EU says UK only gets trade talks after progress on Brexit bill

[BRUSSELS] The European Union signalled UK Prime Minister Theresa May will have to pay for the smooth transition and sweeping free-trade deal she pitched for this week when she opened two years of Brexit negotiations.

In draft guidelines for the talks released to the bloc's 27 other capitals on Friday, EU President Donald Tusk said discussions over future commercial ties would not take place until "sufficient progress" was made resolving thorny topics such as borders and budgets.

Mrs May was also told any transitional period to ease the exit would require the UK paying money and accepting EU laws.

The tough stance, which formalises the previous warnings made by EU officials, implies a quid pro quo in which May gets a shot at securing tariff-free trade ties with the UK's biggest market only if she quickly strikes a deal over the bill the bloc wants to impose.

The first phase of talks must "settle the disentanglement of the United Kingdom from the Union," according to a copy of guidelines obtained by Bloomberg.

Only after this phase in concluded, will negotiations move on to an "overall understanding on the framework for the future relationship", according to the document.

The guidelines will be subject to discussion by the EU's 27 governments and the final version will be approved by the bloc's leaders in an extraordinary summit in Brussels on April 29.

A more detailed mandate for the bloc's chief Brexit negotiator, Michel Barnier, needs to be approved later, before substantial talks with the government in London can begin.

"We want to talk just about fairness and commitments," Mr Tusk told reporters in Malta on Friday.

"I have no doubt that for both sides it's really important to show, to demonstrate that we want to be fair to each other during negotiations."

BLOOMBERG