EU seeks power to sanction UK over any breaches of Brexit deal

The EU will demand the right to rapidly sanction the UK for breaching any deal on a future relationship as it seeks to prevent “competitive undercutting or freeriding” by British companies after Brexit, according to an internal document seen by the FT.

EU governments want to be able to take “flexible” and “interim” measures against Britain if it breaks commitments given as part of any future trade agreement.

The EU’s tough negotiating position, set out in a series of slides discussed by diplomats in Brussels on Friday, is that the UK must agree to stick closely to the bloc’s rules in areas such as labour rights and environmental protection in exchange for a trade deal with few restrictions on trade in goods.

The meeting coincided with a brief ceremony where EU chiefs in Brussels signed off Britain’s exit treaty, beginning an EU ratification process that will conclude in time for Brexit day on January 31. The treaty must be approved by the European Parliament next week.

Charles Michel, the European Council president, tweeted after the ceremony that the UK and EU would “start a new chapter as partners and allies” — and the slides stress that any deal must work for both sides for the long term.

Later in the day Downing Street released a picture of Mr Johnson also signing the withdrawal agreement with the prime minister tweeting that the “signature heralds a new chapter in our nation’s history”.

Mr Johnson and chancellor Sajid Javid have insisted Britain will diverge from Brussels regulations after Brexit, setting up a clash in the future relationship talks.

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The UK is formally due to leave the EU next Friday, heralding the start of an 11-month standstill transition that will keep current trading and security relationships unchanged.

Both sides are seeking to agree a new relationship by the end of 2020, when Britain’s post-Brexit transition arrangements expire. The slides warn that failure to reach a deal would create a “cliff-edge in many areas”.

The documents underline the EU’s insistence that a tariff-free, quota-free trade deal will hinge on Britain’s willingness to stick closely to a “level playing field” of “common high standards and rules”. Guaranteeing the level playing field is one of a number of “imperishable EU principles” for the talks.

The slides present the EU’s conclusions from almost 50 hours of seminars that national officials have held with the European Commission in Brussels over the past two weeks, as the bloc prepares for what are expected to be gruelling negotiations with the UK. Around 200 people participated in the meetings, which have covered everything from trade relations to co-operation in criminal justice and the fight against terrorism.

dpatop - HANDOUT - 24 January 2020, England, London: A general view of the official European Union Withdrawal Agreement after being signed by UK Prime Minister Boris Johnson inside 10 Downing Street. Photo: Andrew Parsons/No10 Downing St/dpa - ATTENTION: editorial use only and only if the credit mentioned above is referenced in full
Boris Johnson’s signature on the withdrawal agreement document © Andrew Parsons/Downing St/dpa

The slides are intended to feed into the commission’s fine tuning of a formal mandate for the negotiations that it will propose in the first week of February, and that EU27 governments will sign off by the end of that month. Negotiations with the UK on future relations would then begin in March.

The document says that the entire agreement, including the level playing field, would be governed by a rigorous dispute-settlement system. Enforcement measures should include “the possibility of full suspension/termination” of the agreement.

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