Before Fixing Brexit Bill, EU Mulls Starting U.K. Trade Talks

By allowing Brexit talks to touch on trade before the two sides agree to a specific exit bill, European governments may give U.K. Prime Minister Theresa May political cover, reported news outlet Bloomberg citing information from two people familiar with the plan.

By the time – December, the new German and French governments will be in place, May would be May would be allowed to start engaging with the EU on the “ambitious” accord she wants at a December 14 summit by such a concession. A separate EU diplomat said on Friday that not until just before the date of Brexit itself, the exact figure of the bill may not be decided until the end of the negotiations.

The 27 EU nations recognize that a large fixed sum could make it harder for May to maintain support from those who campaigned most ardently for Brexit, while they also had wanted Britain to agree to settle its financial obligations before they talked about trade. The sources reportedly said that while leaving the amount until later, negotiators will seek to agree on a formula to calculate liabilities instead.

However, the issue that could be the most toxic of topics is the EU demands that Britain fully repay all outstanding bills resulting from its membership of the bloc. A draft of which explicitly calls for the U.K. to respect its “obligations” for the whole period of membership, a set of general guidelines for the talks, are slated to be signed off by continental leaders in Brussels on Saturday.

“We will not discuss our future relations with the U.K. until we have achieved sufficient progress on the main issues relating to the U.K.’s withdrawal,” European Council President Donald Tusk said in a letter to the bloc’s leaders made public on Friday. This phased approach “is not only a matter of tactics, but — given the limited time frame we have to conclude the talks — it is the only possible approach.”

If the EU tries to extend payments beyond Britain’s withdrawal date of March 2019, a sum of 60 billion euros ($65 billion), which has been floated by EU leaders although, could run higher. Although May’s government has questioned the size and legality of a bill and indicated it will try to win back a share of EU assets, it has also said it’s willing to agree to a “fair settlement”. The EU may be prompted to hold back on discussing the trade deal May wants is there is a failure to make progress on the financial settlement and this is a challenge for May.

A separate EU official told reporters in Brussels on Friday that it will be a political call by the EU’s 27 leaders – the decision on whether “sufficient progress” has been made to allow for a discussion on the future relationship.

While the procedure and the timeline for the transfer will be decided in the next meeting of the bloc’s leaders in June, a part of the exit bill settlement will be the cost for the relocation of the European Banking Authority and the European Medicines Agency from London to other EU countries, the official said.

(Adapted from Bloomberg)

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