Significant gaps remain among negotiators seeking a deal over U.K. demands to loosen its relationship with the European Union, though an agreement remains possible at an EU leaders’ meeting here next week, according to people familiar with the discussions.
European Council President Donald Tusk, in charge of negotiations with the U.K., sent out a new version of the proposed package to EU capitals on Wednesday. The new version contains modest changes from one published Feb. 2.
On Thursday, senior negotiators from the 28 EU countries will meet to discuss the document.
Mr. Tusk on Wednesday called negotiations over the U.K.’s future relationship a “fragile political process” and announced he was clearing his schedule to hold talks in coming days with the French, German and Belgian leaders.
He will also meet leaders from central, eastern and southern Europe, all of whom are nervous about U.K. Prime Minister David Cameron’s plans for reducing benefits for EU migrants.
“I am confident that this is a balanced and solid proposal and I hope to finalize it next week in the European Council. However, let me be clear, this is a very fragile political process,” Mr. Tusk said.
The revised version of the proposal, which was seen by The Wall Street Journal, contained new language to quell political concerns from certain groups of countries but made no significant changes to the specific concessions Brussels offered last week.
The new version states explicitly that only countries who promptly opened up their labor markets to new EU entrants from 2004 will be able to use a new tool allowing temporary reductions in benefit payments. If accepted, that means only the U.K. and a couple of other countries will be able to use the new mechanism, known as the emergency brake.
That will mitigate concerns in Brussels and in some capitals that, amid growing unease in many EU countries about immigration, there would be pressure from wealthier countries to make it easier to adopt the emergency brake. EU officials have warned that any effort to make it easier for more governments to apply restrictions could would be opposed by poorer EU countries.
The new draft also states that a proposal allowing the U.K. to reduce child-benefit payments to EU workers in Britain whose children live in less wealthy countries won’t apply to other types of “exportable” payments, like old-age benefits.
Mr. Cameron has promised to win back powers from Brussels and to negotiate reforms protecting key U.K. interests ahead of an in/out referendum on Britain’s EU membership. That vote could come as soon as June.
U.K. and European officials say challenging negotiations lie ahead, not only over the details the emergency brake, but also over the degree of influence Britain and other non-euro countries will have on eurozone matters.
Also unresolved: How to offer the U.K. a clear carve-out from the EU treaties’ call for an “ever closer union” without upsetting the desire of some governments for further integration.
The revised draft commits the seven non-euro countries that, unlike the U.K. and Denmark, don’t have specific opt-outs, to “make progress” toward meeting the conditions to join the single currency.
In return for offering the U.K. and other non-euro countries specific paths for raising concerns about proposals designed to benefit the single-currency bloc, the new draft requires that the U.K. provide “sincere cooperation” for deeper integration in the eurozone by supporting reform efforts “to improve the proper functioning of the euro area and its long term future.”
In a cover letter to the revised proposals, Mr. Tusk’s office said the latest changes reflected the remarks made at the first round of negotiations on the Feb 2 proposals last Friday but that “more technical work is needed on some of the issues.”
Confidence has grown that Mr. Tusk’s early February package avoided key red lines in most capitals. All leaders, as well as the European Parliament, will have to back it.
However, there is nervousness in Brussels over Mr. Cameron’s domestic difficulties in selling any deal to the British public and concern that the carefully calibrated EU proposals could still unravel as political pressure mounts.
The toughest sticking point, U.K. and EU officials agree, remains Mr. Cameron’s bid to reduce benefits.
Mr. Cameron is pushing for the strongest terms he can secure on the main open issue relating to the emergency brake, namely how long it should be available and how long, once applied, it could be extended for. While people close to the talks say final numbers will only be agreed by EU leaders, Thursday’s negotiations in Brussels may start to define the ranges.
Mr. Cameron came under continued fire from critics within his party who say the deal lacks substance.
“It’s no surprise the other countries have agreed because it’s no change from the current situation,” said Jacob Rees-Mogg, a Conservative lawmaker.
Polls show people are generally divided on whether to vote for the U.K. to stay in the bloc or leave, though there has been a slight shift in support in favor of leaving the EU in recent days.