Pressing the reset button, May also offered more legal protections than she has previously for EU nationals residing in the U.K. and called for deeper cross-continent cooperation on security, months after she used defense provisions as a bartering tool in the talks.

One of the most notable aspects of the speech was the change in tone. She also said the U.K. wanted to remain part of EU programs that promoted education, science and culture and that it would pay to do so.

New Deal

What she would like in return is a sweeping trade deal unlike any other. She ruled out joining Norway in the European Economic Area or xeroxing the EU's commercial pact with Canada, which she described as not ambitious enough for the U.K. She said an accord should be easy to arrange given the U.K. and EU already enjoy four decades of legal links and that it was in the interest of both their economies to maintain easy trade.

“I look ahead with optimism,” May said “We want to work hand in hand with the European Union rather than as part of the European Union.”

Businesses will welcome May's talk of a transition although it falls short of the three years many wanted. The goal is to maintain trade with the U.K.'s biggest market and give companies time to adjust to the new regime. It also would protect industries from being hit with unwieldy tariffs and regulations overnight, and allow extra time for talks if no long-term trade deal has been struck by Brexit day in March 2019.

May acknowledged there would be a need for a dispute mechanism, although she added that that shouldn't include the European Court of Justice.

Tough Balance

The prime minister is trying to maintain a precarious balance between the demands of Europe and those of her own Conservative party colleagues. May's position is even more difficult at home, where her political authority has been eroded after a botched election cost the party its parliamentary majority.

May must somehow deliver a clean enough break with the EU to satisfy the euroskeptics in her Tory party, while giving enough away to Brussels to keep the talks on track.

In her speech she called on EU governments to be “imaginative and creative” in the talks and said “it is in all of our interests for our negotiations to succeed.” That was an attempt to bypass EU negotiator Michel Barnier and appeal directly to her fellow politicians who have the power to trigger trade talks.

Pressure ratcheted up on May in the days leading up to her speech. Barnier warned Britain must “settle the accounts”—a reference to the so-called Brexit bill—and also accept the EU's rules during any transition period.

The question now is whether May said enough to put the talks back on track. If Barnier and his team aren't convinced, then the EU may not declare sufficient enough progress has been made for trade negotiations to begin.

From: Bloomberg News

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