EU, UK agree on Brexit text, but gaps remain before summit

BRUSSELS/LONDON (Reuters) - Britain and the European Union agreed a draft text setting out a close post-Brexit relationship, officials said, though wrangles over fish and the future of Gibraltar must still be settled before leaders meet on Sunday.

European Commission President Jean-Claude Juncker chairs the EU Commission's weekly college meeting in Brussels, Belgium November 22, 2018. REUTERS/Francois Walschaerts

Thursday’s news sent the pound nearly one percent higher on relief among investors that 18 months of tense negotiation were bearing fruit, keeping Britain close to its biggest market and ensuring nothing much will change for at least two years.

British Prime Minister Theresa May told reporters in London: “The British people want this to be settled, they want a good deal that sets us on course for a brighter future ... That deal is within our grasp and I am determined to deliver it.”

EU officials said there was a solid consensus that remaining niggles should not hold up a final deal for Sunday, as the other 27 governments go through the new paperwork. The main question mark is over whether Spain, seeing Brexit as an opportunity to swing the EU’s weight behind its 300-year campaign to reclaim Gibraltar from Britain, can be persuaded to remain patient.

After a draft treaty last week set the terms for Britain’s departure in March, May had met EU chief executive Jean-Claude Juncker on Wednesday, hoping to finalize an ambitious declaration on future ties that can help her secure backing at home for the whole Brexit package in the teeth of furious parliamentary opposition, even within her own party.

She is due to meet Juncker again on the eve of the summit, at 6 p.m. (1700 GMT) on Saturday, and a spokesman for Juncker said that by then there should nothing much left to sort out.

With Spain, France and other EU member states lobbying for various national vested interests in that political declaration - a 26-page wishlist on future trade and security ties separate from the 585-page withdrawal agreement - there was concern in Brussels that haggling could get out of hand and derail Sunday’s tightly choreographed formal summit of the 27 leaders with May.

Summit chair Donald Tusk said: “It has been agreed at negotiators’ level and agreed in principle at political level.”

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EU sources told Reuters that other demands from governments would be parked in a separate page or two of short text to be endorsed at the summit. French calls for access to British fishing grounds and insistence that post-Brexit Britain follow EU environment, tax, labor and industrial rules are largely drafted, leaving a gap for Spain’s concerns that Madrid be given an effective veto over applying any future deal to Gibraltar.

The main text of the political declaration, seen by Reuters, said the EU and Britain “agree to develop an ambitious, wide-ranging and balanced economic partnership.

“This partnership will be comprehensive, encompassing a free trade area as well as wider sectoral cooperation ... will be underpinned by provisions ensuring a level playing field.”

Crucially for May, it commits the EU to looking for ways to avoid triggering a “backstop” clause intended to ensure the Irish border remains free of customs checks. Those include, it says, technical and administrative means favored by May’s pro-Brexit allies that could limit Britain’s need to keep its broader economic and trade rules in line with the continent.

The European Commission said Juncker encouraged May to talk with Spanish Prime Minister Pedro Sanchez, which they had done late on Wednesday, and that Gibraltar, along with some questions on fishing, were what remained unresolved.

The text said the post-Brexit relationship would respect “the integrity of the Union’s Single Market and the Customs Union as well as the United Kingdom’s internal market, and recognize the development of an independent trade policy by the United Kingdom beyond this economic partnership”.

The latter point responds to complaints from May’s key parliamentary allies in Northern Ireland that the EU plan to avoid a hard border with EU-member Ireland could isolate the province from the British mainland. The former deals with EU concern that Britain is using the Irish question to get special access to the EU market while dispensing with its regulations.

Both sides need an accord to keep trade flowing between the world’s biggest trading bloc and the fifth largest national economy. But May has struggled to untangle nearly 46 years of membership without damaging trade or upsetting the lawmakers who will ultimately decide the fate of any deals she can secure.

Despite the hopes of financial firms in London, Britain secured no improvements to its proposed future trading relations in financial services.

European Union's chief Brexit negotiator Michel Barnier smiles at the start of the EU Commission's weekly college meeting in Brussels, Belgium, November 22, 2018. REUTERS/Francois Walschaerts

May updated her cabinet on the state of talks by teleconference but her spokesman cautioned that no final deal can be agreed ahead of the EU summit on Sunday. In practice, however, EU leaders who will meet for an hour before they meet May, want all negotiating finished before.

The transition period, currently due to end after 21 months in December 2020, can be extended for up to two years. May has said it must end before a British election due in mid-2021.

Additional reporting by Alastair Macdonald, Jan Strupczewski and Philip Blenkinsop in Brussels; Writing by Guy Faulconbridge and Alastair Macdonald; Editing by Janet Lawrence

Our Standards:The Thomson Reuters Trust Principles.

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