EU's Donald Tusk offers autumn trade talks if progress made on Brexit
Negotiations on future trade relations between the UK and EU could begin as early as this autumn, European Council president Donald Tusk has indicated.
But the move will only take place once "sufficient progress" has been achieved in talks on the arrangements for Britain's withdrawal, widely seen as a reference to agre ement on a "divorce bill" of an estimated £50 billion set to be presented to the UK.
Unveiling his draft negotiating guidelines for withdrawal talks under Article 50 of the EU treaties, Mr Tusk insisted Brussels will take a "constructive" approach and wants to keep the UK as a "close partner" on trade and security in the future.
The announcement was welcomed by Foreign Secretary Boris Johnson, who said it showed "a lot of goodwill, a lot of willingness to achieve what the Prime Minister has said she wants to achieve, which is an orderly transition and then a deep and special partnership between a strong EU and a strong UK".
But critics pointed to the Council's firm rejection of British pleas for parallel trade and divorce talks and sector-by-sector deals on access to the single market, as well as its insistence the UK will not be allowed to cut separate deals with individual EU states.
Liberal Democrat leader Tim Farron said Theresa May had been "taken to Tusk", as the guidelines showed "the strength of the EU in these negotiations and the carelessness of the UK Government in isolating themselves from our European allies".
Labour MP Owen Smith, a leading supporter of the Open Britain campaign, said: "Two days into a two-year negotiation and the Government's lofty rhetoric is colliding with hard reality. The Prime Minister's plan for Britain is a pipe dream. "
Speaking in Malta, Mr Tusk predicted w ithdrawal negotiations would be "difficult, complex and sometimes even confrontational".
A first phase would seek to disentangle Britain from its commitments and ties with the EU and resolve the status of expatriate citizens, before moving on to a second phase establishing the terms of future EU-UK relations.
He said: "The EU27 does not and will not pursue a punitive approach. Brexit in itself is already punitive enough.
"After more than 40 years of being united, we owe it to each other to do everything we can to make this divorce as smooth as possible."
He rejected talk of a "Brexit bill", insisting it was a matter of "fairness" that the UK should make good on financial commitments it had entered into.
He dismissed suggestions Mrs May had attempted to use security co-operation as a "bargaining chip" by linking it to trade in her March 29 letter notifying Brussels of the UK's intention to quit.
He will visit London for talks with the Prime Minister ahead of an April 29 summit in Brussels, when the remaining 27 member states are expected to approve the guidelines, clearing the way for talks to begin in earnest.
While insisting simultaneous divorce and trade talks "will not happen", Mr Tusk held out hope talks could move on to future trade relations " if sufficient progress has been achieved, probably in the autumn".
The guidelines insist a free trade agreement (FTA) can formally be concluded only after the UK has ceased its membership, but add it will be possible to negotiate "an overall understanding on the framework for the future relationship" prior to Brexit to allow for a swift agreement after withdrawal.
Any FTA should be "balanced, ambitious and wide-ranging", but cannot involve "participation in the single market or parts thereof".
In an indication Brussels will seek to secure British compliance with many of its rules and regulations as part of the price for a deal, the document warns an FTA must "ensure a level playing field in terms of competition and state aid and must encompass safeguards against unfair competitive advantages through ... fiscal, social and environmental dumping".
The guidelines leave open the possibility of "transitional arrangements" to cover any period between the expected date of Brexit on March 29 2019 and the conclusion of an FTA, adding such arrangements must be "clearly defined, limited in time and subject to effective enforcement mechanisms".
EU citizens living and working in the UK will require "r eciprocal, enforceable and non-discriminatory guarantees" of their future status.
The EU will seek "flexible and creative solutions" to avoid the creation of a hard border between Northern Ireland and the Republic.
A Government spokesman said: "These are draft guidelines and we look forward to beginning negotiations once they have been formally agreed by the 27 member states.
"It is clear both sides wish to approach these talks constructively and, as the Prime Minister said this week, wish to ensure a deep and special partnership between the UK and the European Union."
Maltese PM Joseph Muscat, who currently holds the EU presidency, said Brussels would draw up a "clear balance sheet" of what Britain owes.
"It will be a tough negotiation, but it will not be a war," he said.
"At the end of the day the two sides need to remain close to each other as friends. But it is obvious for the 27 that membership of the European Union is the superior option."
CBI deputy director general Josh Hardie said: "From our conversations with our sister federations across Europe we know that businesses are united in their desire to see a comprehensive new economic partnership between the UK and the EU.
"That united voice should make European policy makers sit up and listen on the need for maintaining close economic ties and ensuring a smooth transition."
The Leave Means Leave campaign said Mrs May should "walk away from the table" if Brussels refuses to talk about trade alongside the divorce settlement.
The pro-Brexit group's co-chair Richard Tice also rejected demands for a divorce bill, saying: "When you are a member of a gym and you decide to leave, you serve your notice and pay your fee up until that point. You are not liable to pay for the gym's running costs when you are no longer a member.
"The situation with the EU is exactly the same."
Ukip leader Paul Nuttall said the guidelines were ''bound to create more division amongst EU nations''.
''By wrapping the negotiations in a bureaucratic straitjacket all that they guarantee to do is highlight the already glaring differences of approach amongst the rump 27 nations in the bloc,'' he said.
''As we near March 2019 and the UK''s final days as a member, national politicians in national capitals will realise that the package approved by Brussels will not be in their own specific interests nor that of their citizens.
''The EU's rigid approach will be seen as the problem, not the UK.''
Defence Secretary Sir Michael Fallon said the UK and EU would both be weaker if they did not agree a Brexit deal on fighting organised crime and terrorism.
"If there is no deal on that then we are all weaker. Weaker here and Europe is weaker; because that is a joint effort to tackle organised crime and to combat terrorism.
"What we are seeking in these negotiations is a deep and special partnership with the remaining European Union on both economic issues and on security."
TUC general secretary Frances O'Grady said: "The EU has made an important offer of a 'bridge' to stop the UK falling off a cliff-edge if negotiations for a new trade deal take longer than two years.
"The Prime Minister should accept this offer, as it is the best way to make sure that British jobs and businesses are not put in danger."
Labour MP Chuka Umunna, chairman of Vote Leave Watch, said: "Donald Tusk's remarks this morning have blown the Government's Brexit strategy out of the water.
"T he EU has made clear that no country that leaves the single market can secure an equivalent trading relationship. Clearly, quitting the single market will damage our trade, hit our businesses, and cause jobs to be lost."
Mr Johnson insisted the UK's commitment to the defence and security of Europe was "unconditional".
He said: "I want to stress one thing, the UK's commitment to the defence and security of this region, of Europe, is unconditional and it is not some bargaining chip in any negotiations that may be taking place elsewhere in this capital.
"We make an unconditional commitment to the defence and the security of Europe."
Labour leader Jeremy Corbyn said: "It's welcome that Donald Tusk has softened the EU's opposition to talks on trade taking place before the terms of withdrawal are agreed.
"Both sides must be realistic about the scale of the task ahead and the common need to avoid ending up without agreement.
"Securing a good deal for Britain's future must be the Government's priority and we must be realistic about the need for transitional arrangements."
Mr Corbyn said it was wrong to speculate about the size of any "exit bill", saying there were "obligations on both sides, which must be fairly settled".