The Dublin chief revealed there are “quite divergent opinions” amongst the remaining 27 member states when it comes to the depth of its future partnership with the UK.
EU leaders and officials have repeatedly called for more “clarity” from Britain over what kind of relationship it wants with the bloc, accusing Theresa May of being too vague.
This morning Maltese PM Joseph Muscat said that the UK needs to lay out “in clear terms” what kind of a trade deal it will seek with the EU and how much Single Market access it wants.
And Dutch leader Mark Rutte threw down the gauntlet to Mrs May yesterday, saying that with the agreement on sufficient progress “it’s now for the UK to make up its mind”.
The PM has laid out a number of red lines, including leaving the Single Market and Customs Union and ending free movement and the jurisdiction of the European Court of Justice.
However, the Cabinet has not discussed what kind of a partnership it wants with the EU due to wildly differing visions between Remainers, like Philip Hammond, and Brexiteers like Boris Johnson.
The EU’s chief negotiator, Michel Barnier, has indicated several times that the red lines put down by the British Government means that a free trade agreement, like the one the bloc has with Canada, is the only option.
But Mr Varadkar revealed that there is some dissension within the club over how deep and extensive that FTA should be, with EU officials arguing they cannot agree a deal that upsets their other trading partners.
A number of the bloc’s recent agreements, such as with Canada, have Most Favoured Nation clauses in meaning if Brussels offers Britain better terms it has to go back and update its other deals too.
Mr Varadkar said: “The first real big step is for the UK to say what it wants – in clear terms. I think if this happens in the next few weeks we can start in earnest and by March we will have a very clear European position.”
Mr Varadkar said: “We’ll talk about moving on from Phase one to Phase two — talking about the transition period and the new relationship that will exist between the EU and the UK.
“I think a lot of thinking needs to be done about that. There does seem to be quite divergent opinions on what that should look like.
He added: “Needless to say, from an Irish point of view, we’d like it to look as much like the current arrangement as possible, but that wouldn’t necessarily be the view of everyone.”
Mrs May was applauded by EU leaders at last night’s dinner as she delivered a short speech on Brexit, with senior politicians praising her as “formidable” and “tough”.
The PM now wants to see European capitals move onto talking about trade as quickly as possible, although they want to seal an agreement on a transition before starting talks on the permanent future relationship.
Mr Varadkar said: “Theresa May gave a report just basically giving her outline as to where things stood. There wasn’t a round table discussion because that’s not permitted under Article 50.
“But a few people offered some encouraging remarks, some good luck remarks, merry Christmas type remarks and there was a light round of applause after that.”