Brexit latest: Donald Tusk rejects managed divergence as he reveals EU27's draft negotiating guidelines

Catherine Neilan
Follow Catherine
Tusk said it will "only" be a free trade agreement (Source: Getty)

European Council President Donald Tusk has rebuffed Theresa May's hopes of a dynamic trading relationship, insisting the only option available would be an off-the shelf free trade agreement.

Speaking from Luxembourg, Tusk said he hoped the FTA would be "ambitious and advanced... but anyway it will only be a trade agreement". It will include all sectors, and "address" services, he said.

"This positive approach doesn't change the simple fact that because of Brexit we will be drifting apart," Tusk added. "In fact, this will be the first FTA in history that loosens economic ties, instead of strengthening them. Our agreement will not make trade between the UK and the EU frictionless or smoother. It will make it more complicated and costly than today, for all of us. This is the essence of Brexit."

Speaking at the same press conference, Luxembourg's Prime Minister Xavier Bettel highlighted how important financial services was to his country and urged a pragmatic approach, but stressed that the unity of the remaining member states of the EU was key.

"We deeply regret the decision but have to respect it," he adds. "We don't want a hard Brexit, a soft Brexit, but an intelligent Brexit."

Tusk and Bettel spoke after a leaked document suggested the EU was preparing to reject May's call for managed divergence.

"The European Council has to take into account the repeatedly stated positions of the UK, which limit the depth of such a future partnership. Being outside the customs union and the single market will inevitably lead to frictions," the drafted guidelines state.

"Divergence in external tariffs and internal rules as well as absence of common institutions and a shared legal system, necessitates checks and controls to uphold the integrity of the EU single market as well as of the UK market. This unfortunately will have negative economic consequences."

The EU27's red lines when it comes to the future trading relationship conflict with those set out by the UK's Prime Minister last Friday, where she called for a system based on mutual recognition and managed divergence, with a dispute mechanism in place, as the best possible option for future trade.

The City welcomed her "honest" recognition that some ground would have to be conceded and access reduced, and backed her approach to future trade, which is based on the proposal put forward by the International Regulatory Strategy Group (IRSG) and Hogan Lovells.

Tusk has previously told May to expect that they would back Michel Barnier's contentious argument for including Northern Ireland within the EU's custom union.

The European Council will be followed by the European Parliament, which is expected to agree a draft position among the main political parties this afternoon.

A press conference will be held by Parliament President Antonio Tajani and Brexit coordinator Guy Verhofstadt, who yesterday came to London to meet with May, Brexit secretary David Davis, home secretary Amber Rudd and Cabinet Office minister David Lidington, at around 4:30 UK time.

Related articles