Faisal Islam, Political Editor

There is now a third party in Brexit.

Around the EU27 table on Friday, an hour or so after PM May left, satisfied with her work on securing robust language on Russia, came the news of progress. The remaining members of the European Union had signed off on the terms of a transition deal and on a mandate for Michel Barnier to start talking about a future relationship.

But it was in the conversation afterwards that the real negotiating peril lies. One word: America. The perception among EU leaders around the table is that the UK will in a year's time try to pursue a trade deal with the US that will inevitably undermine the scope and depth of the future UK-EU trade relationship. Or perhaps more candidly, given current circumstances, that the UK will side with the US against the EU in a brewing transatlantic trade war.

I am told that several European Union leaders were prompted to express concern at the UK potentially "consorting with the US" at a time when President Donald Trump was "holding us to ransom" over trade tariffs.


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One EU27 leader communicated privately that "‪to have a very good agreement with US, UK will have to diverge from EU in a way that would be unacceptable for EU. That will be the real bone of contention and is seen as the major threat".

Chancellor Angela Merkel, Hungarian PM Viktor Orban and Mr Barnier all pondered the issue, in the context of what sort of future relationship should be negotiated. It was of huge immediate relevance because Theresa May had remained at the summit that morning to discuss the five-week grace period on huge new US steel and aluminium tariffs for the European Union and six other nations.

The message around the table: "The UK will have to choose its allies, it can't play both sides of this."

All of which is made far more interesting by the fact that the agreed terms for transition do allow the negotiation of new trade deals. The EU appears to believe that the UK will be far more preoccupied with finalising the EU deal and prolonging existing third country deals, rather than having the scope to do entirely new ones.

For many longstanding Leavers, there is no dilemma at all. Indeed, a trade alliance with the US, perhaps even joining NAFTA, is one of the very points of Brexit.

However, there may be a fundamental trade off and decision to make on priorities. US trade officials have already made it clear to the UK that it sees EU standards as closed, opaque and protectionist.

President Trump's Commerce Secretary Wilbur Ross told a British business audience in London recently that such "key hindrances" to a trade pact need to be solved to get a UK-US deal. In effect it was a call for the UK to detach itself from EU standards on, for example, toys, chemicals and food. And yet the thrust of the PM's recent Mansion House speech was that across large swathes of industry, from chemicals to cars and medicines, the UK would continue to take EU standards and seek to participate in EU agencies.

For many longstanding Leavers, there is no dilemma at all. Indeed, a trade alliance with the US, perhaps even joining NAFTA (North American Free Trade Agreement), is one of the very points of Brexit. And the Europeans are frightened because they are too divided to sign their own trade deal with the US.

But the fact that the European Union Council, almost as soon as the PM left her chair, sees this as a litmus test of where the UK is going, suggests it will not budge too far in the generosity of its post-Brexit trading offer. And even more so at a time when President Trump is ratcheting up trade tensions with Europe.

Sky Views is a series of comment pieces by Sky News editors and correspondents, published every morning.

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