A pedestrian walks past the European Commission Berlaymont building as European Union (EU) flags fly in Brussels, Belgium (Photographer: Jasper Juinen/Bloomberg)

U.K. Steps Up Battle With EU Over Brexit Bill, Citizens' Rights

(Bloomberg) -- Prime Minister Theresa May’s U.K. government stepped up its divorce battle with the European Union, with Brexit Secretary David Davis rejecting key EU demands on the rights of European citizens living in Britain and on the sequencing of exit negotiations.

Davis on Sunday predicted a battle over the timetable for settling the nation’s exit bill and the border with Ireland -- two of three areas where the European Commission says there needs to be “sufficient progress” before the talks can move onto a post-Brexit trade deal.

He agreed that he wants an early resolution on the third area, guaranteeing the rights of 3.2 million EU citizens living in Britain, while disagreeing with the EU demand that the European Court of Justice play a role in upholding those rights.

“We will have an argument about that,” Davis said on ITV’s “Peston on Sunday” program. “We don’t see a need to give in to the European ideology on the European Court of Justice. We’ve got very good courts -- in fact, I take slight offense at the argument that the Supreme Court couldn’t oversee this” in London.

Davis’s hard line on the ECJ reflects May’s promise to voters that European judges will have no role in the U.K. after Brexit, and it reinforces her argument to voters ahead of the June 8 election. May has talked up her battle with Brussels, saying that her Conservative team is strong enough to lead Britain through negotiations with a hostile EU.

‘Generous Outcome’

Davis said he wants a swift agreement about citizens that “effectively freezes” the existing rights enjoyed by EU nationals living in the U.K. Britain also wants the more than 1 million U.K. expatriates living elsewhere in Europe to be protected.

“What we are after is a very generous outcome,” Davis said. The EU citizens “will have the rights to welfare, they will have the rights to health care, they will have the rights to pensions -- as they would if they were a permanent resident here anyway. The only rights they wouldn’t have are those citizenship rights and the right to vote in a general election.”

The issue for the U.K. is that any delay in resolving rights, such as a disagreement over the ECJ, could prompt the EU to withhold the discussion that May wants about a wide-ranging free-trade deal to cover all goods and services. 

‘Row of the Summer’

Davis flatly rejected the EU timetable. “That will be the row of the summer,” he told ITV.

“It’s wholly illogical, and we happen to think the wrong interpretation of the treaty,” Davis said. “How on earth do you resolve the border, the issue of the border with Northern Ireland and the Republic of Ireland, unless you know what our general borders policy is, what the customs agreement is, what the free trade agreement is, whether you need to charge tariffs at the border or not?”

Britain is “very conscious of how they will use that time sequence to pressure us, and we’ll avoid that at every turn,” Davis said.

Britain wants a free-trade agreement with the EU “covering all products and all services,” Davis said, adding that Britain will keep open the option of walking away from talks if the deal that’s offered isn’t good enough.

“We argue a bad deal could be significantly worse than no deal,” he said.

The minister also said he doesn’t expect a final Brexit bill to be settled until the whole exit agreement is reached and “packaged up together.” The EU is seeking as much as 100 billion euros ($109 billion) from the U.K. to cover commitments that the country made while a member of the bloc, including future pensions provisions -- a figure Britain rejects. 

“They are going to try to bleed this country white with their bill,” Foreign Secretary Boris Johnson told the Telegraph on Saturday. He said there “are good arguments” that the EU should pay Britain for its share of the bloc’s assets, and that Britain could “walk away” from the bloc without paying any bill.