tusk said in comments echoed by German Chancellor Angela Merkel, who said “substantive issues” must first be settled.

In a mark of how last year’s Brexit vote has called into question the unity of the United Kingdom itself, leaders will also offer Irish Prime Minister Enda Kenny a pledge that if Northern Ireland, which voted against Brexit, ever unites with his country, it will automatically be in the EU.

The leaders may spend more time in discussions, including with Barnier, on what criteria they may use to judge, come the autumn, whether he has made sufficient progress to warrant a start on trade talks. They may also talk about how to manage a transition, after Britain leaves in 2019, to a new relationship likely to take many more years to finalize.

That decision on what is “sufficient” is the kind of debate that can poison relations as the 27 seek to protect national interests. Also contentious will be which countries scoop the prizes of hosting two EU agencies set to be moved from London.

With most of the 27 offering to house the European Medicines Agency (EMA) and several wanting the European Banking Authority (EBA), Tusk and EU chief executive Jean-Claude Juncker will propose criteria for making the choices to avoid unseemly rows.

“We are remarkably united,” one national leader who will be at the table told Reuters. “But then it’s always easy to be united on what you want before you start negotiating.”

Belgian Prime Minister Charles Michel warned against falling into a “trap” where Britain divided the bloc to its advantage.

DIFFERENCES

Among possible differences, the priorities of poor, eastern states are to secure residency rights for their many workers in Britain and British money for the EU budget; Germany and others set store by a smooth transition to a new free trade agreement.

Unwonted unity has been forged by the shock of Brexit; it breaks a taboo and raises fears of further break-up at the hands of nationalists like French far-right leader Marine Le Pen. She will contest her country’s presidential election run-off on May 7, though few expect her to beat centrist Emmanuel Macron.

The EU sees it as vital that Britain not be seen to profit from Brexit to dissuade others from following suit.

However, some officials are also voicing concern that the process of weaving maximalist demands into the negotiating text could risk souring the atmosphere with May, who expects to start talks shortly after the UK election she has called for June 8.

Senior officials in Brussels believe the risk of a breakdown in talks that could see Britain simply walking out into chaotic legal limbo in March 2019 has diminished since May wrote to Tusk on March 29 in terms recognizing a need to compromise.

Merkel, facing her own election in September, warned Britain last week against lingering “illusions” of how much access it can get to EU markets. And some diplomats fear the tone of EU demands sounds too aggressive and may create a popular backlash in Britain that might make it hard for May to strike a deal.

“These are legally solid arguments,” one said, noting for example a demand Britain not only lose the EMA and EBA but also pay the moving costs. “But we don’t want to sound too punitive.”

Luxembourg Prime Minister Xavier Bettel said: “They are maybe not any more in our family but they are still our neighbors so we should have respect for each other.”

(Reporting by Philip Blenkinsop, Foo Yun Chee, Alastair Macdonald, Farah Salhi, Andreas Rinke and Jan Strupczewski; Writing by Alastair Macdonald; Editing by Janet Lawrence)

Brexit to dominate as May sets out stall for UK re-election

FILE PHOTO: Britain's Prime Minister Theresa May speaks to the media outside 10 Downing Street in London, Britain April 18, 2017. REUTERS/Stefan Wermuth/File Photo

By Kylie MacLellan

LONDON (Reuters) – Whatever Prime Minister Theresa May’s Conservatives promise in their manifesto before a June election, managing Britain’s exit from the European Union will limit her opportunity to push wide-ranging radical domestic change.

Brexit is already diverting government attention from other, often pressing, issues – the number of laws coming into force has dived to a 20-year low – and parliament will be occupied for a long time in deciding the fate of EU legislation introduced during Britain’s four-decade membership of the bloc.

May, who was appointed prime minister shortly after Britain voted last year to leave the EU, has framed the election on June 8 as an opportunity to bolster support for her Brexit plan, while saying it will help her put her own stamp on government.

She will rip up several of the pledges made by predecessor David Cameron and hope a bigger majority will secure parliamentary backing for some more contentious measures, such as opening new selective schools and capping energy prices.

But beyond a few flagship policies she is most passionate about, Brexit will dominate.

The complexity of delivering Brexit will sap government and parliamentary time, possibly requiring as many as 15 pieces of major legislation, and leave little room for domestic policy promises.

“The reality is that Brexit eclipses so many other legislative priorities, and will do for years to come,” said Daniel Greenberg, a legal adviser on domestic legislation to the lower House of Commons.

The manifesto, expected to be published early next month, will set out the promises May has made on Brexit, including plans to leave the EU’s single market, end free movement of people from the remaining member states and pull out of the European Court of Justice, which rules on EU law.

But it is unlikely to go into detail on her negotiating stance after months of keeping her cards close to her chest.

DIVERTING ATTENTION

Analysis by Thomson Reuters legal business shows 1,642 pieces of legislation were introduced in 2016, down 29 percent from the previous year and the lowest level since 1997.

“The last government slowed down on legislative activity ahead of the vote, and now the decision has been taken to leave the EU, only the more favored non-Brexit related issues are going to see significant legislative attention,” said Greenberg.

The government proposes to convert all EU laws into domestic legislation, after which further parliamentary time will be spent deciding which should then be amended, replaced or repealed.

On top of this, the Institute for Government (IFG) think tank predicts 10 to 15 new bills and thousands of pages of secondary legislation will need to be passed by parliament to put in place arrangements in areas such as immigration and customs before Britain’s expected EU departure in March 2019.

On average the Queen’s Speech, which sets out the government’s legislative programme for the year, contains around 20 flagship bills, leaving little room for non-Brexit measures.

The government, which is cutting spending to reduce the budget deficit, also does not have the capacity to focus on major new policies unrelated to Britain’s EU exit.

Some of the ministries set to be heavily involved in Brexit preparations, such as the Home Office and the Department for Environment, Food and Rural Affairs, have faced the biggest cuts to their budgets and staffing levels, according to the IFG.

“Brexit is going to take so much public policy time, political time and cabinet time that I am not sure how this country can address all of the other things it needs to address,” said Brigid Laffan, director of the European University Institute’s Robert Schuman Centre.

BREXIT-OBSESSED

Beyond leaving the EU, voters cite healthcare as the next biggest issue facing the country, followed by immigration, the economy, housing and education, according to pollsters YouGov.

The government has been under pressure on many of these issues, with housebuilding falling well short of its promised level, immigration running at nearly three times its target, and schools complaining of cuts to funding.

The Conservative manifesto for the last election in 2015 included a pledge to spend at least an additional 8 billion pounds ($10 billion) on the National Health Service (NHS) by 2020, but the chief executive of NHS England has said it needs as much as 21 billion pounds.

That manifesto also promised to cap residential social care charges for the elderly from 2016, but shortly after the election the government announced this would be delayed to 2020.

“Having such a Brexit-obsessed government means that they are not doing their day job. They are not providing the decent public services that people want,” former Liberal Democrat leader and deputy prime minister Nick Clegg told the BBC.

Yet with the opposition Labour Party divided and accused of lacking a clear message on Brexit, polls suggest May’s Conservatives will be returned to power with a bigger majority.

That gives her the freedom to focus on Brexit and a handful of other measures which she might otherwise have struggled to get past even her own party, such as new selective grammar schools, or those which are less traditionally associated with the Conservatives’ laissez-faire economic policy.

May’s “modern industrial strategy” – a interventionist approach to rebalance Britain’s heavily services-based economy – will feature, while ministers have said there will also be a pledge to act in the energy market, possibly through a cap on prices for domestic customers.

The Conservatives have also raised the prospect of scrapping a 2015 promise not to raise three taxes which are the state’s biggest revenue raisers and to protect pension increases.

Last month finance minister Philip Hammond was forced to reverse plans to raise payroll taxes for the self-employed amid accusations that it broke that manifesto pledge.

“It’s self-evidently clear that the commitments that were made in the 2015 manifesto did, and do today, strain the ability of the government to manage the economy flexibly,” Hammond said during a trip to Washington last week.

($1 = 0.7802 pounds)

(editing by David Stamp)

British PM May calls for early election to strengthen Brexit hand

Britain's Prime Minister Theresa May speaks to the media outside 10 Downing Street, in central London, Britain April 18, 2017. REUTERS/Toby Melville

By Elizabeth Piper, Kylie MacLellan and William James

LONDON (Reuters) – British Prime Minister Theresa May called on Tuesday for an early election on June 8, saying she needed to strengthen her hand in divorce talks with the European Union by shoring up support for her Brexit plan.

Standing outside her Downing Street office, May said she had been reluctant about asking parliament to back her move to bring forward the election from 2020, but decided it was necessary to win support for her ruling Conservative Party’s efforts to press ahead with Britain’s departure from the EU.

Some were surprised by her move – she has repeatedly said she does not want to be distracted by time-consuming campaigning – but opinion polls give her a strong lead, the economy is weathering the Brexit vote and she has faced opposition from her own party for some of her domestic reforms.

The pound rose to a two-and-a-half-month high against the U.S. dollar after the announcement, but Britain’s main share index fell to its lowest point in more than seven weeks.

“It was with reluctance that I decided the country needs this election, but it is with strong conviction that I say it is necessary to secure the strong and stable leadership the country needs to see us through Brexit and beyond,” May said.

“Every vote for the Conservatives will make it harder for opposition politicians who want to stop me from getting the job done.”

Britain joins a list of western European countries scheduled to hold elections this year. Votes in France in April and May and in Germany in September have the potential to reshape the political landscape around the two years of Brexit talks with the EU expected to start sometime in June.

May is capitalising on her runaway lead in the opinion polls. The Conservative Party is around 20 points ahead of the main opposition Labour Party, a large lead for an incumbent party two years after the last parliamentary election.

The prime minister’s own personal ratings also dwarf those of Labour leader Jeremy Corbyn, with 50 percent of those asked saying she would make the best prime minister. Corbyn wins only 14 percent, according to pollster YouGov.

CHALLENGE

Before holding the election, May must first win the support of two-thirds of the parliament in a vote on Wednesday. Labour said it will vote in favour of a new election, meaning she should be able to get it through.

“I welcome the prime minister’s decision to give the British people the chance to vote for a government that will put the interests of the majority first,” Corbyn said in an emailed statement.

Other members of his party were less enthusiastic and other parties criticised her decision. Nicola Sturgeon, first minister of the Scottish government, described it as “huge political miscalculation” that could help her efforts to hold a new independence referendum.

May, a former interior minister, was appointed prime minister after Britain’s vote to leave the European Union in June 2016 forced the resignation of her predecessor David Cameron. A new election will be a vote on her performance so far.

Her spokesman said she had the backing of her top team of ministers and had informed Queen Elizabeth of her plans.

If the opinion polls are right, she will win a new mandate for a series of reforms she wants to introduce in Britain and also a vote of confidence in a vision for Brexit which sees the country outside the EU’s single market.

“The decision facing the country will be all about leadership,” May said.

“It will be a choice between strong and stable leadership in the national interest with me as your prime minister, or weak and unstable coalition government, led by Jeremy Corbyn, propped up by the Liberal Democrats who want to reopen the division of the referendum.”

(Additional reporting by William James, Kate Holton and Andy Bruce, writing by Estelle Shirbon; Editing by Sonya Hepinstall)

Let’s minimize the damage of Brexit, Eurogroup chief says

BERLIN (Reuters) - Britain and the remaining 27 members of the European Union should stay away from the cliff edge of Britain falling back on World Trade Organization terms at the end of Brexit negotiations, Eurogroup chairman Jeroen Dijsselbloem said. "Let's try to minimize the damage," he said of Brexit, speaking at a banking conference in Berlin on Thursday. Dijsselbloem, who said he would discuss Greece with German Finance Minister Wolfgang Schaeuble while in Berlin, said the more he thought about Brexit, the more worried he became. He singled out financial stability as one area of particular risk. Asked about "passporting" rights for Britain-based institutions to sell financial services in the EU single market after Brexit, Dijsselbloem replied: "I think, also talking to financial players from the City, that passporting won't be the answer. There will be different regimes for different sub-sectors of the financial sector." "Equivalence will be part of the solution," he added of a system whereby Brussels grants access to non-EU firms that comply with rules similar to those in the bloc. "But here again, declaring the rules and regulations and the supervision of the UK equivalent to that of the EU at the outset is quite easy, but over time our standards and the way of supervision will start to diverge," Dijsselbloem said. "So if you want to maintain equivalence over time you will have to commit, also in the long-run, to staying close to the European standards," he added. "Looking to the future, we will have to find to ways to regularly assess whether we are still equivalent." (Writing by Paul Carrel Editing by Jeremy Gaunt)

BERLIN (Reuters) – Britain and the remaining 27 members of the European Union should stay away from the cliff edge of Britain falling back on World Trade Organization terms at the end of Brexit negotiations, Eurogroup chairman Jeroen Dijsselbloem said.

“Let’s try to minimize the damage,” he said of Brexit, speaking at a banking conference in Berlin on Thursday.

Dijsselbloem, who said he would discuss Greece with German Finance Minister Wolfgang Schaeuble while in Berlin, said the more he thought about Brexit, the more worried he became. He singled out financial stability as one area of particular risk.

Asked about “passporting” rights for Britain-based institutions to sell financial services in the EU single market after Brexit, Dijsselbloem replied: “I think, also talking to financial players from the City, that passporting won’t be the answer. There will be different regimes for different sub-sectors of the financial sector.”

“Equivalence will be part of the solution,” he added of a system whereby Brussels grants access to non-EU firms that comply with rules similar to those in the bloc.

“But here again, declaring the rules and regulations and the supervision of the UK equivalent to that of the EU at the outset is quite easy, but over time our standards and the way of supervision will start to diverge,” Dijsselbloem said.

“So if you want to maintain equivalence over time you will have to commit, also in the long-run, to staying close to the European standards,” he added. “Looking to the future, we will have to find to ways to regularly assess whether we are still equivalent.”

(Writing by Paul Carrel Editing by Jeremy Gaunt)

EU lawmakers adopt Brexit resolution, reject pro-Gibraltar hint

The Union Jack (L), the Gibraltarian flag (C) and the European Union flag are seen flying, at the border of Gibraltar with Spain, in front of the Rock in the British overseas territory of Gibraltar, historically claimed by Spain April 3, 2017. REUTERS/Jon Nazca

By Francesco Guarascio

STRASBOURG (Reuters) – European Union lawmakers adopted a resolution on Wednesday setting their red lines for the two-year divorce talks with Britain and rejected attempts by British MEPs to recognize Gibraltar’s pro-EU stance in the Brexit referendum.

In a display of EU unity, the legislature’ text repeated the same priorities set by the EU summits’ chair Donald Tusk in his draft negotiating guidelines released last week.

The European Parliament wants talks on Britain’s future relations with the EU to start only after “substantial progress” is made on the bill for Brexit bill, on the Irish border, and on the rights of the 3 million EU citizens in Britain and the one million British residents in EU countries.

The text was backed by more than two-thirds of the deputies in the parliament, which will have to approve any deal with the United Kingdom.

Britain’s Under Secretary for Brexit Robin Walker said this was “a positive move” although Britain would prefer to start trade talks as soon as possible. He told reporters at the session in Strasbourg that Britain will also put citizens’ rights first in the Brexit process.

In a minor departure from Tusk’s text, the parliament’s resolution hinted at the possibility for Britain to reverse the Brexit process, stressing however that this would be possible only with the approval of all the remaining 27 member states.

“The door is open if Britain changes its mind,” Gianni Pittella, head of the center-left grouping, the second largest in the parliament, told reporters. The Greens expressed a similar wish.

The move was aimed at strengthening the hand of the 48 percent of Britons who voted against Brexit in last year’s referendum, but was opposed by the EU chief negotiator on Brexit, Michel Barnier, parliament officials said.

The conservative grouping, the largest in the legislature, tried to distance itself from such a statement, although they backed the resolution. “Leave means leave,” the conservatives’ leader Manfred Weber said.

The resolution also allowed transitional arrangements to smooth the UK’s departure, but they should not last more than three years. MEPs also insisted that at the end of the process Britain cannot expect better conditions than when it was an EU member.

GIBRALTAR

Lawmakers rejected two nearly identical amendments that would have added to the text a reference to Gibraltar’s pro-EU vote in last year’s Brexit referendum, a move meant to recall its residents back the EU but also prefer to remain in Britain.

The rocky British enclave on the southern Spain coast caused a harsh controversy after Tusk’s guidelines gave Madrid a say in the future relationship between Gibraltar and the EU after Britain leaves the bloc.

Gibraltar rejected the idea of Britain sharing sovereignty with Spain by 99 percent to 1 percent in a 2002 referendum, but voted overwhelmingly to remain part of the EU in last June’s Brexit vote.

The changes proposed by British Conservative lawmakers in the EU parliament and by a cross-party group of MEPs wanted to highlight that Gibraltar voted against Brexit.

They also wanted to add a reference to the enclave in a paragraph saying that a majority of electors in Scotland and Northern Ireland voted to stay in the EU.

The main groupings in the parliament opposed this change because “we do not agree to give to the Gibraltar issue the same importance as Scotland’s and Northern Ireland’s”, a parliament official said.

Other amendments proposed by the United Kingdom Independence Party (UKIP) euroskeptic grouping, deploring Tusk’s guidelines on Gibraltar, were also widely rejected.

(Reporting by Francesco Guarascio; Editing by Tom Heneghan)

EU offers Brexit trade talks, sets tough transition terms

People drink beer at a Pro-Brexit event to celebrate the invoking of Article 50, in London. REUTERS/Peter Nicholls

By Robin Emmott and Alastair Macdonald

VALLETTA/BRUSSELS (Reuters) – The European Union offered Britain talks this year on a future free trade pact but made clear in negotiating guidelines issued on Friday that London must first agree to EU demands on the terms of Brexit.

Those include paying tens of billions of euros and giving residence rights to some 3 million EU citizens in Britain, the proposed negotiating objectives distributed by EU summit chair Donald Tusk to Britain’s 27 EU partners showed.

The document, seen by Reuters, also sets tough conditions for any transition period, insisting Britain must accept many EU rules after any such partial withdrawal. It also spelled out EU resistance to Britain scrapping swathes of tax, environmental and labor laws if it wants to have an eventual free trade pact.

The guidelines, which may be revised before the EU27 leaders endorse them at a summit on April 29, came two days after Prime Minister Theresa May triggered a two-year countdown to Britain’s withdrawal in a letter to Tusk that included a request for a rapid start to negotiations on a post-Brexit free trade deal.

“Once, and only once we have achieved sufficient progress on the withdrawal, can we discuss the framework for our future relationship,” Tusk told reporters in Malta — a compromise between EU hardliners who want no trade talks until the full Brexit deal is agreed and British calls for an immediate start.

“Starting parallel talks on all issues at the same time, as suggested by some in the UK, will not happen,” Tusk said, while adding that the EU could assess as early as this autumn that Britain had made “sufficient progress” on the exit terms in order to open the second phase of negotiations, on future trade.

Brussels has estimated that Britain might owe it something of the order of 60 billion euros on departure, although it says the actual number cannot be calculated until it actually leaves.

What it does want is to agree the “methodology” of how to work out the “Brexit bill”, taking into account Britain’s share of EU assets and liabilities. Britain disputes the figure but May said on Wednesday that London would meet its “obligations”.

The Union’s opening gambit in what Tusk said would at times be a “confrontational” negotiation with May’s government also rammed home Brussels’ insistence that while it was open to letting Britain retain some rights in the EU during a transition after 2019, it would do so only on its own terms.

Britain would have to go on accepting EU rules, such as free migration, pay budget contributions and submit to oversight by the European Court of Justice — all things that drove last June’s referendum vote to leave and elements which May would like to show she has delivered on before an election in 2020.

“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,” Tusk’s draft guidelines stated in reference to a transition period that diplomats expect could last two to five years to smooth Brexit.

“NO DUMPING”

It also stressed that a future trade pact, allowing for not just low or zero tariffs on goods but also regulatory alignment to promote trade in services, should not allow Britain to pick and choose which economic sectors to open up. That would prevent London giving undue subsidies or slashing taxes or regulations — “fiscal, social and environmental dumping”, in EU parlance.

The negotiations will be among the most complex diplomatic talks ever undertaken and the EU guidelines are only an opening bid. EU officials believe they have the upper hand in view of Britain’s dependence on exports to the continent, while British diplomats see possibilities to exploit EU states’ differences.

Tusk and Maltese Prime Minister Joseph Muscat, who holds the Union’s rotating presidency, warned against such efforts and insisted the EU would negotiate “as one”, through their chief negotiator, former French foreign minister Michel Barnier. He expects to start full negotiations in early June.

Tusk spelled out priorities for the withdrawal treaty, which Barnier hopes can be settled by November 2018, in time for parliamentary ratification by Brexit Day on March 29, 2019:

– the EU wants “reciprocal” and legal “enforceable” guarantees for all EU citizens who find their rights to live in Britain affected after a cutoff on the date of withdrawal

– businesses must not face a “legal vacuum” on Brexit

– Britain should settle bills, including “contingent liabilities” to the EU

– agreement on border arrangements, especially on the new EU-U.K. land border in Ireland, as well as those of British military bases on EU member Cyprus.

(Writing by Alastair Macdonald; Editing by Catherine Evans)

German minister warns of tough Brexit talks, no discount available

German Foreign Minister Sigmar Gabriel speaks during a news conference with his Greek counterpart Nikos Kotzias (not pictured) following their meeting at the ministry in Athens, Greece, March 23, 2017. REUTERS/Alkis Konstantinidis

BERLIN (Reuters) – German Foreign Minister Sigmar Gabriel said on Thursday that negotiations about Britain’s exit from the European Union would be tough before getting easier.

“The Brexit negotiations with the United Kingdom that the European Union will lead for us won’t be easy – some people know the saying that … things will get difficult before they get easier again – that applies to these talks,” said Gabriel.

Gabriel also said that the EU’s remaining 27 states expected Britain to keep to its financial obligations.

“There is in no discount for Britons in the Brexit talks,” he said.

Media reports have suggested Britain may have to pay some 50 billion to 60 billion pounds ($62 billion to $74 billion) to honor existing EU budget commitments as it negotiates its departure from the bloc.

However, Britain’s Brexit minister David Davis said earlier he did not expect this to be the case and added that the time of huge sums being paid to Brussels was coming to an end.

Gabriel also said he expected Brexit negotiations to start from the end of May and reiterated that London would not be able to enjoy the benefits of the EU’s single market while imposing its own controls on immigration.

“We have always rightly stressed that the single market is not an a la carte menu – its four freedoms are inseparable and that includes the freedom of movement of people … London has understood that,” he said.

Gabriel also stressed in his speech that he wanted Germany to remain on good terms with Britain. “We must stay friends … maybe apart from when we are on the football pitch.”

(Reporting by Madeline Chambers and Michelle Martin; Editing by Toby Davis)

‘No turning back’: PM May triggers ‘historic’ Brexit

The Big Ben clock tower is seen in London, Britain March 29, 2017. REUTERS/Hannah McKay

By Guy Faulconbridge and Elizabeth Piper

LONDON (Reuters) – Prime Minister Theresa May formally began Britain’s divorce from the European Union on Wednesday, saying there was “no turning back” from a decision pitching her country into the unknown and triggering years of fraught negotiations.

Nine months after Britons voted to leave, May notified EU Council President Donald Tusk in a letter that Britain was quitting the bloc it joined in 1973.

“The United Kingdom is leaving the European Union,” May later told parliament in London. “This is an historic moment from which there can be no turning back.”

The prime minister, an initial opponent of Brexit who won the top job in the political turmoil that followed the referendum vote, now has two years to settle the terms of the divorce before it comes into effect in late March 2019.

May, 60, has one of the toughest jobs of any recent British prime minister: holding Britain together in the face of renewed Scottish independence demands, while conducting arduous talks with 27 other EU states on finance, trade, security and other complex issues.

The outcome of the negotiations will shape the future of Britain’s $2.6 trillion economy, the world’s fifth biggest, and determine whether London can keep its place as one of the top two global financial centers.

For the EU, already reeling from successive crises over debt and refugees, the loss of Britain is the biggest blow yet to 60 years of efforts to forge European unity in the wake of two world wars.

Its leaders say they do not want to punish Britain. But with nationalist, anti-EU parties on the rise across Europe, they cannot afford to give London generous terms that might encourage other member states to break away.

BREXIT DIVORCE

May’s notice of the UK’s intention to leave the bloc under Article 50 of the EU’s Lisbon Treaty was hand-delivered to Tusk in Brussels by Tim Barrow, Britain’s permanent representative to the EU.

Barrow gave the letter to Tusk, the EU summit chair and former Polish prime minister, in the Council President’s offices on the top floor of the new Europa Building, according to a Reuters photographer in the room.

That moment formally set the clock ticking on Britain’s two-year exit process. Sterling, which has lost 25 cents against the dollar since the June 23 referendum, jumped to $1.25.

May signed the Brexit letter on Tuesday, pictured alone at the cabinet table beneath a clock, a British flag and an oil-painting of Britain’s first prime minister, Robert Walpole.

BREXIT DEAL?

The 6-page letter set a positive tone for the talks though it admitted that the task of extracting the UK from the EU was momentous and that reaching comprehensive agreements within two years would be a challenge.

May wants to negotiate Britain’s divorce and the future trading relationship with the EU within the two-year period, though EU officials say that will be hard given the depth of the relationship.

“We believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU,” May told Tusk in her letter, adding that London wanted an ambitious free trade agreement with the EU.

“If, however, we leave the European Union without an agreement the default position is that we would have to trade on World Trade Organization terms,” she said.

May has promised to seek the greatest possible access to European markets but said Britain was not seeking membership of the ‘single market’ of 500 million people as she understood there could be no “cherry picking” of a free trade area based on unfettered movement of goods, services, capital and people.

Britain will aim to establish its own free trade deals with countries beyond Europe, and impose limits on immigration from the continent, May has said.

In an attempt to start Brexit talks on a conciliatory note, May said she wanted a special partnership with the EU though she laced that ambition with an a clear linkage of the economic and security relationship.

EU leaders will welcome assurances of a constructive approach and appreciate a commitment to remain a close partner for the EU and to encourage its development, as well as an explicit recognition that Britain cannot retain the best bits of membership after leaving.

They may be less warm to an implication that Britain could live with a breakdown of talks on trade coupled with what might be seen as a threat to disrupt the security and counter-terrorism cooperation for which Britain, as a member of the U.S.-backed Anglophone Five Eyes system, is highly valued.

“We should work together to minimize disruption and give as much certainty as possible,” May said. “Weakening our cooperation for the prosperity and protection of our citizens would be a costly mistake.”

Tusk said the EU would seek to minimize the cost of Brexit to EU citizens and businesses and that Brussels wanted an orderly withdrawal for Britain.

“We already miss you,” Tusk said. “Thank you and goodbye.”

Within 48 hours, Tusk will send the 27 other states draft negotiating guidelines. He will outline his views in Malta, where he will be attending a congress of center-right leaders. Ambassadors of the 27 will then meet in Brussels to discuss Tusk’s draft.

“DAMN NARROW TIME-FRAME”

But the course of the Brexit talks – and even their scope – is uncertain.

“The time-frame is damn narrow,” said Martin Schaefer, a spokesman for the German Foreign Ministry.

A huge number of questions remain, including whether exporters will keep tariff-free access to the single market and whether British-based banks will still be able to serve continental clients, not to mention immigration and the future rights of EU citizens in the UK and Britons living in Europe.

One major uncertainty for May is who will be leading France and Germany, which both face elections this year.

“It’s bad news for everybody. It’s a wedge pushed into the European project,” said French centrist presidential candidate Emmanuel Macron, who has made clear he would ensure Britain gains no undue advantages outside the Union.

UNITED KINGDOM?

At home, a divided Britain faces strains that could lead to its break-up. In the Brexit referendum, England and Wales voted to leave the EU but Scotland and Northern Ireland voted to stay.

Scottish nationalists have demanded an independence referendum that May has refused. In Northern Ireland, rival parties are embroiled in a major political crisis and Sinn Fein nationalists are demanding a vote on leaving the UK and uniting with the Republic of Ireland.

May said she knew that triggering Brexit would be a day of celebration for some and disappointment for others.

“Now that the decision to leave has been made and the process is under way, it is time to come together,” she said.

(Additional reporting by Alastair Macdonald, Jan Strupczewski and Yves Herman in Brussels, Michel Rose in Paris and Kylie MacLellan, William James, Estelle Shirbon, Kate Holton, Paul Sandle and Anjuli Davies in London; Writing by Guy Faulconbridge; Editing by Mark Trevelyan, Peter Millership and Giles Elgood)