EU Is Said to Consider Brexit Compromise on Transition Talks

  • May’s speech eased deadlock but breakthrough remains unlikely
  • Davis, Barnier to hold press conference at noon in Brussels

EU's Barnier Sees `New Dynamic' in Brexit Talks

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Theresa May’s Brexit concessions have started to ease the deadlock.

Even as both sides went into the fourth round of negotiations with fighting talk, European Union leaders are considering going some way to meet one of the U.K.’s demands. They are discussing bringing forward talks about the transition period that would follow Brexit, according to three people familiar with the situation who declined to be named.

The concession, while minor, would break the deadlock and make it easier for the U.K. to discuss the contentious divorce bill. The U.K.’s goal of moving talks on to trade next month is probably still out of reach, according to the people, who declined to be named as the deliberations aren’t public.

May’s speech last week in Florence, where she pledged to continue paying into the EU’s budget for two years after leaving and honor the U.K.’s financial commitments more broadly, hit some of the notes her European counterparts were hoping for. While the two sides are still far apart on key issues, such as the role of the European Court of Justice, her words may have opened the door to some flexibility at least in the way talks are structured.

Read more: Brexit Bill Swells on Pensions as EU Parliament Draws Red Lines

With just 18 months to go before it leaves the club, the U.K. needs to get the terms of the transition agreed in order to mitigate the uncertainty facing businesses, some of which are already relocating. May said in Florence she wants a two-year transition during which trading terms remain unchanged. The quid pro quo is that the U.K. must accept all of the EU’s rules while losing any say in how they are made.

October Summit

The concession on transition would happen at the EU summit in October, where leaders may discuss changing the mandate of chief negotiator Michel Barnier to allow him to talk about the bridging arrangements, according to the people. Governments are also considering whether to add language in their summit statement that assures the U.K. they are likely to accept a transition period, one of the people said.

Initially Barnier insisted that transition could only be discussed after the separation terms and the outline of the future trade relationship were agreed. He signaled on Monday that his mandate could be revised, but it would be up to EU leaders.

Red Lines

EU governments must approve the U.K.’s plans for a transition, and it can happen only if the two sides strike an overall deal on the British departure before March 2019. They still insist that talks must show “sufficient progress” on the three main separation issues of the bill, the rights of EU citizens in the U.K. and the Irish border before negotiations can start on trade. The definition of “sufficient progress” has always been open to interpretation.

European Parliament President Antonio Tajani will meet the chamber’s political party leaders on Thursday to discuss Brexit, ahead of a resolution to be voted on next week. The resolution may include a line that “partial links between divorce and transitional might be explored at October European Council,” according to a summary of the draft document obtained by Bloomberg on Wednesday.

Still, the draft resolution also offered a reminder of how far apart the two sides still are. The assembly, which has veto power over the final deal, wants the European Court of Justice to have jurisdiction in the U.K. during any transition, which Brexit Secretary David Davis ruled out as recently as last weekend. It also wants freedom of movement during the transition, while the U.K. wants to register Europeans entering Britain after 2019. Ireland, which will become home to the U.K.’s European border and wants as long a transition as possible, said today the transition could last as long as four years.

Barnier and Davis will outline the progress made during four days of talks at a news conference at noon in Brussels on Thursday. Later in the day, Prime Minister Theresa May will head to Tallinn for a dinner with EU leaders where she’s expected to flesh out some of the points she made in last week’s speech. Brexit isn’t on the formal agenda at the summit.

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