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Exclusive – EU open to free commerce however not Chequers customs plan: doc

BRUSSELS (Reuters) – EU negotiators are prepared to supply Theresa May a free-trade space after Brexit however say that, opposite to her “Chequers” plan, there have to be a customs border that may make commerce lower than “frictionless”, in response to an inner EU doc seen by Reuters on Tuesday.

Britain’s Prime Minister Theresa May, European Commission President Jean-Claude Juncker and Luxembourg’s Prime Minister Xavier Bettel attend the European Union leaders casual summit in Salzburg, Austria, September 20, 2018. REUTERS/Leonhard Foeger

The doc — three pages of “defensive points” for EU officers to make towards the UK prime minister’s July proposal on future ties with the bloc — could supply May some consolation in exhibiting a readiness to seal a free commerce settlement (FTA) like these giving entry to Japan or Canada’s items and companies.

But as she prepares for her Conservative Party conference this weekend, it additionally rams home, in some element, the rejection of the Chequers proposal for a particular customs deal that might keep away from border checks on items and preserve provide chains fluid.

Brussels argues it will give Britain an unfair benefit within the single market, making use of some EU guidelines however not others.

Apparently shocked by the most recent EU rejection of that concept when she met fellow leaders at a summit in Salzburg final week, May has insisted she is sticking with the plan, regardless of fierce opposition from some in her occasion. She complained that the EU had not given her detailed causes for its rebuff.

The doc, despatched to EU governments on Friday morning as British media declared Salzburg a significant setback for May, does go into element, which officers stated EU negotiator Michel Barnier had given to the 27 leaders over a lunch on Thursday.

British officers had, properly earlier than Salzburg, been briefing opposing arguments to Barnier’s. But EU officers and diplomats stated all leaders had given help to their negotiator. One stated they understood that the customs ingredient of May’s Chequers plan would injury their very own financial pursuits.

Another EU official stated May had not solely irritated leaders by insisting vocally and really publicly that there was no different to her concept however by saying the EU objections had not been given to British negotiators intimately.

FREE TRADE AREA

Reflecting feedback made since July by Barnier, the doc lays out EU officers’ pondering on Chequers, named after May’s residence the place the plan was hammered out.

It concludes it will “give the UK an unfair competitive advantage” — whereas additionally saying officers “welcome … proposals to develop an ambitious new partnership” for which the Chequers proposal of a “free trade area” needs to be “the starting point”.

Britain’s items might solely get unfettered entry to the EU’s market if the UK stays “fully bound by the EU acquis (accumulated legislation) in the same way as other single market members, including supervision and enforcement”.

Since Britain has firmly dominated that out, saying it is going to depart the EU’s single market and the customs union, the doc says a Canada-style FTA is the one remaining possibility.

“An FTA cannot ensure entirely ‘frictionless’ trade,” the doc says, including there have to be a customs border between the EU and Britain after Brexit.

“As a result, the UK’s goods trade will over time be less closely integrated economically with the EU than it is now. For example, cross-border supply chains will not operate seamlessly.”

UNFAIR ADVANTAGE

May’s “common rulebook” for items would give Britain unfair benefit, it says. In one instance, research confirmed that a lot of the regulatory prices for metal or chemical compounds producers weren’t in product requirements, which Britain presents to satisfy, however in requirements for manufacturing strategies — resembling guidelines on air pollution — from which London needs to have the ability to diverge.

It stated British producers would have to adapt to EU guidelines to be allowed into the only market: “This will make the biggest difference for agriculture and sensitive industrial goods with authorisations by public bodies including chemicals, automotive, pharmaceuticals, biocides.”

It additionally explains EU issues that “embedded services”, such because the financing of automobile gross sales, characterize a lot of the price of many items and that, below Chequers, Britain presents to match EU requirements solely on the ultimate product, not guidelines that apply to, say, how employees produce the companies that accompany them.

The doc additionally gives officers with an argument to counter British complaints that Brussels has supplied to maintain Northern Ireland successfully inside its financial rulebook to be able to keep away from border infrastructure with EU member Ireland that either side concern might revive battle on the island.

The problem, the doc spells out, is that with 1.eight million folks and “unique circumstances”, the EU is keen to make a particular case of Northern Ireland, which is “much less of a competitive threat than the 60-million UK”.

May once more confused on Tuesday that Britain must see EU counter-proposals to maneuver the Brexit negotiations ahead.

Adding to May’s Brexit woes on Tuesday, Britain’s essential opposition Labour Party signalled it will vote towards any deal she clinches with the EU and can be open to a second referendum with the choice of staying within the bloc.

Additional reporting by Alastair Macdonald; Editing by Gareth Jones

Our Standards:The Thomson Reuters Trust Principles.

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