Brexit: Theresa May's plans face fierce resistance from Brussels, EU document expected to show

Chief EU negotiator Michel Barnier has set out disagreements over transition and the European Court of Justice

Michel Barnier has set out a series of disagreements with the UK over the transition period (BBC)

Theresa May is on a collision course with Brussels as it emerged a draft EU Brexit agreement will probably ignore a string of key demands she has made.

The draft withdrawal document to be published on Wednesday will state that EU citizens must retain full rights during the Brexit transition period, and that the UK must remain subject to European court rulings indefinitely.

The paper outlining the moves, that fly in the face of the Prime Minister’s demands, comes just days before Ms May is set to make her biggest speech on Brexit since last year.

Conservative ministers Liam Fox and Boris Johnson both made interventions underlining how the Government would be not seeking a relationship involving a customs union with Europe after Brexit.

Speaking ahead of publication of the EU’s draft withdrawal agreement, the bloc’s chief Brexit negotiator Michel Barnier warned there are still disputes about how the transition should work.

In particular, there is disagreement as to whether EU citizens arriving during the probable two-year period after Brexit day in March 2019, should still have the right to freedom of movement – something Ms May does not want to grant.

Mr Barnier said: “There are significant points of disagreement with the UK as to what we understand by transition, the conditions for such and the dimensions for such a transition.”

He added: “In the light of these disagreements, we have not achieved the transition yet.

“On all of these points of disagreement, I am happy to discuss these matters straight away with [Brexit Secretary] David Davis.

“It’s essential we make progress by means of political discussion, political negotiation.”

He said there would be “no surprises” in the 120-page document, which will set out in legal terms the political agreements reached between Ms May and European Commission president Jean-Claude Juncker in December.

But reports also emerged that Brussels will insist in the draft that the UK accept the European Court of Justice as the ultimate arbiter of treaty-related disputes, even after the transition.

Continuing oversight is needed because parts of the withdrawal deal, like the £39bn divorce bill, will be discharged over many years to come – but the idea of the ECJ having continued sway will probably be rejected by the Government.

Mr Barnier also poured cold water on Ms May’s proposal for a future EU-UK relationship based on “ambitious managed divergence” – in which Britain would observe EU regulations in some areas and go its own way in others.

In the light of these disagreements, we have not achieved the transition yet

Chief EU negotiator Michel Barnier 

The EU negotiator said: “It is illusory to imagine a situation in which we would accept cherry-picking.

“We are responsible for guaranteeing the integrity of the single market. The UK knows what the rules are which underpin that integrity, because they have been helping us put them together for the last 40 years.”

The draft text of the withdrawal agreement will be discussed with the remaining 27 EU member states, as well as the European Parliament, before being adopted at the European Council summit in March.

It will also include procedures for putting into operation the “alignment” of Northern Irish regulations with the EU rulebook, which will be needed if no technological solution is found to keep the border with the Republic open after Brexit.

Theresa May and her Cabinet are currently trying to work out how to maintain pulling the UK out of the EU’s customs union, whilst also ensuring there is no customs border between Northern Ireland and the Republic – something seen as critical to peace in the region.

The Foreign Secretary angered rival politicians by comparing the complex problem at the heart of all Brexit negotiations, to managing the boundary between two London councils.

Mr Johnson told BBC Radio 4: “We think that we can have very efficient facilitation systems to make sure there is no need for a hard border [and] excessive checks at the frontier for Northern Ireland and the Republic.

“You know, just for people listening, there’s no border between Camden and Westminster but when I was Mayor of London we anaesthetically and visibly took hundreds of millions of pounds from the accounts of people travelling between those two boroughs without any need for border checks.”

When the interviewer said the comparison is not credible, Mr Johnson went on: “It’s a very relevant comparison, because there’s all sorts of scope for prebooking, electronic checks, all sorts of things that you can do to obviate the need for a hard border.”

The International Trade Secretary also gave a speech in which he argued that staying in a customs union would damage the UK’s ability to do trade deals in the future.

Mr Fox’s warning came a day after Jeremy Corbyn unveiled a dramatic shift in Labour’s Brexit stance, confirming the party will back a “new and comprehensive” UK-EU customs union to ensure tariff-free trade.

Leading Tories too are backing a move to force the Prime Minister into a position where she must negotiate to keep the UK in a customs union.

Mr Fox said: “As rule takers, without any say in how the rules were made, we would be in a worse position than we are today.

“It would be a complete sellout of Britain’s national interests.”