EU sets Brexit talk conditions, priority for people, money, borders

By Jan Strupczewski

BRUSSELS, March 22 (Reuters) - The European Union's chief negotiator for Britain's exit from the bloc spelled out on Wednesday the EU's conditions and priorities for the talks, stressing the need for early agreements on citizens' rights, money and borders.

Speaking to the Committee of the Regions in the European Parliament, Michel Barnier said the key to reaching a deal within the two years envisaged by EU law was to negotiate issues in the right order. He said a scenario of the deadline of March 2019 passing with no deal was not one the EU was entertaining.

Barnier said the first condition for success was the unity of the 27 governments staying in the EU and the transparency of the negotiations. The second was to remove the uncertainty about the future of Britons in the EU and EU citizens in Britain - some 4.5 million in total.

"Guaranteeing their rights as European citizens, in the long term, will be our absolute priority from the very start of the negotiations," he said in a prepared speech.

He noted this meant tackling residency rights, access to the labour market, pension or social security rights and access to education.

"It will take time, several months certainly. We must do serious legal work on this with the United Kingdom," he said. "We can and we should agree – as soon as possible – on the principles of continuity, reciprocity and non-discrimination so as not to leave these citizens in a situation of uncertainty."

The talks should also quickly remove any doubts about funding for programmes financed by the EU budget, he said.

He noted the 90 billion euro ($97.3 billion) European Social Fund for the unemployed, the 200 billion euro European Regional Development Fund, the 315 billion euro EU investment scheme and the 80 billion euro research and development programme - a total of 685 billion euros.

Barnier said all of these programmes were approved together with Britain, financed together and provided benefits to all, therefore London must settle its part of the accounts.

"We will not ask the British to pay a single euro for something they have not agreed to as a member," he said. "In the same way, the 27 will also honour their commitments concerning the United Kingdom, its citizens, companies and regions. This is the mutually responsible way to act."

Negotiations must also quickly dispel any uncertainty regarding the EU's external borders after Britain leaves the bloc, in particular the Irish-British land (LSE: BLND.L - news) border.

"We will be particularly attentive, in these negotiations, to the consequences of the UK's decision to leave the Customs Union, and to anything that may, in one way or another, weaken dialogue and peace," Barnier said.

Barnier said the EU shared the ambition of Britain's Prime Minister Theresa May to reach a "bold and ambitious free trade agreement" to replace current ties, but noted its terms would be less favourable than those governing Britain trade with the EU now.

He said the trade agreement would have to take into account social, fiscal, environmental and consumer protection standards of the EU and be ratified by all EU parliaments.

He repeated the EU mantra that a trade deal with Britain could not mean a menu choice of Britain's current privileges and obligations and that such a deal could only come after an agreement on the terms of the divorce.

"The sooner we reach a deal on an orderly withdrawal, the sooner we can prepare for the future relationship," he said, adding that leaving difficult divorce issues until the last moment was playing with failure.

He said the EU hoped to continue its cooperation with Britain in research and development, environment protection, the fight against terrorism and crime and in defence.

He said a transition agreement, that would regulate the period between the divorce and the new, full trade agreement, could be necessary, but such a transition period would have to be limited in time. ($1 = 0.9250 euros) (Reporting By Jan Strupczewski; editing by Philip Blenkinsop)