The EU plans to be able to sanction the UK if London violates the agreements reached on the transition period, according to a draft by the European Commission seen by EUobserver.
In the document the EU executive has set out the basics for the transition period after the UK leaves the EU on 29 March 2019 until 31 December 2020.
It is the legal translation of the negotiating directives agreed by member states last week.
The draft transitional deal will be attached to the withdrawal agreement, that is being finalised by the EU Commission based on what was agreed with the UK last December.
The draft says that the withdrawal agreement “should provide for a mechanism allowing the Union to suspend certain benefits deriving for the United Kingdom from participation in the internal market where it considers that referring the matter to the Court of Justice of the European Union would not bring in appropriate time the necessary remedies.”
Court actions could take years, while the transition period would last 21 months.
While the EU is looking for guarantees to make sure the UK follows the agreement during the transition period, this could upset the fragile negotiations as British prime minister Theresa May is struggling to keep her party united over Brexit.
The draft also warns the UK to “abstain, during the transition period, from any action or initiative which is likely to be prejudicial to the Union’s interests”.
In line with what EU countries have agreed to, the draft says that during the transition period all EU institutions will retain their power in relation to the UK, the Court of Justice of the EU as well.
The UK however will not participate in any EU institutions or bodies during the transition period, except only on a “case-by-case basis, exceptionally” attend meetings without voting rights, when the EU sees it fit.
This is key as London seeks guarantees to be able to check and reject new EU rules that it had no say in, which the EU has so far dismissed.
The EU and the UK shall however cooperate on sanctions and fisheries policies.
The draft legal transition text is subject to negotiations with the UK.