The European Union’s chief negotiator Michel Barnier issued a graph today, outlining what the bloc believed illustrated the various different countries’ levels of access to the group’s single market.
According to the illustration, at the top is full EU membership, which Britain will leave in March 2019, the next rung down is is membership of the European Economic Area (EEA), which incorporates Norway, Iceland and Liechtenstein.
Britain has already ruled out membership as it ruled out being under the jurisdiction of the EU court as well as big payments to the EU budget, freedom of movement and adhering to most EU rules.
Below that, illustrated with the Swiss flag, which has Switzerland largely free from judicial control compared to EEA membership but still shadowing the EU in many ways.
The next step is the Ukraine, which has an agreement with the EU that is overseen by EU judges and regulates complete judicial autonomy but the country does not permit free movement of workers between itself and the rest of the EU.
Turkey is on the next stage which is a member of the EU customs union, but this has also been ruled out by Prime Minister Theresa May as she wants to be able to strike deals with countries outside of the EU, most notably the United States.
With that structure, Mr Barnier sees the possible deal that could be struck with the UK is a free trade deal, similar to the ones agreed with Canada and South Korea.
The only other option, according to Mr Barnier, is a “no deal” outcome where Britain trades with the EU along WTO guidelines, which most hardline Brexiteers favour but business interests have indicated this would have an adverse effect on the economy.
Separately, Mr Barnier, in a series of interviews with a number of European newspapers, indicated that he was not open to striking a free trade deal that included financial services.
He said: “There is no place for financial services. There is not a single trade agreement that is open to financial services. It does not exist.”
He described the position as a result of “the red lines that the British have chosen themselves”.
He added: “In leaving the single market, they lose the financial services passport.”
Mr Barnier made clear that the EU will respond firmly to any deviation from the framework of single market regulations which might give the UK a competitive advantage through lower taxes or weaker standards.
He said: ”We will not accept from the other side, regulatory competition against social rights, against environmental rights, against consumer rights and against fiscal regulations … or against financial stability.”
The EU executive Commission will agree a set of negotiating directives for Barnier on Wednesday to start talks early in the new year on a status-quo transition period after Brexit. EU leaders want Britain to offer more detail on what it wants after that before they will give Barnier a more detailed set of guidelines in March for an outline free trade agreement.
Barnier aims to have a “political declaration” on what the future will look like by around October next year, at the same time as a draft withdrawal treaty. Full trade talks will start only after Brexit in March 2019 and, Barnier says, could be completed to take effect in January 2021, when the transition period ends. But many think that is a tight deadline.
Brexit Secretary David Davis has called for a “Canada Plus Plus Plus” deal, implying better access than the Canadians in some areas. Prime Minister Theresa May says she will use Britain’s size and importance to its European neighbours to negotiate the most favourable future relationship.