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EU could start free trade talks with UK by autumn, council president says

Britain will have to make "significant progress" on agreeing to the terms of its departure from the European Union before beginning talks on a new trade arrangement, but the head of the European Council has suggested that those talks could begin before the end of 2017.

A divorce agreement in which the U.K. settles bills for existing commitments could come as soon as the autumn of this year, allowing discussions on a new trade deal to begin, European Council President Donald Tusk said March 31, laying out a draft European negotiation strategy. But he ruled out the possibility of parallel talks.

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European Council President Donald Tusk, left, and Maltese Prime Minister Joseph Muscat.

Source: Associated Press

The U.K. wants a deal for a framework on the terms of its future trade relationship with the EU before the end of the two-year negotiation period, which kicked off March 29 when it provided formal notification of its intention to leave.

"Once, and only once, we have achieved significant progress on the withdrawal can we discuss our future relationship," Tusk said, adding that the determination of whether that progress has been made will be entirely in the hands of the remaining 27 members, but that it could come in the autumn. "Starting parallel talks on all issues at the same time, as suggested by some in the U.K., will not happen."

Any future agreement "cannot offer the same benefits as Union membership," the draft guidelines say, but "strong and constructive ties will remain in both sides' interest and should encompass more than just trade."

Tusk said any divorce agreement will have to include a deal on how much Britain owes the EU, although he emphasized that this would cover existing commitments by both sides. U.K. and EU politicians have spoken of the potential for a £50 billion bill for pension liabilities and other commitments, but Tusk said there would be no attempt by European negotiators to punish Britain for leaving the bloc.

"Brexit itself is already punitive enough," he said. "There is no such thing as a Brexit bill or a penalty for leaving. We want to talk just about fairness and commitments."

An agreement on departure terms will also have to include a deal on protecting the rights of EU citizens living in Britain and U.K. citizens in EU countries, as well as preventing a "legal vacuum for our companies that stems from the fact that after Brexit the EU laws will no longer apply to the U.K.," Tusk said. An arrangement to prevent the imposition of border controls between Northern Ireland and the Republic of Ireland will also need to form part of the deal, he added.

Tusk's draft guidelines also emphasize that Britain must negotiate only with the EU and not with individual member states, and they rule out a sector-by-sector approach governing access to the bloc's single trading market. They allow for the possibility of a transition period after Britain leaves the bloc, but stress that for as long as that period lasts, Britain must accept governance by EU institutions, something likely to jar with pro-Brexit politicians' wishes to end the jurisdiction of bodies such as the European Court of Justice.

"In our books, transition periods [mean] that you're still a member or at least you still have access to a membership situation," said Maltese Prime Minister Joseph Muscat, whose country holds the EU's six-month rotating presidency. "If you have such an access, it is obvious ... that the institutions we have all agreed upon need to govern that period."

Oversight under any future free trade agreement will be subject to negotiation, he added.

Tusk and Muscat also said they were confident that Britain would not use security cooperation as a bargaining chip, as suggested in some quarters based on wording in Prime Minister Theresa May's letter to Tusk triggering Article 50.

"It must be a misunderstanding," Tusk said. "Our partners are wise and decent partners, and this is why I'm absolutely sure that no one is interested in using security cooperation as a bargaining chip."