Diplomatic momentum is growing in Brussels for an interim trade deal with the U.K. that sets no tariffs on manufactured goods and food but restricts British services such as aviation and finance.

In public, the remaining 27 EU countries insist they will keep trade talks with the U.K. off the agenda until they have finalized the core elements of the divorce settlement: citizens' rights and Britain's multibillion-euro departure bill. Behind the scenes, however, EU trade attachés are already liaising at an informal level on how the EU27 can leverage their superior economic muscle in trade talks.

Trade diplomats from four EU27 countries said the idea gaining the most traction in early discussions was a transitional deal with the U.K. in which the two parties would pay zero tariffs on each other's goods. This would take effect immediately after Britain leaves the block in March 2019 as a prelude to a full free-trade agreement, which would probably take many more years to negotiate. Two of the diplomats said the team of European Commission Brexit negotiator Michel Barnier had floated the idea.

A zero-tariff deal on goods has immediate attractions for the U.K. but it is no silver bullet because other regulatory barriers such as compliance paperwork could be severe. Cars from Japanese factories in Britain, for example, could still face trade restrictions because of EU demands about "rules of origin." Brussels would be likely to argue that not enough of the parts and technology used to build the vehicles qualify as British. This means car exports from the U.K. would not necessarily enjoy the same free access they had while Britain was a full member of the EU customs union.

Under World Trade Organization rules, duties would reach 10 percent on cars, with agricultural tariffs stretching far higher.

The omission of services raises even bigger problems for London: Companies from banks and insurers to budget airlines like easyJet and Ryanair could find themselves shouldered out of the all-important EU market.

One trade attaché said a transitional tariffs-only trade accord would avoid “falling off the cliff-edge” but the U.K. would still be notably “worse off” because of the blow to its service sector and other regulatory challenges. The diplomats added that the zero-tariff offer was unlikely to be possible if the initial divorce talks failed to reach a settlement.

Both London and the remaining EU countries want to avoid a devastating hard landing in 2019 if Britain crashes out of the single market without a transitional trade arrangement in place. Some of Europe's most influential industries — German carmakers and the French and Italian food sectors — want to avoid tariffs between the EU and the U.K. that would ramp up their costs.

Under World Trade Organization rules, duties would reach 10 percent on cars, with agricultural tariffs stretching far higher. The driving fear is that the EU will slip automatically into imposing its external duties on the U.K. after Brexit and London will retaliate.

Twenty percent of German cars head to Britain and 55 percent of U.K. wine is imported from the EU.

The European Commission did not comment on the zero-tariff plan. “Negotiations have not yet started and it is therefore too early to speculate about whether there will be a transitional agreement and if so, what shape it will take,” said spokeswoman Mina Andreeva.

Spokespeople for the U.K. government didn't reply to a request for comment on Sunday.

Scramble for services

Britain's continental rivals in sectors such as banking and aviation see Brexit as a prime opportunity to snatch business from the U.K. While Britain ran an eye-watering £25 billion deficit in goods with the rest of the EU in the last three months of 2016, it simultaneously ran a £6 billion surplus in services.

Airlines such as Air France and Lufthansa want a strict application of EU aviation rules after Brexit to curtail the activities of British competitors. Budget carriers such as easyJet and Ryanair will have to show from 2019 that they are majority-owned by EU interests if they want to preserve their access to European skies. Similarly, Britain's financial rivals in Frankfurt and Paris want U.K. financial companies to move staff and assets to the Continent to maintain their foothold in the European market.

British Prime Minister Theresa May stressed when triggering Article 50 last Wednesday that she wanted an ultimate accord to be “a bold and ambitious free- trade agreement” with the EU that “covers sectors crucial to our linked economies such as financial services and network industries.”

But the EU has been cautious on the continued access for services.

On Friday, it warned that Britain would not seal a free-trade agreement — the successor to the interim accord — unless it committed not to turn itself into a tax haven. Similarly, at a POLITICO event last Tuesday, France's ambassador to the EU, Pierre Sellal, said London would be in danger of losing access to the internal market if it pursued a more free-wheeling economic model by turning itself into a Singapore or Hong Kong.

Still, Mike Vercnocke, head of European affairs for the City of London Corporation, is confident that the City is agile enough to compete even without an immediate deal on services. “The City is very flexible, you already see companies serving clients by other means” such as setting up subsidiaries in the EU, he said.

The chances of a quick transition are also boosted because a tariffs-only deal would be the exclusive competence of the EU.

The mood in Germany is that the U.K. will have to face costs to preserve the coherence of the single market.

“The EU and U.K. should reach an agreement that minimizes economic damage, but any future deal must not undermine the EU’s single market by granting the U.K. favorable conditions without setting clear obligations," said Jochen Andritzky, secretary-general of the German Council of Economic Experts, which advises the government.

"We must avoid creating a precedent that demonstrates that one could leave the EU, its freedom of movement and budget contributions while continuing to reap the economic benefits,” he added.

Quick tariff trade-off

While EU trade negotiations could drag on for years, experts said that an interim deal limited to cutting tariffs should be easier. A "minimalistic deal is relatively easy to get," said Marco Bronckers, a professor of trade law at Leiden University. Britain is more likely to be able to conclude such a deal because it plans to secure regulatory convergence by converting EU rules into British law, he added.

The chances of a quick transition are also boosted because a tariffs-only deal would be the exclusive competence of the EU. “The EU could ratify swiftly without needing to pass by 38 national or regional parliaments,” Bronckers said, alluding to the regulatory gauntlet that almost killed the EU's trade agreement with Canada last year, when the Belgian region of Wallonia was effectively able to impose a veto.

The arrangement would not constitute a "customs union" and Britain would be free to strike other trade deals around the world.

However, that would raise problems for the U.K.'s trading partners in the EU as they would have to monitor the origin of goods scrupulously. If Britain were to strike a free-trade deal with China, for example, Brussels would not want those goods entering the EU tariff-free.

The interim customs plan also triggered skepticism for other reasons.

“I don't think something like this would fly,” said Pascal Kerneis, managing director of the European Services Forum. “EU-U.K. trade is very much about services, from accounting to transport."

Daniel Caspary, trade spokesman for the European People's Party, called the idea an “emergency solution” and expressed doubts that the EU was actually willing to slash all tariffs, particularly when it comes to agriculture.

“We haven't offered zero-tariffs on agriculture in any trade deal because there are farmers in Europe that need protection from foreign competition,” he said. “If Britain leaves the EU and contributes no longer to the Common Agriculture Policy [supporting those farmers], I don't believe in a zero-percent tariff. Otherwise, what kind of signal would that be sending to other trading partners?”

Simon Marks, Florian Eder, Charlie Cooper and Cathy Buyck contributed reporting.