The UK wants to be able to align and diverge from EU rules sector by sector, but the block says it won’t work.
After a day-long meeting at the UK prime minister’s country retreat on Thursday, a “broad consensus” emerged among the country’s senior ministers on what kind of relationship they want with the EU after Brexit.
UK health secretary Jeremy Hunt told BBC Radio on Friday the UK would align with EU rules in certain “areas and sectors of industry” but on a “voluntary basis”.
“We will, as a sovereign power, have the right to choose to diverge, and what we won't be doing is accepting changes in rules because the EU unilaterally chooses to make those changes,” Mr Hunt said.
Known as the “three baskets approach” - because it would involve either mirroring, modifying or making a break with EU rules in different sectors - it was dismissed by the EU as early as last week.
In a slide presentation to EU diplomats on 15 February, the Commission said the UK’s views on regulatory issues in the future relationship, including the ‘three basket approach’, “are not compatible” with the block’s negotiating principles.
“This is a kind of a cherry-picking which I don’t believe is acceptable,” said a senior EU official.
The EU is fearful that a special deal for the UK will “undermine” relations with European Economic Area (EEA) members Norway, Iceland and Liechtenstein, and could breach “most favoured nation” clauses in international trade deals with countries like Canada and Japan.
So, EU leaders, frustrated by what they see as the UK’s “inconsistent” position, are pressing ahead with their own offer on the future relationship, which they will sign off in March.
“That will happen no matter whether more or less detail will come from London,” said one senior EU official close to the Brexit talks. “We are where we are, and time is ticking.”
That offer is likely to be light on detail but open to amendments further down the road, in case the UK’s position shifts.
An EU official said it will reflect what the block knows about the UK’s red lines on the single market, customs union and court of justice - meaning a Canada-style trade deal is all that is on the table for now.
“We want to stay as closely associated with the UK as possible,” Dutch prime minister Mark Rutte said, but added: “If you want something, there are certain rules we all have to abide by.”
Irish prime minister Leo Varadkar said it was “impossible” to interpret what the UK wants, and urged prime minister Theresa May for more detail in a speech she intends to give next week.
"I really think we need, at this stage, is real detail as to what the United Kingdom’s position is, what new relationship they want the United Kingdom to have with the European Union, and to have that spelled out in detail, not in aspiration,” Mr Varadkar said.
In a blog post, Maria Demertzis and Nicola Viegi of Bruegel, an economics think tank, say the impasse is a “natural consequence of the strategic game the two parties are following”, and say both sides are being “uncooperative, risking an outcome that would be unfavourable for all”.
Meanwhile, the vague talk about the future belies the fact that little concrete progress has been made on other issues, including a post-Brexit transition period and the Irish border.
Two days of ‘technical’ talks this week were inconclusive, though negotiators welcomed a UK position paper on transition, which they will discuss again next week.
Next week’s talks will also bring up all the unresolved issues from the first phase, including customs, data protection and Euratom. They will take place as the Commission publishes its draft text for a future EU-UK withdrawal agreement, which it aims to agree with the UK by the end of the year (see other news).
Europe and foreign ministers will also meet next week in the General Affairs Council for an update from EU lead negotiator Michel Barnier and to begin the preparations for the March EU summit. (Sarah Collins)