BREXIT: EU Says 'No Decisive Progress', Divorce Bill Disputed

--No Big Declarations From Brexit Talks

--UK Disputes Legal Basis For Bill

--Davis Accuses EU Of Putting Process Before People

By Tara Oakes

     BRUSSELS (MNI) - Frustrated EU Chief Brexit negotiator Michel Barnier

Thursday presented a gloomy prognosis of the third round of Brexit talks.

     "No decisive progress has been made on key issues," Barnier told

journalists in Brussels at a joint press conference with his UK counterpart,

David Davis.

     The assessment was damning but not unexpected, after rumblings of

discontent from the EU side on Britain's approach negotiations have intensified

over the week.

     Markets as well as the weary press mob had foreseen Barnier's comments,

with a distinct lack of movement in both the pound's level against the euro and

in UK Gilt yields noted after the briefing.

     DIVORCE BILL

     Settling the accounts between Britain and the EU remains the most

contentious issue, with the UK refuting the EU's assessment with a

"line-by-line" legal analysis provided by their own lawyers, rather than

publishing a rival position paper.

     An EU official familiar with the negotiations said the EU rejected the UK's

lengthy refutation.

     "They say basically that the last financial obligation to which they feel

legally bound will be the last payment they make to the EU budget as a member

state," the source said.

     The EU believe that obligation to pay stems from the 7-year rolling

Multiannual Financial Framework (MFF) and the Own Resource Decision (ORD), which

the UK signed up to when still a member.

     But after a press conference where Davis said the UK recognised they have

"moral" as well as legal obligations to pay, the source said the EU side

remained perplexed that the whole presentation amounted to nothing more than "a

default legal view" relevant in case of no agreement, rather than a proposal for

the financial settlement "as such".

     Barnier, claiming that he had the "calm of a mountaineer" and denying that

he was angry at the disappointing results, slammed some of the UK's much-touted

"flexibility".

     "The UK wants to take back control and adopt its own standards and

regulations, but also wants to have standards recognised automatically by the

European Union," Barnier said.

     "This is simply impossible, to be outside the single market and shape its

legal order," he told journalists.

     TIME TICKING

     Barnier repeated his reminder that time is flying by for negotiations,

which the EU are adamant have to reach "sufficient progress" on separation

issues by October for any future relationship to be discussed.

     Davis and his team have been badgering their EU counterparts to untie

themselves from this stringent timetable, but there is as of yet no give.

     "The mandate means very clear, precise sequencing," Barnier said.

     Davis jibed in his opening remarks that it was time to "put people above

process".

     Rounds of talks may become more frequent in the run-up to October, with

Barnier saying the EU team were ready to "step up and intensify" negotiations.

The UK side are believed to be open to the suggestion, but with party

conferences looming Davis might be occupied with domestic Tory infighting in the

coming weeks.

     LIMITED PROGRESS

     Both Davis and Barnier hailed some small areas of progress, including

protecting the rights of frontier workers.

     Agreement was also reached on the cross-border medical European Health

Insurance (EHIC) card, Davis said - a previous sticking point in talks.

     According to the "grid" published after talks detailing areas of contention

in green, amber or red, both sides have agreed that UK residents in an EU member

state at the moment of withdrawal - March 29, 2019 at midnight - will be able to

continue benefitting from the EU-wide EHIC scheme in their country of residence

and in any EU27 country they go to on holiday.

     But if they choose to move to another EU member state, they would lose that

right, according to the present state of negotiations. It is understood that the

UK side are pushing for a greater extension of this so UK citizens residing in

Britain could also continue benefitting from their EHICs, but there is as of yet

no agreement from the EU side.

     Those who possess professional qualifications -- doctors, lawyers,

architects and more - will be able to continue to have them recognised in the UK

or their member state of residence at the level they currently enjoy if they

reside in an EU27 country on Brexit day, according to the negotiation document.

If they do not, there is no agreement yet on reciprocal future recognition.

     UK negotiators are believed to be pushing for this too to be extended so,

for example, EU national students studying to be doctors at UK universities can

have the confidence that their qualifications will be worth something back home

by the time they graduate.

     Even if the sticking points are mended, the deal will also have to be

approved by the European Parliament before it comes into force.

--MNI Brussels Bureau; +44 203-865-3851; email: tara.oakes@marketnews.com

--MNI Paris Bureau; tel: +33 1-42-71-55-41; email: jack.duffy@marketnews.com

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