The U.K. and the European Union concluded their first day of negotiations over Britain's departure from the bloc with the EU securing its preferred timetable for the talks and divergent views immediately emerging over a divorce bill the EU is demanding from London.
The talks on Monday started almost exactly a year after last June's U.K. referendum vote to quit the EU. The complex talks are on a tight timetable: They must be done in time for Britain to leave in March 2019.
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In an early concession, 11 days after U.K. elections in which Prime Minister Theresa May's Conservative Party lost its parliamentary majority, British negotiators agreed to focus early talks on the EU's key priorities: settling the future rights of EU citizens in the U.K., discussing past spending pledges the EU wants Britain to fulfill and avoiding a hard border in Ireland.
The EU has said only once there is "sufficient progress" on these issues can talks begin on the future trade relationship between the two sides. The bloc's chief negotiator, Michel Barnier, said he hopes the two sides can reach that point by October.
In a sign of the tensions that lie ahead, EU officials said U.K. Brexit Secretary David Davis didn't accept the EU's legal case for a British divorce bill -- financial commitments made by the U.K. that it hasn't yet fulfilled -- saying there were different legal views on the issue. EU officials have said Britain has made spending pledges of at least EUR60 billion ($67 billion) that it must fulfill.
At a news conference after the first day of talks, Mr. Davis and Mr. Barnier categorized the talks as positive.
"The first session was useful indeed to start off on the right foot and the clock is ticking," Mr. Barnier said.
Mr. Davis said he was encouraged by Monday's seven hours of talks. "There is a long way to go but we are off to a promising start," he said. "We have taken the first critical steps together."
Mr. Davis said he hoped for quick progress on agreeing the rights of EU citizens in the U.K. and British citizens in the EU.
He said Mrs. May would brief her counterparts at a Brussels summit this week on what British officials have called a generous British proposal on the rights of the three million EU citizens in the U.K. and the one million U.K. citizens in the EU. The details of that plan will be published next Monday.
The two sides agreed they would meet for one week a month to conduct the negotiations, with the next talks beginning on July 17. They set up three working groups on citizens' rights issues, on the EU's financial settlement demands and other divorce issues.
They also established a separate dialogue, at a higher political level, to discuss the politically sensitive and technically complex issue of avoiding a hard border between Northern Ireland and the Republic of Ireland. Mr. Davis acknowledged that solutions for Ireland would take longer.
Mr. Barnier has said he wants to conclude the talks by October 2018 to give enough time to ratify a divorce deal after more than four decades of British membership in the bloc. The two sides are also supposed to shape a future partnership between Britain and its neighbors.
Mrs. May has said she wants a close economic and security partnership with the EU but has acknowledged that any future deal can only be secured once Britain exits the EU. Some European officials have warned that could take years to achieve.
Britain started Monday's negotiations at a time of huge political volatility at home, with Mrs. May struggling to rebuild her authority after calling early elections that ended with a disastrous result for her party. Since the vote, there have been calls from senior Conservative politicians for Mrs. May to soften Britain's Brexit goals.
After Monday's negotiations, Mr. Davis said there would be no change in the government's intention to leave the EU's single market of goods and services and exit the EU's customs union. "The position hasn't changed," he said.
Mr. Barnier said the EU side also was negotiating on that basis. He warned that while his team were determined to try to reach a deal with the U.K., leaving the bloc without a deal would have real consequences for the country. "A fair deal is possible and far better than no deal," he said.
While the U.K. government insists it won't change its negotiating position, senior officials have said they aren't closing off options for a possible transitional agreement that could cushion the economy for the first few years after Britain leaves the bloc.
However, any decision to stay temporarily in the single market after March 2019 would mean accepting continued EU rules and the oversight of EU courts. Staying in the customs union for a few years would prevent Britain completing bilateral trade agreements with other countries during the transition.
On Monday, top trade officials from the U.S. and U.K. said they are eager to explore a bilateral free-trade agreement -- but any possible deal is likely at least two years away from taking shape.
"We're not allowed to conclude any negotiations as long as we're still part of the European Union," Liam Fox, the U.K.'s international trade secretary told a U.S. government-run investment conference just outside Washington, in a joint appearance with Commerce Secretary Wilbur Ross.
Mr. Fox, though, showed he was eager to begin exploring the prospects, pointing to a working group the two sides had established.
"From the U.S. side," Mr. Ross told the group, "we've made clear we're prepared to begin as soon as the U.K. is ready."
Write to Laurence Norman at email@example.com and Valentina Pop at firstname.lastname@example.org
(END) Dow Jones Newswires
June 19, 2017 16:16 ET (20:16 GMT)