Brexit: UK and EU clash ahead of trade talks

Boris Johnson says Britain does not need to accept EU rules as Brussels demands fishing rights

British Prime Minister Boris Johnson, right, clashed with the EU's top Brexit negotiator, Michel Barnier, left, on Monday. AFP

Britain and the European Union laid down red lines for the future of their post-divorce relationship on Monday, in a hostile start to the latest chapter of the Brexit saga.

Following the UK’s formal departure from the bloc on Friday, the two sides have only 11 months to reach an agreement, with British Prime Minister Boris Johnson flatly refusing to extend the negotiating period beyond the end of this year.

Until then, Britain has agreed to abide by the rules of EU membership, but if they fail to reach an agreement deal, the two sides would resort to the most basic of relationships with border checks and high tariffs.

Trade was the most pressing issue for Europe’s chief negotiator Michel Barnier as he announced his ideas for future ties between Brussels and London.

The UK, Mr Barnier said, will no longer benefit from the rights and advantages of EU membership. Being out of the bloc will mean “less favourable” terms for the UK, he said.

Brexit negotiator Michel Barnier set out the EU's guidelines for the negotiations. AFP

Setting out what he called a “highly ambitious” deal, Mr Barnier said the EU would be “very demanding” in its efforts to guarantee a level playing field between competing British and European businesses.

Turning to an early flashpoint in the build-up to the negotiations, Mr Barnier said there must be a deal on fisheries including reciprocal access to territorial waters.

The fishing industries of eight EU member states, particularly France and Denmark, are heavily dependent on British waters. For instance, British territorial waters account for 30 per cent of sales of French fishing crews.

"There will be no trade deal with the British if there is no reciprocal access deal for our fishermen," Mr Barnier told France Inter radio.

"We will negotiate access to the British territorial waters for European fishermen at the same time that we negotiate access to European markets for British fisheries products," he said.

Pro Brexit supporters gather for the Brexit Day celebration party hosted by Leave Means Leave at Parliament Square on Friday. Getty Images

Thousands gathered in Parliament Square to mark Britain's departure from the EU. Reuters

Some Brexit supporters dressed up for the celebrations. Getty Images

Crowds counted down the hours and then the minutes until the Brexit hour at 11pm local time. Reuters

Britain officially left the EU after a debilitating political period that has bitterly divided the nation since the 2016 referendum. AP

Britain ended 47 years of EU membership on Friday. AFP

Brexit Party leader Nigel Farage speaks to the media before addressing crowds in Parliament Square. Reuters

But Mr Johnson said Britain would not accept the EU’s rules on striking a deal and said the choice was either a Canada or Australia-style accord.

"There is no need for a free-trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment or anything similar, any more than the EU should be obliged to accept UK rules," Mr Johnson said.

"Are we going to insist that the EU does everything that we do as the price of free trade? Are we? Of course not,” he said.

"We want a comprehensive free trade agreement similar to Canada's but in the unlikely event that we do not succeed then our trade will have to be based on our existing withdrawal agreement with the EU," Mr Johnson said.

"Let's be clear the choice is emphatically not 'deal or no deal', we have a deal," he said.

The prime minister said any deal on fisheries must respect the UK as an independent coastal state, and proposed annual negotiations with the EU on fishing.

Mr Johnson also said the UK will not seek to undermine the bloc’s standards with a “cut-throat race to the bottom”.

“We are not leaving the EU to undermine European standards,” he said.

“We will not engage in any kind of dumping, whether commercial or social or environmental.”

The EU published a draft of its directives for the trade negotiations as Mr Barnier delivered his speech in Brussels, clearing the way for negotiations to begin formally.

Ursula von der Leyen, president of the European Commission,  said: "It's now time to get down to work. Time is short. We will negotiate in a fair and transparent manner, but we will defend EU interests, and the interests of our citizens, right until the end."

The frosty exchange between the British prime minister and the EU's top negotiator sparked market uncertainty and saw the pound fall by as much as 1.2 per cent, trading 1.1 per cent lower at $1.3056 shortly after midday in London.

Responding to Mr Johnson’s speech, Rebecca Harding, CEO of Coriolis Technologies and author of several books on trade, said: “The prime minister offered a robust and upbeat vision of the UK’s trade future outside of the EU.

"Yet, the truth is that the UK's position is out of sync with the realities of geopolitics, trade negotiations and the UK public.

“The UK’s trade position is fragile and needs to be treated with care.”