EU Puts the Ball in Britain's Court on Trade

By FeaturesDow Jones Newswires

European leaders called on British Prime Minister Theresa May to spell out what her government wants from a future trade agreement in order to begin serious negotiations on the issue by March.

Leaders are set to agree Friday to allow Brexit negotiations to advance. However, arriving for the second day of this week's summit, they put the onus on Britain to set out its objectives for a future trade deal in the coming weeks.

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"The first real big step is for the United Kingdom to say very clearly what it wants," said Maltese Prime Minister Joseph Muscat. "I think If this happens in the next few weeks, we can start in earnest and by March we can have a very clear European position."

The U.K. government has been divided over what sort of relationship it wants with the EU, and what compromises pro-Brexit forces are willing to make to maintain close trade ties with the bloc.

Mrs. May is set to hold the first of what is expected to be several cabinet meetings on Tuesday to decide the shape of Britain's demands for a future trade agreement.

Until now, the government has been clear it wants Britain to leave the EU's single market and customs union, and to narrow the influence of EU courts in Britain.

Mrs. May has in recent months struggled to quell dissension from members of her top team, made up of both pro- and anti-EU politicians.

Foreign Secretary Boris Johnson, one of the leaders of the campaign to leave the EU, in September undercut Mrs. May by laying out his own vision including a clean break from EU rules several days before she was set to make a keynote speech. Senior officials have also clashed over immigration policy and over whether Britain should accept all of its current EU obligations during a two-year post-Brexit transition.

Mrs. May and her top team must determine how closely Britain plans to align itself with EU trade rules and standards in the future. Close alignment could help deliver a solid trade accord and may ease specific challenges, like how to avoid a hard border with Ireland.

Supporters of a clean break with the EU argue that only through a shift away from the bloc's rules can Britain hope to start locking in trade deals with other major economies that will bolster the U.K.'s economic future.

British officials say they are hopeful that behind-the-scenes talks will begin now on a two-year transitional deal and on the future relationship.

The EU has set out a stricter timeline for the coming weeks. It says formal negotiations on a transition can only begin in late January and that negotiations on the future trade agreement must wait at least until March, when the bloc will give formal negotiation guidelines to the EU's chief negotiator, Michel Barnier.

Some leaders warned about a rocky path ahead. Austrian Chancellor Christian Kern raised questions about whether thorny questions over Ireland have really been settled. "If there can't be a border between Northern Ireland and the U.K. and no border between Ireland and Northern Ireland, even school children can see that's a riddle that still needs to be solved," he said.

German Chancellor Angela Merkel on Thursday said that while progress has been made "there are still many outstanding issues."

Leaders still need to produce a legal text for last week's agreement on important divorce terms between the EU and Britain.

Mrs. May arrived in Brussels having on Wednesday suffered her most serious legislative setback since Britain triggered its exit from the U.K., when members of her Conservative party joined opposition lawmakers and voted to guarantee the British Parliament the power to vote on whether to accept any final Brexit deal.

After a dinner Thursday night with EU leaders, Mrs. May said there had been "very good discussions" and she was now looking forward to quickly starting negotiations on "our future trade relationship and security relationship."

Valentina Pop contributed to this article.

Write to Laurence Norman at laurence.norman@wsj.com and Jenny Gross at jenny.gross@wsj.com

(END) Dow Jones Newswires

December 15, 2017 05:26 ET (10:26 GMT)