EU chief negotiator Michel Barnier said on Thursday that there was still a "fundamental divergence" with Britain on how to protect the rights of the three million EU citizens living in Britain after Brexit.

Speaking at a press conference after the first full round of negotiations, Barnier insisted that the European Court of Justice (ECJ) should be the guarantor of such rights.

Read more: Brexit talks round 2: what to expect

Barnier, who appeared with British Brexit Secretary David Davis, said Britain still needed to provide clarification on three key issues: EU citizens' rights, the Irish border, and its position on a financial settlement of its obligations to the bloc.

Brexit negotiations: What are the key issues? Two phases EU leaders agreed to negotiating guidelines during a summit in April 2017 that divided the divorce talks into two phases. Phase I, in which both sides aimed to settle the basic terms of Britain's departure, started in July and ended with an agreement on "sufficient progress" in December. Officials are now holding Phase II negotiations on the post-Brexit relationship between Britain and the EU.

Brexit negotiations: What are the key issues? The "Brexit Bill" London agreed to a formula for calculating what it owes in its "divorce bill" to the EU in early December after months of haggling by British officials. The current EU budget expires in 2022 and EU officials have said the divorce bill will cover financial obligations Britain had committed to before triggering article 50. The final bill will reportedly total around £50 billion (€67 billion).

Brexit negotiations: What are the key issues? Citizens' rights Both sides agreed in early December that the 3 million EU citizens currently in Britain and the 1.1 million British citizens in the EU keep their residency rights after Brexit. British courts will have immediate jurisdiction over EU citizens living in Britain. But the EU's highest court, the ECJ, can hear cases until 2027 if British judges refer unclear cases to them.

Brexit negotiations: What are the key issues? The Irish border Britain and the EU also agreed in December that no border checks between the Republic of Ireland and Northern Ireland would return post-Brexit. How feasible the commitment will be is unclear, as Britain's commitment to leaving the EU Single Market and Customs Union makes it difficult to avoid customs checks at the Irish border.

Brexit negotiations: What are the key issues? Transition period Theresa May envisages a two-year transition period after March 2019. Both sides still have to hash out the details of the transition period in Phase II, including the exact end-date, whether new EU laws passed during the period will apply to Britain, and whether Britain can negotiate its own free trade deals. British officials hope to agree on the terms of the transition by March 2018.

Brexit negotiations: What are the key issues? Trade May has repeatedly said Britain will leave the European Single Market and the EU Customs Union. Leaving both could disrupt British-EU trade, but allow Britain to negotiate its own free trade deals and restrict EU migration — key demands by pro-Brexit politicians. London has said it wants to negotiate a new EU-UK trade deal during Phase II to minimize trade disruption before March 2019.

Brexit negotiations: What are the key issues? Immigration Britain has also vowed to restrict EU migration into Britain after Brexit. However, some British lawmakers are wary that a sharp drop in immigration could lead to shortfalls in key sectors, including health, social care and construction. The EU has warned that Single Market access is out of the question if London decides to restrict the ability of its citizens to live and work in Britain.

Brexit negotiations: What are the key issues? Security Recent terror attacks across Europe including a string in Britain underline both sides' support for continued security cooperation after March 2019. But access to EU institutions such as Europol and programs such as the European Arrest Warrant require compliance with EU laws. Whether Britain will still be compliant after it leaves is unclear. Author: Alexander Pearson



"Clarification of the United Kingdom's position is essential," Barnier said. "We want an orderly exit, and an orderly exit requires Britain to settle its accounts. "This week's experience has shown, we make better progress when our respective positions are clear."

Davis said the talks had been "robust but constructive," but noted there was "a lot left to talk about."

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"A solution will require flexibility from both sides," Davis added.

What role for Europe's top court?

One major issue that continues to divide is whether the ECJ will be the final arbiter on issues that concern both the EU and UK after Brexit. Davis and his team have flatly rejected that the UK should be subject to ECJ laws after it leaves the bloc, while Barnier has insisted that it should continue to play an important role, especially over the rights of EU citizens living the UK.

Read more: Brexit: Commons prepares for fight as 'Repeal' Bill unveiled

"Quite frankly any reference to European rights imply their oversight by the court of justice of the European Union," Barnier said on Thursday.

However, the Luxembourg-based court was a key factor in the British public's decision last year to leave the EU, as campaigners from the "Leave" camp repeatedly decried the ECJ's supremacy over that of the UK courts.

The UK's divorce bill

Davis refused disclose if his team had reached an agreement on whether the UK would have to make some form of net payment to leave the bloc, in what has often been commonly referred to as the Brexit divorce bill.

Estimates for the bill have ranged from around 40 billion euros ($46 billion) to 100 billion euros. Last week, the UK Foreign Minister Boris Johnson said the EU could "go whistle" if its demands became too excessive.

"We're a country that recognizes its international responsibilities and rights and we will seek to exercise both in the future," Davis said.

The next round of talks is set to start on August 28.

rc,dm/rt (Reuters, AFP)