UK rejects EU trade demands, threatens to walk away

Britain put the prospect of a chaotic Brexit back on the table on Thursday as it set out its red lines for trade talks with the European Union.

In its mandate for the negotiations that start on Monday, Prime Minister Boris Johnson's government rebuffed EU demands for common trading standards and continued fishing rights.

And it warned it could walk away from the talks if a "broad outline" of a deal is not agreed by a meeting planned for June.

This would see Britain's currently seamless trading arrangements with the EU, forged over half a century, abruptly end after a post-Brexit transition period expires in December.

"We want the best possible trading relationship with the EU, but in a pursuit of a deal, we will not trade away our sovereignty," senior government minister Michael Gove told MPs.

The European Commission, which is negotiating on behalf of the EU's 27 member states, said it was preparing for all scenarios.

"The commission maintains its capacity to prepare for no deal following the result of those negotiations," spokeswoman Dana Spinant said.

She added that the mid-year meeting was "a very fair timeline" to take stock of whether a deal was possible.

Britain left the EU on January 31, but both sides agreed to a standstill transition period lasting until December 31 to allow time to strike a new partnership.

Johnson wants a free trade agreement similar to the EU's deal with Canada, set alongside separate agreements on issues such as fishing, energy and aviation.

But Brussels says Britain's geographical proximity and existing close ties make it a different case, fearing it could gain an uncompetitive advantage by relaxing costly environmental and labour laws.

It says Britain must mirror EU standards if it wants to continue freely trading goods with the bloc's huge single market.

However, Johnson argues this would undermine the whole point of Brexit, even if that means increased barriers with what is currently Britain's largest trading partner.

"We will not agree to any obligations for our laws to be aligned with the EU's," the official UK mandate says.

Brussels also wants its state aid rules to apply in the UK -- something London rejects.

Another potential flashpoint is financial services, a key concern for Britain that it wants resolved by June to allow firms to keep working in the EU after December 31.

The European Commission spokeswoman refused to commit the EU to completing so-called equivalence assessments by June.

In the British parliament, opposition politicians decried the government's hard line approach.

"This is nothing other than a routemap to the cherished no-deal -- the real ambition of these Brexit zealots," said Scottish National Party MP Pete Wishart.

Tensions were already high between Britain and the EU ahead of the first round of negotiations.

On Tuesday, when the bloc published its mandate, EU negotiator Michel Barnier said he would not strike a deal "at any price".

Some EU ministers have also warned London against backtracking on commitments made in the previous Brexit divorce agreement, particularly relating to the Irish border.

One crucial issue for both sides in the upcoming negotiations is fishing rights.

Fishing became a totemic issue in the 2016 referendum campaign on Britain's EU membership, which Johnson led.

But it is also vital for many EU countries, notably France, where fish and seafood caught in UK waters account 30 percent of sales for fishermen.

Brussels wants to maintain the right of its fleets to fish in UK waters, warning that failure to agree on this could scupper the wider trade talks.

But Gove warned: "We will take back control of our waters as an independent coastal state and we will not link access to our waters to access to EU markets." London proposes instead that fishing opportunities be negotiated annually, based on stock levels.