EU Chief Negotiator Says 'Consequences' for Brexit, No 'Frictionless Trade'

Clodagh Kilcoyne  Reuters

He pointed out that access to the internal market without the customs union, as happens in the European Economic Area, still requires EEA members Norway, Iceland and Liechtenstein to comply with a system of procedures and customs controls; similarly, Turkey's customs agreement with the EU, without access to the internal market, has an implied system of procedures and customs controls as well.

But by leaving the EU, he added, the United Kingdom will "move to the other side of the external border that delineates not only the customs union but also the area in which the rules of the internal market are adopted". The problem will be to verify over time if the United Kingdom takes action that amounts to social dumping, lower environmental standards and tax dumping - for example. But Mr Barnier said that, while it would be a "lose-lose situation" for both sides if no deal was reached, there appeared to be a misunderstanding on the British side over a belief that the country could retain all the benefits of membership after Brexit.

These four freedoms - including freedom of movement - are indivisible and there can be no exceptions for certain sectors, he insisted. We can not let the single market unravel.

"There can be no sector-by-sector participation in the Single Market".

He continued "only the combination of a Single Market and a Customs Union allows good to move around choosing to leave the EU you are moving yourself deliberately outside that border and those rules".

"Number three: The EU must maintain full sovereignty for deciding regulations".

He added that all countries outside the European Union must respect its autonomy to set rules and standards, both as a marketplace and an economic and social community.

Losing access to the single market would lead to City firms losing "passporting rights", which provide wide-ranging European Union access for UK-based financial services.

He noted that he had encountered those in the United Kingdom who argue that one can leave the single market and keep all of its benefits, his retort was simple, "this is not possible".

He reluctantly put his name to the Remain side in the referendum and fired some lawmakers who backed an amendment in Parliament calling on the government to keep open the option of staying in the bloc's single market and customs union. And of course no spirit of revenge.

Barnier urged business to assess, with lucidity, the negative consequences of the UK's choice on trade and investment.

The warning comes on the eve of a meeting of business leaders and Brexit Secretary David Davis on at Chevening House in Kent.

In response to questions on financial services Barnier said that United Kingdom financial institutions would lose passporting rights as a result of this choice.

"One transition is better than two and certainty is better than uncertainty", she said.

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