POLITICO Brexit Files: ‘Fundamental divergence’ — The nuclear (waste) option — Lamb and strawberry diplomacy



TODAY’S READOUT

— There was scant evidence of progress in a press conference to mark the end of the first substantive round of Brexit talks in Brussels today, with both sides looking as far apart as ever on key issues. The EU’s Brexit negotiator Michel Barnier said there was a “fundamental divergence” with the British negotiating team over the way that the rights of EU citizens in the U.K. would be guaranteed, adding that he needed clarity on the U.K.’s position on the Brexit bill. U.K. Brexit Secretary David Davis said, “We shouldn’t expect incremental progress in every round [of talks].”

— The U.K.’s performance in the first substantive round of Brexit negotiations this week got panned in Brussels and back home in London, but British negotiators insist they have the EU right where they want it — and are confident in their approach, the criticism notwithstanding, writes Charlie Cooper.

— Britain and the European Union have both made tactical blunders in their opening salvos of the Brexit negotiations in Brussels, said the former U.K. diplomat who authored Article 50, John Kerr — now Lord Kerr of Kinlochard.

— British and American officials will gather Monday to discuss a potential free-trade agreement between their two countries after Brexit, Reuters reported overnight. “The early discussions will focus on laying the groundwork for commercial continuity … and exploring possible ways to strengthen trade and commercial ties,” an official from the U.S. trade representative’s office told the news agency. Britain’s International Trade Secretary Liam Fox and U.S. Trade Representative Robert Lighthizer will attend the meeting.

INSIGHT

The devil is always in the detail.

In the run-up to this first week of substantive Brexit talks we had a clear idea of the big disagreements that were coming: the size and nature of the U.K.’s “Brexit bill” and the bust up over the role of the European Court of Justice to name just two.

But while these remain unresolved and likely to roll on for the entirety of the talks, it is two more detailed proposals that proved among the most controversial in the negotiating rooms this week.

According to insiders familiar with the talks, the EU side is unhappy with the British demand to carry out a criminal records check on any EU citizen who applies to the Home Office for the new “settled status” that Theresa May offered as part of the U.K.’s proposal on the rights of EU citizens based in the country post Brexit. Meanwhile, the U.K. side is cross that the EU proposes British expats in Europe will only be allowed to seek residence rights in the country they live in — not throughout the EU — so stripping them of the freedom of movement rights they currently enjoy.

Both issues have the potential to set emotions running high.

Many in the EU, particularly those MEPs who love a moral cause, will see the U.K.’s planned criminal records as a matter of principle — an affront to millions of people that looks too much like the British Home Office treating EU citizens with an assumption of guilt. In the U.K. however, the government’s right to carry out what many will see as a reasonable immigration check to keep British streets safe will go down well with the press and many ordinary people.

British expats meanwhile, will be personally worried about their future freedom to roam and settle across the EU, under the current proposals coming from the Commission.

Brexit is a huge, complex process. The worry after this week will be how many other unforeseen pitfalls lie buried in the detailed proposals both sides will set out over the coming weeks and months.

— Charlie Cooper

OVER AND OUT

— With its economy growing again after almost a decade in the doldrums, Ireland is eager to attract bankers, software engineers and accountants to its shores. But there’s a problem: finding them somewhere to live, writes Naomi O’Leary.

— Britain must pay what it owes to the EU as a precondition of starting post-Brexit trade deal negotiations, French Economy Minister Bruno Le Maire said Wednesday. “It was Margaret Thatcher who had said to the European Union at the time: ‘We want our money back,’” Le Maire told French parliament’s economic affairs committee.

— “There’s no such thing as an unsackable minister,” British Prime Minister Theresa May declared in an interview with LBC radio Wednesday, in another warning to her cabinet after a minister’s comments at a closed-door government meeting appear to have been leaked to the press.

— Ask EU bankers where the London-based European Banking Authority should be relocated after Brexit, and you’re likely to get little more than a shrug, writes Fiona Maxwell. Their nonchalance contrasts sharply with the lobbying over the relocation of the European Medicines Agency, probably because what banks care about more than location is how the EBA is funded.

— U.S. bank Morgan Stanley has chosen Frankfurt as the site of its post-Brexit EU hub, the Guardian reported. The bank will apply for a licence with the local German regulator to continue trading across the EU after Britain leaves. About 200 U.K. jobs could be relocated.

— There is a “strong case” for Scotland having different Brexit arrangements from the rest of the U.K. in some areas if a U.K.-wide deal does not reflect Scotland’s needs, according to a report by the House of Lords EU committee. While this could include Scotland setting its own EU immigration goals, it could not stay in the single market, the report added.

— Britain should stay in the aviation single market and adopt common regulatory standards after Brexit, according to a survey published today by the Independent Transport Commission, a British think tank. The report also said the transport industry should be represented at the EU Exit Business Advisory Group, recently established by the U.K. government to garner opinion from the main British business organizations.

— U.K. Minister for Environment, Food and Rural Affairs George Eustice said today in parliament that British industry can count on tariff-free market access to the EU for foodstuffs including fish products. Eustice said the U.K.’s position was strengthened by the fact that it has a significant trade deficit in food and drink products with the bloc.

— Britain has the right to return radioactive waste — originating from materials coming from EU countries — to the bloc after it leaves, so says one of the U.K.’s position papers on the Brexit talks. “It might just be a reminder that a boatload of plutonium could end up at a harbour in Antwerp unless an arrangement is made,” a nuclear expert who has advised the government told the FT.

— There is a “window of opportunity” for the U.K. government to reassure firms they do not have to relocate staff in the wake of Britain leaving the European Union, the business leaders’ group Institute of Directors said. According to their survey, 57 percent of firms are looking at contingency planning for Brexit, but only 11 percent have already begun to implement their plans.

— “The British economy can succeed. But it needs less wishful thinking and a more hard-headed assessment of the facts,” writes John Neill, chairman of the manufacturing group Unipart, in the New European, of what the U.K. can learn from the British auto industry.

— The EU’s chief Brexit negotiator Michel Barnier enjoyed British lamb and Belgian strawberries at a lunch with U.K. Brexit Secretary David Davis at the U.K. ambassador’s residence in Brussels today following the press conference marking the end of the talks. Instead of the usual working lunch in one of the EU institution buildings, the British extended an invitation to Barnier to meet on their territory.

Brexit Files is compiled by Paul Dallison and Sanya Khetani-Shah. Reach them at pdallison@politico.eu | skhetanishah@politico.eu

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