EU demands in next round of talks set to enrage Cabinet Brexiteers, leak reveals

EU negotiators are already laying the groundwork to hit the UK with demands in the next stage of Brexit talks that are unacceptable to key figures in Theresa May’s Cabinet, The Independent can reveal.

Leaked documents show chief EU negotiator Michel Barnier wants to make giving the UK a good transition deal conditional on Britain’s “automatic” acceptance of new Brussels regulations during the likely two-year period after March 2019.

The plan, set out to EU leaders behind closed doors, would leave the UK with no say over rules it accepts during the transition and is likely to enrage Brexiteers in the Cabinet like Boris Johnson, Michael Gove and Liam Fox, who are determined 2019 should be the last year Britain takes new rules from Brussels.

The move shows that it is once again EU negotiators who are setting the terms of Brexit discussions, while Ms May is still struggling to meet their initial demands relating to the first “withdrawal” stage of the talks.

On Friday, she met President of the European Council Donald Tusk in a bid to gain approval for her offer to pay a “divorce bill” which may now total £40bn, and give guarantees over the Irish border and citizens’ rights.

The Prime Minister is desperate for EU leaders to approve her withdrawal offer at a December meeting of the European Council, and allow talks to move on to settling the transition, likely to be between 2019 and 2021, and future trade – with her own political survival in part depending on it.

But the documents handed to The Independent show the next stage of talks will be just as punishing and fraught with political danger for her Government.

The papers consist of a presentation, drawn up by Mr Barnier for the EU27’s representatives, in which he says any UK transition out of the EU must involve the “automatic application in the UK of new EU rules post-30 March 2019”.

The chief negotiator is clear Britain would have “no institutional rights, no presence in the institutions” and “no voting rights” under his plan, meaning the UK would end up following rules made in the interests of the remaining member states and even incorporating them into British law with no control of how they are formed.

Any potential conflict over the transition has yet to surface because the EU has said it will not discuss future arrangements on that or trade until the three withdrawal issues have made “sufficient progress”.

But the leak shows the direction the bloc is taking behind the scenes and indicates probable obstacles to agreement in future rounds of talks.

Mr Barnier said in September that “any transition has to respect the regulatory and financial framework of the single market” and that the UK would have to continue to follow EU rules, but the subject of new laws written during the transition has yet to be explicitly broached in public.

The European Commission’s approach also raises extra questions for the Government’s EU (Withdrawal) Bill, which would give the Government powers to copy current EU law into British law at the point of departure in March 2019, but then tweak it as it pleases.

In her key speech in Florence, the Prime Minister said that a transition, or “implementation” period, would be governed by “the existing structure of EU rules and regulations”, with a Downing Street spokesperson telling The Independent more recently that the transition period is “subject to negotiations”.

Chancellor Philip Hammond and Home Secretary Amber Rudd have been pushing for a transition which mimics current conditions as closely as possible in order to reduce instability for business as they prepare for a new regulatory framework beyond 2021.

But Foreign Secretary Mr Johnson indicated in a interview ahead of Conservative conference with The Sun that it would be a “red line” of his that the UK accept no new regulations during the transition.

He said: “You heard the Prime Minister say very clearly in Florence that she envisages the transition period being run under existing arrangements – that was the phrase she used, ‘The existing rules’.”

But while battle lines were being drawn for the second phase of talks, Ms May was still undertaking a diplomatic round last week aimed at settling the first phase.

As well as Mr Tusk, she met German leader Angela Merkel, Danish premier Lars Lokke Rasmussen, Belgium’s Charles Michel, and Lithuania’s Saulius Skvernelis at a summit in Brussels.

At a recent cabinet sub-committee meeting, Ms May is said to have won backing to offer the EU some £40bn to settle the UK’s financial obligations. Meanwhile David Davis has hailed progress made on the issue of citizens’ rights.

However, the issue of handling Northern Ireland’s border emerged last week as a potential stumbling block after Dublin demanded stronger guarantees that there would be no land border on the island of Ireland.

Questioned over the matter, a Downing Street spokesperson initially said it could be a matter for negotiations whether Northern Ireland remained in the EU’s customs union after Brexit, but it later backed down and clarified that the UK would leave the union as one, on withdrawal.

The issue of the Irish border is particularly difficult for the Prime Minister politically because the Northern Irish DUP is propping up Ms May’s majority in the House of Commons – and has used its conference to make clear it will not accept the province remaining part of the customs union.