EU, Britain to start trade talks next week

BRUSSELS (Reuters) - Britain and the European Union will start talks next week on their future trade relationship after Brexit, diplomats said on Thursday.

Britain will leave the EU next March and enjoy a status-quo transition until the end of 2020, according to the current plan.

Then, a new relationship between the sides would kick in, which negotiators from London and the EU will start discussing for the first time in Brussels on Monday.

The other 27 EU leaders adopted their joint stance for the trade talks last month. Although it has been informally shared with London, one diplomat said the EU's position would be formally presented to the British negotiators next week.

"The UK has had a couple of weeks to reflect on that, analyse that. So for next week I'd hope and expect them to come tell us what they think, tell us more about how the UK sees the future relationship," another diplomat said.

Diplomats said, however, that there has been no substantial progress on the Irish border conundrum in continued talks since the March EU summit, where British Prime Minister Theresa May also secured the 21-month transition phase after Brexit.

Both sides have vowed to avoid physical border checks on the island of Ireland for fear of reigniting sectarian violence there, but the EU says this would not be possible under Britain's plan to also leave the bloc's single market and customs union.

The sources said Britain was sticking to its proposal to use the latest technology to make border checks seamless. But the EU has dismissed the idea of a "digital border" as unrealistic, with one diplomat denouncing it as an "elves and ferries" solution.

In refusing to comment in detail on the latest border talks, Ireland's EU Commissioner Phil Hogan told a news conference on Thursday they were at a "crunch point".

Unless a better solution is found, the EU has prepared an emergency mechanism under which it would go on regulating trade in Northern Ireland after Brexit. This, however, is anathema to London where it is seen as weakening the British province's links to the rest of the country.

"We have to find an operative solution that would enable maintaining the unity of the internal market while we do not have to build a physical, hard border," the EU's Brexit negotiator, Michel Barnier, said separately in Prague.

The EU has offered Britain an extensive free trade agreement for their future deal, but one that falls short of the "bespoke" deal London has sought.

There will be an EU-UK negotiating round every two weeks before the next meeting of the bloc's leaders due in June.

The bloc also wants to iron out the lingering differences over Britain's withdrawal, including the Irish border, the exact role of the EU's top court and expatriate rights.

(Reporting by Jan Strupczewski, Gabriela Baczynska and Alastair Macdonald in Brussels, and Robert Muller in Prague; Editing by Toby Chopra)