The UK could be fined or lose preferential access to the European market if it violates the terms of a future relationship deal with the EU, under plans presented by the European Commission.
Brussels wants trade and other future co-operation with Britain to be governed by one strong set of enforcement rules, according to an EU presentation, shared with diplomats on Monday and seen by the Financial Times.
The measures would ensure each side can act decisively to protect itself in the event that the other fails to honour its obligations.
France and other European capitals are pushing for the UK to stay in synch with EU rules in areas such as environmental and labour market policy, state aid and tax, arguing that future alignment is essential to protect European companies from unfair competition.
Sajid Javid, chancellor, said in an FT interview on Friday that post-Brexit Britain would never accept regulatory alignment with Brussels in comments which heightened the EU’s concerns about the UK’s intentions.
A particular concern for Brussels is how to uphold the “level playing field” of common rules that the EU insists the UK must adhere to in exchange for a duty-free, quota-free trade deal.
In its meeting with EU diplomats in Brussels on Monday, the commission outlined its proposed future dispute settlement procedures which would be backed by sanctions including the “suspension of the agreement in whole or in part” and even “financial compensation”.
The commission added that the “monitoring and compliance” mechanisms concluded in an EU-UK deal would reflect the “depth and content” of that future partnership.
In particular, Brussels stressed the need for rapid, temporary, measures to respond to Britain breaching the level playing field.
The commission said in its presentation that “tailored remedies” would be needed in this area, but did not elaborate further. [...]
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