UK: Uncertainty looms over Brexit transition period

The talks over an agreement between the U.K. and the EU for a proposed transition period have come to a standstill as the first round into the second phase of Brexit negotiations concluded Friday.

Michel Barnier, the chief EU negotiator, said at a news conference in Brussels that he said he could not understand the positions taken by the British government in recent days.

“To be quite frank, if these disagreements persist, the transition period is not a given,” he warned.

The latest disagreements have now put a smooth deal for the transition period -- a limited period which will give businesses a chance to adapt themselves with Brexit effects -- in danger.

Barnier said he was “surprised” by the U.K.’s demands.

“When I met David Davis [Brexit secretary] in London on Monday and once again in negotiations in Brussels this week, the U.K. insisted that we should reach an agreement in March on this transition period,” Barnier said.

“At the same time, however, our partners set out a certain number of disagreements which I regard as substantial,” he said.

Barnier’s remarks triggered an immediate drop in the British pound’s value on Friday as 1 pound was traded at 1.37 US dollar after a 1.1 pecent loss.

The EU said, during the transition period, which is proposed to cease by the end of 2020, the U.K. will have to obey all EU laws without any representation in EU bodies and any say on future legislation.

A leaked document also suggested that the EU plans to have powers to suspend the transition period if the U.K. infringes EU law.

The British government insists that the EU citizens who will arrive in the U.K. during the transition period should not have the same rights as the EU citizens who will benefit from a settled status. It also seeks the right to reject new EU laws.

Barnier said: “I don’t understand some of the positions of the UK […] I am surprised by these disagreements. The positions of the EU are very logical […] If these disagreements persist, there will undoubtedly be a problem.” 

Northern Ireland

Barnier also spoke about the post-Brexit border between the Republic of Ireland and Northern Ireland.

"It is important to tell the truth,” he said. "A U.K. decision to leave the single market and to leave the customs union would make border checks unavoidable."

He said there was no possibility of a trade deal that could avoid barriers to trade. He also said the U.K. was yet to come up with an offer of a “specific solution” to avoid a hard border on the island of Ireland.

The British government has been saying the U.K. as a whole, including the Northern Ireland, will leave the single market and the customs union.

The U.K., the EU and Ireland all have indicated that they would like to keep the seamless Irish border in a solution that is in line with the 1998 Belfast (Good Friday) Agreement that brought peace to the region after years of violence. 

Davis - Barnier dispute

Barnier also hit back at David Davis's comments that described a leaked EU document suggesting the suspension of the transition period in case of any EU law infringement by the U.K. as "frankly discourteous".

He said said he had "not been in the least discourteous or vindictive".

"Quite simply we have to construct a withdrawal agreement which is legally sound and does not give rise to any uncertainty in anyone's mind," Barnier added.

The U.K. and the EU will continue negotiations over the transition period and its details. The European Council will take up the issue during a summit in March, where British Prime Minister Theresa May says she hopes to see progress.

The U.K. is expected to leave the bloc in March 2019, ending its 44-year long membership.