Trade talks come after Brexit: Hollande

The European Union's remaining 27 member states are set to embed in their Brexit negotiating guidelines that trade talks with the United Kingdom can only begin once there is clarity on the terms of an orderly withdrawal, according to a draft circulated among Europe's capitals.

Tusk said the European Union will not punish Britain in the negotiations, saying that Brexit itself is "punitive enough". "Brexit in itself is already punitive enough", he said.

Tusk's draft negotiating guidelines add that the other 27 countries are ready for a transitional deal after Britain's exit in 2019, but that any such arrangement must be under strict European Union rules.

The European Union will tell Britain on Friday how it aims to negotiate its "orderly withdrawal" from the bloc, limit uncertainties for businesses and pave the way for a close future partnership.

People must not be used as bargaining chips by any side, and this issue should be settled as quickly as possible, said Muscat, whose country holds the rotating European Union presidency from January to June this year.

Also looming large is the so-called "exit bill" Britain will have to pay, estimated to be as much as €60 billion (S$89.6 billion), and the border between Northern Ireland and Ireland. The draft answers some key questions, such as what would be the fate of European citizens in Britain and vice versa.

Labour MP Owen Smith, a supporter of the Open Britain campaign, said: "Two days into a two-year negotiation and the Government's lofty rhetoric is colliding with hard reality".

Side-by-side divorce and trade talks "will not happen", Tusk said at a news conference in Malta.

Centeno, who had travelled to London mainly to meet investors, argued that the EU's economic situation in terms of public sector budgets and external accounts is positive compared with "the imbalances that exist in the US" or even in the United Kingdom itself.

While there is no such thing as a Brexit bill for leaving commitments must be honored, added Tusk.

Tusk also ruled out the suggestion that there was an inherent threat in British Prime Minister Theresa May's departure letter, which some felt hinted at a link between sharing security information and getting a good deal.

First negotiate the terms of Britain's departure then negotiate Britain's new deal with the European Union (which has to be carried out under the terms of another treaty article - 218 (3) - which covers negotiations between the European Union and "third countries", that is countries that are not members of the EU).

Germany's foreign minister says that Britain's future trading relationship with the European Union will inevitably be less advantageous than the arrangement it has as a member.

Mr Tusk played down the storm over Mrs May's bid to link trade and security agreements, saying he thought there had been "a misunderstanding".

These include the timeframe for wrapping up the EU-U.K. talks, which remains unclear but has been an early sticking point ahead of negotiations.

  • Zachary Reyes