The UK's Brexit Secretary David Davis and the EU's chief negotiator Michel Barnier both say that agreement has been struck on arrangements for a transition period after Britain's departure from the bloc in March 2019.
The two negotiators have been giving a joint news conference in Brussels, ahead of a crucial meeting of European Union leaders later this week.
Barnier said agreement had been reached on "a large part" of what will make up an international accord for the UK's withdrawal from the EU, especially on a transition period.
Agreement has been struck on the rights of citizens and on the financial settlement. Both sides say more work needs to be done on the Irish question — but agree that a so-called "backstop" solution will form part of the legal text.
Questions still remain over the future role of the European Court of Justice in the UK's affairs.
The British government has been seeking a transition period to avoid the consequences of a so-called "cliff-edge" bringing widespread disruption after Brexit.
The draft treaty says the transition period will end on December 31, 2020.
The main points
A joint legal text has been drawn up giving force to what was agreed in December, representing a "decisive step" towards an international agreement on an orderly UK withdrawal
There is "complete agreement" on citizens' rights and the UK's financial settlement over withdrawal from the EU
EU citizens arriving in the UK will have the same rights and guarantees as those who arrived before Brexit
The transition period will be of limited duration. The UK will no longer participate in decision making processes and will no longer be a member state. But it will preserve the benefits of the single market and customs union
Progress is still needed on governance of the agreement, and on the border between Ireland and Northern Ireland
The "backstop" agreement on the Irish border (keeping the frontier open) will apply if no other solution is found
Legal certainty including on transition will only come with ratification on both sides: "nothing is agreed until everything is agreed"
Today is another important step after December's milestone accord. It gives certainty to both business and citizens for after the UK leaves the EU in March 2019
The UK can sign and ratify new trade deals during the implementation (transition) phase, which will come into force when the period is over
International agreements which arise from EU membership will continue to apply as now
Joint UK-EU committee to be set up which will ensure the UK's voice is heard
Safeguards have been agreed regarding fishing negotiations in 2019. From 2020 the UK will be able to negotiate terms deciding who can access its waters and on what terms
Plans for ambitious partnership on foreign and defence policy
Rapid progress has been made on wider agreement, for example on citizens' rights (for those arriving during the implementation period) and the financial settlement
More work needed on the Irish question. Legal text agreed with backstop agreement; the intention is for a close agreement so as not to have to fall back on this. No agreement on the right operational approach but we know what we need to do.
Unveiling the 130-page draft text, Michel Barnier highlighted the areas agreed by both sides, coloured in green and covering the majority of the document. Areas where political agreement needed to be clarified were coloured in yellow.
Subjects where disagreement or divergences of opinion still remain were marked in white. This took up less space, but the lack of solutions in these areas remain significant.
An accord had been called into doubt because of the impasse over the Irish border. Dublin has been seeking assurances over a pledge to keep the frontier with Northern Ireland open after Brexit, despite the UK's stated intention to leave the EU's customs union and single market.
London had rejected a "backstop" arrangement as set out in the EU's draft of the withdrawal treaty. It meant that Northern Ireland would effectively submit to EU economic rules, and so become potentially isolated from the British mainland.
The meeting in Brussels comes ahead of a key summit of European Union leaders later this week, at which it is hoped an agreement on transition can be signed off.
How they have reacted
- “The PM is pleased that we’ve made more progress in the EU negotiations and that we are able to give businesses and citizens certainty by the implementation period which will deliver a smooth Brexit and will allow us to trade on the same terms as now until 2020” – spokesman for British Prime Minister Theresa May.
- “It is welcome that they have finally struck a deal on transition and now the government must prioritise negotiating a final agreement that protects jobs, the economy and guarantees there will be no hard border in Northern Irreland” – Keir Starmer, UK opposition Labour Party Brexit spokesman.
- “After a transition period, Britain would still be leaping into a deep void of uncertainty” – Vince Cable, UK Liberal Democrat leader.
- “Welcome progress in #Brexit negotiations. The EP will scrutinise and have the final say. The UK’s attempt to discriminate against EU citizens in the transition has been defeated. The EU must allow free movement for UK nationals resident in the EU after Brexit” – Guy Verhofstadt, European Parliament’s Brexit co-ordinator on Twitter.
- “The Brits have just given in on everything so big was their drive to get the transition” – unnamed EU diplomat quoted by Reuters.
- “In the end the Brexiters have been prepared to compromise and surrender on almost every single point. On the divorce bill, on the primacy of European law, on freedom of movement, on fisheries, the Government has yet again capitulated. We should be in no doubt that this will be the shape of things to come in the negotiations over the future relationship” – Labour MP Chuka Umunna, anti-Brexit Open Britain campaign
- “Despite denials from Theresa May there is now confirmation that the British government is accepting the agreements made, including the backstop option which would see the north remaining in the customs unin and significant elements of the single market” – Martina Anderson, MEP with Irish nationalist party Sinn Fein.
- “There is nothing from today’s announcement to concern us. The border issue has not been resolved at this stage and we didn’t expect it to be,” – unnamed source from Northern Ireland’s Democratic Unionist Party (DUP) quoted by Reuters.
- “This is shaping up to be a massive sellout of the Scottish fishing industry by the Tories. The promises that were made to them during #EUref and since are already being broken – as many of us warned they would be” – Scottish First Minister Nicola Sturgeon.
- “That we now have to wait until 2020 to assume full control (of fisheries policy) is an undoubted disappointment… Having spoken to fishing leaders today, I know they are deeply frustrated with this outcome… I will not support a deal as we leave the EU which, over the long-term, fails to deliver that full control over fish stocks and vessel access” – Scottish Conservative leader Ruth Davidson.
- “It’s a total betrayal… for fishermen there will be no Brexit, as the Tories have handed the EU even more power over their industry” – Mike Hookem MEP, UKIP fisheries spokesman
- “Theresa the Appeaser has let the people down again. After vaunting her so-called red lines she quickly rubs them out under EU pressure. She’s like the Duke of York marching the troops to the top of the hill to march them down again” – ex-UKIP leader Nigel Farage
- “Negotiators must now focus on reaching agreement on key aspects of our trading and regulatory relationships with the EU, where failing to reach a deal would create substantial costs and disruption for industry. Our sectors need reassurance that after the UK leaves the EU we wil not face burdensome new customs requirements and will continue our participation in successful pan-European regulatory regimes like the European Aviation Safety Agency and European Chemicals Agency” – Paul Everitt, Chief Executive of ADS (aerospace, defence, security and space trade association).
- “Food and drink manufacturers are now looking for serious reassurance from Government that will not press ahead at any economic cost and that they will be flexible if systems – particularly customs – are not ready in 21 months’ time. Similarly, negotiations must avoid a hard border on the island of Ireland, where ingredients, finished products and workers cross the border many times a day. Until the appropriate technological solutions can be found, then the option of a regulatory backstop must be left on the table” – Ian Wright, Director General of UK Food and Drink Federation.