Brexit: EU demands veto over UK trade deals with other countries for two years after Britain leaves

Liam Fox has previously said he would have 40 deals ready to sign a minute after Brexit

Brussels will demand a veto over any trade deals signed by Britain during the Brexit transition period, in a new blow for Theresa May’s plan to make the UK a “great, global trading nation” after it leaves the EU.

A leaked draft of member states’ directives to chief negotiator Michel Barnier for the coming phase of negotiations, obtained by The Independent, shows that the EU27 countries will require the UK not to implement trade deals for nearly two years after Brexit “unless authorised to do so by the Union”.

The move comes amid a general toughening-up of the EU’s red lines as talks on what the transition period will look like get underway over the next few weeks. Member states have also instructed Mr Barnier to extend free movement rights for the whole transition period, and to establish a special status for EU nationals living in the UK after that.

No date has yet been set for mainline talks to resume in full, but both the UK and EU want to conclude discussion on the transition period by March, so they can move to discussions about the UK’s future trade framework.

“The United Kingdom should continue to comply with the Union trade policy,” the guidelines on the transition period, dated 15 January state.

“It should also in particular ensure that its customs authorities continue to act in accordance with the mission of EU customs authorities including by collecting Common Customs Tariff duties and by performing all checks required under Union law at the border vis-à-vis other third countries.

“During the transition period, the United Kingdom may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law, unless authorised to do so by the Union.”

The EU’s new, strenthened line on trade deals is a huge blow for Liam Fox, the International Trade Secretary. In just October Mr Fox promised to have signed dozens of international free trade deals “one second after midnight” on Brexit day 2019.

“I hear people saying ‘Oh, we won't have any [free trade agreements] before we leave'. Well believe me we'll have up to 40 ready for one second after midnight in March 2019,” he told Tory activists at the party’s conference in Manchester at the time.

Though the veto plans leave open the possibility that Brussels would agree to the UK making a trade agreement with another country, it would likely be extremely difficult for the UK to implement any wide-reaching deal while still following EU rules and regulations during the transition. Mr Barnier’s team has repeatedly warned that it expects “the integrity of the single market” to be respected as a condition of the transition period.

Liam Fox has pledged 40 trade deals will be ready a minute after midnight in 2019 (Reuters)

The document also stresses that the “four freedoms of the single market are indivisible” and that free movement and other rights should continue in full until “the end of the transition period”, after which a special negotiated status for all EU citizens in the UK – and vice-versa – would be provided.

Mr Barnier has previously said the transition period, if agreed, should run until 31 December 2020 – the end of the EU’s current budget round. This would mean Britain would be unable to sign any trade deals with non-EU countries without Brussels’ say-so for just short of two years after it leaves in March 2019.

A British government spokesperson was contacted for this story but declined to comment because it is based on a leaked draft.