Brexit Talks Sidestep Thorny Issues as Work Starts on Future

(Bloomberg) -- Talks between the U.K. and the European Union skirted around the biggest obstacles to a Brexit deal as officials settled on a list of topics to shape negotiations about the future.

Negotiators didn't cover the Irish border and the U.K.'s post-Brexit customs arrangements in talks over the past days, according to an EU official. Instead, they focused on the two sides' relationship on security and the extent to which the U.K. will be bound to the EU's economic model, such as on tax policy and state aid.

With less than 11 months before the U.K. leaves the EU, the two sides are negotiating in two distinct areas: issues related to Britain's withdrawal, including how to prevent a hard Irish border, and a “framework” for the two side's future relationship, which will eventually form the basis of full-blown trade talks.

The EU says it wants to see progress on how to prevent a hard Irish border after Brexit by the time leaders meet in June. While the bloc isn't making a solution on the border an explicit condition, Prime Minister Theresa May must recognize the basic paramenters if talks on future trade are going to accelerate. The U.K. doesn't recognize June as a “deadline” and says that the border problem can be solved only through discussions on the wider future relationship.

The U.K. and EU jointly published a list of topics for negotiations on the future in four broad subject areas:

• The basis of ongoing cooperation (including governance of the U.K.-EU agreement, dispute settlement and Britain's participation in EU bodies),
• The economic partnership (including customs, financial services, energy, agriculture and financial services),
• The security partnership (including foreign-policy and law-enforcement cooperation),
• Other issues including data protection, fisheries and science

The two sides haven't decided on dates for these discussions beyond three rounds of talks in May and June. That will depend on the amount of progress made before a summit on June 28-29, the EU official said. Initially, talks will consist of the EU asking British negotiators to set out the U.K.'s position on each issue.

The EU's positions on future relations haven't altered since it presented them earlier this year. This includes ruling out access to the EU's single market for financial institutions any better than equivalence and insisting that the U.K. can obtain only an agreement similar to the EU's free trade deal with Canada.

This week's talks saw the EU press the U.K. for a precise vision for the type of economic model it wants after Brexit. The EU is worried that Britain will start cutting taxes, slashing regulation and using state aid to gain a competitive advantage. The bloc will only offer a more generous deal if the U.K. signs up to these “level playing field” commitments.

To contact the reporter on this story: Ian Wishart in Brussels at iwishart@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Peter Chapman

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