EU says Brexit trade deal needs power to fine UK if it breaks rules

Any British trade deal with the EU after Brexit should include powers to fine the UK if it breaks European rules, Brussels has said.

Commission officials told member state diplomats that breaches of the agreement would be punishable with a “lump sum” or “penalty payment”, payable to Brussels within one month.

The plan is the latest to come out of a series of meetings in the EU capital aimed at getting member states and the Commission on the same page before talks start next month. The EU is planning to officially draw up its negotiating terms over the next few weeks.

In a further stipulation likely to enrage Brexiteers, the EU also wants its own European Court of Justice (ECJ) to have a starring role in arbitrating the deal. Brexiteers view the ECJ as a “foreign court” and many hard-liners believe Britain should not be under its jurisdiction after it leaves.

The ECJ would be joined by arbitration panels and a so-called joint committee to help judge whether either side had broken the rules.

If rules are ruled to be broken the deal would also give either party the right to suspend the trade agreement, under the EU plans.

Free trade agreements generally include some kind of agreed dispute resolution mechanism that parties can turn to if they feel the other side is not holding up their end of the bargain.

The issue is however likely to be particularly fraught in any UK-EU deal because of Brexiteers’ aversion to the ECJ, as well as concerns on the EU side about the UK backsliding on aspects of EU regulations it signs up to under a “level playing field”.

The news is the latest hint that negotiations may not be straightforward, with Boris Johnson’s self-imposed deadline of 2021 to get a deal signed looking difficult to meet.

Asked about EU demands for powers to fine the UK, the prime minister’s spokesperson said: “We have not even started negotiations with the EU on our future partnership yet, but we are clear that we want a Canada-style free trade agreement. The prime minister has set out that our future UK and EU relationship should be based on friendly co-operation.”

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