A European Union flag flies from a lamp post opposite the Houses of Parliament in London, Britain, January 16, 2018. REUTERS/Hannah McKay
March 7, 2018
By Jan Strupczewski
BRUSSELS (Reuters) – The European Parliament will call for a broad-based “association agreement” with Britain after Brexit that goes beyond a narrow focus on trade, according to a draft resolution to be voted on next week.
The draft resolution is intended as a contribution to discussions within the European Union about what kind of future relationship it will seek with post-Brexit Britain.
The European Parliament’s approval is necessary for both the terms of Britain’s departure as well as a future trade deal.
“A free trade agreement (FTA) is simply not enough, we need cooperation also in other areas,” the parliament’s main Brexit coordinator, Guy Verhofstadt, told a news conference.
“What we are proposing is more ambitious, and an FTA would be part of the association agreement,” he said.
The draft resolution envisages such an agreement covering four areas: trade and economics, foreign policy and security cooperation, internal security and thematic cooperation.
EU law says the bloc may sign agreements establishing an “association” with third countries involving reciprocal rights and obligations, common action and special procedure.
Earlier on Wednesday, the chairman of EU leaders, Donald Tusk, offered Britain a free trade deal that falls well short of ambitions set out by Prime Minister Theresa May last week, notably for the country’s dominant financial sector.
A draft offer seen by Reuters said the EU wanted a close partnership with Britain, but its depth would be limited by Britain’s own wish to leave the bloc’s single market and the customs union.
The parliament’s draft resolution echoed the Tusk offer, saying that only Britain’s membership of the EU’s single market and customs union would guarantee continued frictionless trade.
Britain argues that Brussels should be able to offer its financial services sector, which generates more than 10 percent of national output, special access to the Single Market, as all British laws are already fully in line with those of the EU and possible divergence later could be managed to minimize changes.
But the draft resolution said that even if London had identical legislation or full alignment after Brexit, it still could not enjoy the same benefits as full EU members.
“Leaving the single market would lead to the UK losing passporting for financial services and the possibility to open branches in the EU subject to UK supervision,” the text said.
The draft resolution said the EU could consider the rules of Britain as a third country as equivalent to those of the EU to facilitate firms’ access to the EU market.
Britain’s finance minister Philip Hammond said he was not ruling out using equivalence in financial services regulation, although he did not like the EU’s model of it, which allows the EU executive to revoke the equivalence at short notice.
The parliament’s resolution said this was the only option.
“Decisions on equivalence are always of unilateral nature,” the text said.
(Reporting By Jan Strupczewski; Editing by Gareth Jones)