Britain has urged Brussels to honour a June deadline for granting market access rights that the City of London will rely on when the UK’s post-Brexit transition period runs out at the end of the year.
In a letter published on the same day that Britain and the EU began negotiations on their future relationship, Rishi Sunak, chancellor, told the European Commission that he could “see no reason” why both sides could not complete the necessary approvals on time.
The letter, dated February 27, underlines the UK’s urgency in aiming to secure access rights for the country’s financial services firms from Brussels that will cushion any blow from leaving the single market.
The EU has insisted that future access arrangements must be based on equivalence, which is the same system it uses for other non-EU countries. Around 40 different equivalence provisions are scattered across the EU’s financial services laws, dealing with issues such as the ability of Europe’s companies to use clearing houses and stock exchanges located outside the bloc.
The system does not require other countries to apply EU rules directly, but to have standards of comparable rigour, which are assessed by Brussels.
UK officials have complained that the EU’s negotiating mandate for future relationship talks, published last week, did not mention an agreement the two sides reached last year to move quickly on equivalence.
As part of Britain’s Brexit deal, signed last October, the EU and UK agreed they should start assessing equivalence “as soon as possible after the United Kingdom's withdrawal from the Union, endeavouring to conclude these assessments before the end of June 2020.”
Brussels has retorted that there was no need to mention it in the mandate as the issue is strictly unilateral and not part of the future relationship talks. Negotiations kicked off on Monday with a two-hour meeting between chief negotiators David Frost and Michel Barnier in Brussels.
The EU knows equivalence gives the bloc a useful form of leverage in the wider trade talks with the UK. Brussels has rebuffed repeated requests from the UK for assurances about how equivalence will be applied. Britain is wary that the commission could withdraw access at short notice, and has called for “appropriate consultation and structured processes” before any equivalence findings are rescinded in the years to come.
Mr Sunak said in his letter, addressed to EU financial regulation chief Valdis Dombrovskis, that “the UK and the EU should be able to conclude equivalence assessments swiftly”.
“I see no reason why we cannot deliver comprehensive positive findings to the June timeline,” he wrote.
Diplomats said the two politicians spoke on Monday about the letter, which included a proposal for meetings between EU and UK officials “to support our autonomous decision-making”.
Mr Sunak acknowledged in his letter that “the negotiations about our future relationship are of course being handled on a different track”.
EU officials said that Mr Frost and Mr Barnier’s meeting was an opportunity to run through the core principles of their respective positions, which sketch out very different visions of the future partnership.
Ahead of the start of the talks on Sunday evening, Mr Frost briefed the 100-strong UK team of negotiators, urging them to be friendly but robust in protecting Britain’s sovereignty. Mr Frost reiterated the UK’s red lines that there would be no alignment with EU rules or European Court of Justice jurisdiction in the UK.
The UK negotiating team, which has been issued with special lanyards featuring the union jack, will move on Tuesday to a conference centre in central Brussels to begin detailed talks with their EU counterparts on everything from access to UK fishing waters to nuclear co-operation. This week’s negotiating round — which lasts until Thursday — is the first of several which will take place before an EU-UK summit in June.
“The UK will engage constructively to reach a free trade agreement which fully respects the UK’s political and regulatory autonomy,” a UK spokesperson said.
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