The 27 remaining member states want to be able to act against the UK without having to go through a lengthy legal process.
Brussels will have the power to punish the UK at will during the Brexit transition period by closing off parts of the single market to British companies, according to a leaked legal document drawn up by the EU.
The use of focused sanctions to suspend certain benefits … of the internal market, would give the EU the freedom to punish the UK without prematurely terminating the transition period and risking damage to its economic interests.
The document does not stipulate what acts by the UK would lead to sanctions, but the EU has made it clear it is concerned that the British government could infringe the rights of its nationals living in the UK after Brexit.
The development will inevitably fuel the concerns held by some over the terms of the 21-month transition period following Brexit day on 29 March 2019, during which the UK will effectively stay in the single market and customs union without any say on new regulations.
Theresa May’s apparent acceptance of most of the EU’s demands has already prompted accusations from the Tory MP Jacob Rees-Mogg that the UK will be a vassal state.
The document says that only in exceptional cases will the UK be allowed to sit in on parts of meetings.
Even then, British officials will have to leave the room once the relevant part of discussions have come to an end. The chair of the meeting concerned shall clearly identify the agenda points for which their attendance is allowed, the document notes. The UK will also be blocked from having access to sensitive information.
Staying in the customs union
This is the EU current system of which the UK is a part it groups all the EU members, as well as Monaco. The EU defines it as a single trading area where all goods circulate freely, whether made in the EU or imported from outside”.
This means that if goods enter the EU from another country, duty or checks only happen when they first come into the bloc.
Some Labour and Tory MPs, and the Liberal Democrats, want the UK to stay in this after Brexit.
Joining a new customs union
As raised by Labour, but now ruled out by Downing Street, this would see the UK sign its own customs deal with the EU after leaving, allowing for some differences. The EU already has three separate bilateral customs union arrangements in place, with Turkey, Andorra and San Marino.
Signing up to a ‘customs arrangement’
This idea, mentioned by Downing Street when it ruled out membership of any future customs union, remains vague, but is taken to mean a looser deal which would allow the UK to make its own separate trade deals with non-EU nations, something seen as crucial to many Brexiters.
But it could end up being a change largely of terminology. Craig Oliver, the former No 10 communications head, tweeted that he wondered if it was a political trick, to “name something differently and say it’s not the same.”
The document states that the UK will merely be consulted on fishing in its waters during the transition period, in a clear indication of the EU’s intention that the current quotas will remain in force.
The demand for a mechanism to punish the UK where it is thought to have infringed EU law during the transition period is likely to cause the most consternation among Brexiters.
The demand is contained in the final footnote in the document, which is to form the centrepiece of this week’s EU-UK negotiations in Brussels.
It states the future withdrawal agreement “should provide for a mechanism allowing the union to suspend certain benefits deriving for the United Kingdom from participation in the internal market where it considers that referring the matter to the court of justice of the European Union would not bring in appropriate time the necessary remedies”.
The two most contentious issues, until now, were thought to be the UK’s lack of a veto in the application of sensitive new laws and May’s insistence that EU nationals arriving in the UK during the transition period will be treated differently to those who are already in the country.
Officials from the UK and the EU willengage in four days of talks, beginning on Tuesday, led by the most senior officials from each side, Sabine Weyand, the bloc’s deputy chief negotiator, and Downing Street’s senior Brexit adviser, Olly Robbins.