The European Union signaled U.K. Prime Minister Theresa May will have just a year to work on the sweeping trade deal she wants for Britain once it leaves the bloc and then only if she first settles the region’s financial demands.
In draft guidelines for the Brexit talks released to the bloc’s 27 other capitals on Friday, EU President Donald Tusk said outlining future trade ties would not take place until “sufficient progress” was made resolving thorny topics such as borders and budgets. He said later that the first round of discussions may run until this fall.
“We want to talk just about fairness and commitments,” Tusk told reporters in Malta. “I have no doubt that for both sides it’s really important to show, to demonstrate that we want to be fair to each other during negotiations.”
While the two sides technically have until March 29, 2019, to strike a deal, the need for it to be ratified by parliaments leaves them in reality with just the next 18 months. Although May again pitched this week for the divorce and trade talks to run in parallel, the EU is holding fast to its argument that the “disentanglement” comes first.
That means finding agreement on issues such as the Irish border, the rights of citizens already living in each other’s economy and, most crucially, the 60 billion-euro ($64 billion) bill that EU officials want to impose and which May’s government is already challenging. The message of Friday’s document is that only once Britain and the EU start to establish common ground on severing their ties will talks turn to the trade pact May wants with what will remain the U.K.’s biggest market.
The EU’s ambitions may be more limited than hers, too. While May this week said it was possible to line up a “bold and ambitious” commercial accord within two years, the EU on Friday talked of an “overall understanding on the framework for the future relationship.”
The guidelines contained no estimate for the bill the EU is seeking although it called on Britain to cover all “legal and budgetary commitments as well as liabilities, including contingent liabilities.” While May said on Wednesday that the U.K. would meet its obligations, she also indicated it would seek its share of EU assets built up over four decades of membership.
On trade, the U.K. was again reminded that leaving the EU single market would come at a cost and that Britain would not be able to adopt a “sector-by-sector approach” to winning access to it. Echoing a warning made by Germany, the EU also said any attempt to lure companies with lighter regulation and tax policies will damage the prospects for a trade deal.
May was also told that any transitional or implementation period to ease the passage to a new relationship once Britain leaves the EU must be “limited in time” and would require the U.K. accepting “regulatory, budgetary, supervisory and enforcement instruments and structures.”
A day after May reached out to voters in seven EU states via newspaper columns, the EU said “there will be no separate negotiations” between individual capitals and the U.K.
The guidelines will now be discussed by the EU’s governments and a final version will be approved by leaders at a summit in Brussels on April 29. A more detailed mandate for the bloc’s chief Brexit negotiator, Michel Barnier, needs to be approved later, before substantial talks with the government in London can begin.