Phase 2 of the Brexit talks will not begin until February with detailed negotiations on a framework for future EU-U.K. trade delayed until late March at the earliest, according to the latest draft of guidelines for the EU27's approach to the Brexit talks being prepared for approval by EU leaders later this week.

The revised guidelines also stress the continuing authority of the European Court of Justice during any transition period in which the U.K. remains in the bloc's single market.

“[In] January we start talking about the transition period, as from March we work on the framework of the trade deal,” said an EU diplomat involved in drafting the guidelines.

The timetable will dismay businesses on both sides of the Channel and put a dampener on the momentum created by the draft sufficient progress deal agreed on Friday morning. It also casts doubt on the feasibility of the EU and U.K. doing a quick deal on a post-Brexit transition period — something that was a key clause of the agreement struck between London and Brussels last week.

“We want an overarching trade deal which has no tariffs. An overarching trade deal, including services. Canada, plus, plus, plus would be one way of putting it" — David Davis

Businesses are anxious for more clarity about post-Brexit regulations and many have set March as a cutoff point at which they say they will trigger relocation plans that could have a significant impact on the U.K. economy. The British government has been pushing to move the process on to talks about a future trade framework for months but at the same time it has never respected several deadlines indicated by the EU.

“We want an overarching trade deal which has no tariffs. An overarching trade deal, including services. Canada, plus, plus, plus would be one way of putting it,” Brexit Secretary David Davis told the BBC at the weekend. But if talks on the future trade framework don't start until March, that leaves barely 12 months to come to an agreement — less, when you factor in the need for ratification by national parliaments and the European Parliament.

EU diplomats and government officials are still finalizing the text of draft guidelines issued on Friday by European Council President Donald Tusk. Along with the “sufficient progress” decision itself, these need to be formally signed off by EU leaders at the European Council summit Friday.

But a text being prepared for the summit at a meeting of EU sherpas in Brussels last night makes clear that full negotiating guidelines will not be ready until March 2018, according to five EU diplomats present at the meeting. The intention is for those guidelines to be signed off by leaders at the European Council summit on March 22-23.

Substantive talks on a future trade framework would not take place until after that, although some discussions on the U.K.'s future relationship with the bloc based on the more generic draft guidelines that are due to be signed off this week can start earlier. It specifies the “end of January” for a new directive to begin Phase 2 of the talks. Diplomats have penciled in January 29 for the approval of the new directive.

It will likely take the European Commission a few days to convert the draft guidelines into a negotiating mandate for the EU’s chief negotiator Michel Barnier, meaning talks even on the more generic negotiating position will not begin until February.

“Exploratory talks and contacts are anyway possible before the additional guidelines,” said an EU official.

The timing of the guidelines on the future trade relationship was a matter of fierce debate at official meetings, diplomats said, with some countries pushing for the March 2018 European Council summit as a clear target and others advocating for a looser approach with no fixed deadline.

“We are talking about our future here, we need time to look into possibilities" — Anonymous EU diplomat

One diplomat said a major purpose of the March deadline was to make clear that the EU27 are keeping to a clear timeline in the Brexit process, and to prevent the U.K. from blaming Brussels for any delays.

EU diplomats say the delay stems in part from the ambiguity over what the U.K. wants to see from an eventual trade deal. Theresa May's Cabinet has yet to discuss what ministers want from a future relationship with the EU. Not knowing the U.K.'s position means that EU diplomats have more variables to consider. “We are talking about our future here, we need time to look into possibilities,” said an EU diplomat.

It was clear in the revisions that diplomats want to emphasize the role of the European Court of Justice. For supporters of Brexit, ending the court's jurisdiction in the U.K. has been a top priority, and the issue was subject of contentious negotiations during Phase 1 of the Brexit talks in relation to citizens' rights.

The new language also emphasizes the U.K's continuing obligations on trade, customs and tariffs during any transition.

"All existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures will also apply, including the competence of the Court of Justice of the European Union," according to the revised guidelines. "As the United Kingdom will continue to participate in the Customs Union and the Single Market (with all four freedoms) during the transition, it will have to continue to comply with EU trade policy, to apply EU customs tariffs and collect EU customs duties, and to ensure all EU checks are being performed on the border vis-à-vis other third countries."

Update: This article was updated on 12 December with a comment from an EU official making clear that exploratory discussions on trade can happen before the additional guidelines are signed off in March.