EU’s negotiating guidelines are flat rejection of May’s flexible model

The European Union's latest draft negotiating guidelines are a flat rejection of Theresa May's proposal for a flexible model of regulatory alignment after Brexit.

They rule out any form of cherrypicking between sectors in the single market, and pour cold water over the prime minister’s call for Britain to remain in the European medicines and chemicals agencies after Brexit.

Donald Tusk made clear that as long as May clings to her negotiating red lines which rule out single market and customs union membership, the best the EU can offer is a free trade agreement similar to that with Canada. Such an agreement would not cover services, which account for most of Britain's economic activity and in which it enjoys a trade surplus with the EU.

Philip Hammond dismissed the guidelines as an opening bid from the EU, and London continues to hope that member-state governments will soften them before this month's EU summit. Although industry across Europe has failed to come to Britain's aid on Brexit until now, that could change as the deadline approaches and it becomes clear that a bad Brexit deal would be costly on both sides of the channel.

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Draw comfort

Pro-Europeans inside the Conservative party and elsewhere will draw comfort from Tusk’s promise that if Britain abandons its red lines the EU will be more generous in its offer.

They have been encouraged by Labour’s shift in position towards supporting customs union membership, and by May’s acknowledgment last week that economic independence would come at a cost in terms of market access.

May has doubled down on her opposition to customs union membership, describing it in the House of Commons as a betrayal of the Brexit referendum. Hard Brexiteers in her party remain alert to any betrayal on her part, and their recent period of silence and calm could end abruptly if the prime minister appears to weaken on her red lines.

Arithmetic

Parliamentary arithmetic could yet confound both the prime minister and the Brexiteers, however, when MPs vote after Easter on a proposal to commit Britain to membership of a customs union after Brexit.

The Conservative rebels who joined Labour to defeat the government last year are confident that they can pull off a second victory on the customs union.

If that happens Tusk may need to make good on his promise of a more generous offer.