By Laurence Norman and Valentina Pop 

BRUSSELS -- The European Union adopted its core positions Saturday for the coming Brexit negotiations, making it clear to Britain that talks on a future trade agreement remain months away.

Some EU leaders expressed frustration with the British government, saying London didn't understand what it would take to resolve key divorce issues the bloc wants tackled before talks on the future relationship can begin.

That suggests there could be hard discussions after Britain's June 8 election, as the two sides try to bridge major divisions on issues like the exact rights EU citizens will enjoy in Britain after Brexit and the EU insistence that the U.K. pledge to stand by tens of billions of euros of past spending pledges the U.K. has made to the EU.

U.K. Prime Minister Theresa May has said she wants discussions on a future trade agreement as soon as possible, though she has acknowledged a deal cannot be completed until Britain leaves the bloc, due in March 2019.

For the U.K., securing a future agreement speedily is crucial for avoiding serious economic challenges once it exits the bloc. The EU has said any transitional deal, which could smooth Britain's exit from the bloc, would only last a few years.

Speaking after Saturday's meeting, European Council President Donald Tusk said EU leaders had backed this phased approach to negotiations. He said for talks to move onto discussions on a trade agreement, there would need to be unanimous agreement among EU leaders.

"It is too early to speculate on when this might happen," Mr. Tusk said.

Some EU officials said Saturday it is unlikely talks on the future relationship will start much before year-end. That would leave little time to define the shape of a future agreement since the EU wants negotiations wrapped up by October 2018 to leave enough time to ratify a divorce deal.

Speaking after the meeting, German Chancellor Angela Merkel said she has "the impression" that the EU's phased approach to the negotiations "are not clearly understood by some in the U.K."

European Commission President Jean-Claude Juncker and the EU's chief negotiator Michel Barnier met Wednesday with Mrs. May in London to discuss the negotiations.

EU officials said Saturday the British government still seems to believe that on the issue of the rights of EU citizens, it would be enough to secure a broad agreement promising fair treatment when, in fact, the EU wants a detailed deal in place.

"I have the impression sometimes that our British friends...do underestimate the technical difficulties we have to face," Mr. Juncker said. "The single and not simple issue of citizens rights is in fact a cortege of 25 different questions which have to be solved. So this will take time."

Saturday's meeting was the first formal summit of EU leaders without Mrs. May, a month after she sent Britain's divorce letter.

The EU's negotiating guidelines state that the U.K. cannot gain sector-by-sector access to the single market and that EU courts must have a role in Britain after Brexit. They divorce talks will seek to avoid that a hard border is re-established between Northern Ireland and the Republic of Ireland and raise the future status of Gibraltar, a small British territory subject to a centuries-old territorial dispute with Spain.

U.K. Brexit Secretary David Davis said both sides are approaching the negotiations with good will but acknowledged that the talks "will be tough and, at times, even confrontational."

The U.K.'s main business lobby group, Confederation of British Industry said that with EUR600 billion worth of trade every year between the U.K. and the EU, "the economic case for making rapid progress on a trade agreement is crystal clear."

EU officials said part of Saturday's discussion was devoted to the risks of the Brexit talks failing. Mr. Barnier has said that would have negative effects for both sides but especially for Britain.

"We have to be clear what happens if things get rough," said one official describing the discussion.

Meanwhile, there were fresh signs that the coming Brexit talks were weakening trust between London and Brussels.

Mr. Juncker complained about a last-minute British decision to block some EUR6 billion in spending on security, aid and other programs.

The U.K. government told Brussels on Tuesday night it couldn't approve the spending because the government had now gone into the official pre-election period. EU officials complained that Britain had not in the past blocked decisions following through on already agreed programs.

Mr. Juncker raised the issue with Mrs. May on Wednesday but Britain hasn't changed its position.

"It would be desirable and it would facilitate the beginning of the negotiations if the U.K. were to be able to withdraw the reservation that it entered," Mr. Juncker said.

--Jason Douglas in London contributed to this article

Write to Laurence Norman at laurence.norman@wsj.com and Valentina Pop at valentina.pop@wsj.com

 

(END) Dow Jones Newswires

April 29, 2017 14:04 ET (18:04 GMT)

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