Brussels – The European Union is ready to launch talks on a future free trade agreement with Britain, but has warned of inevitable "frictions" in the relationship, according to a draft text prepared by European Council President Donald Tusk, seen by dpa.

Brussels and London have been at odds over the degree of future access Britain can have to the EU's single market and customs union, both of which it has vowed to leave under Brexit.

Red lines could limit partnership

Britain is due to exit from the EU in just over a year, but both sides are working on implementing a transition period to prepare for the new relationship.

Britain's red lines will "limit the depth" of any future partnership, Tusk warns in his draft guidelines on future EU relations with London, which he is due to formally present during a visit to Luxembourg on Wednesday.

"This unfortunately will have negative economic consequences," the text adds. The guidelines still require the formal approval of the bloc's remaining 27 member states.

No "cherry-picking"

A future free trade agreement with Britain "cannot offer the same benefits as membership and cannot amount to participation in the single market or parts thereof," the memo warns.

It repeats the EU's much touted line that Britain cannot be "cherry-picking" among the EU's rights and obligations.

Any future trade in areas such as financial services must reflect the fact that Britain and the EU "will no longer share a common regulatory, supervisory, enforcement and judiciary framework," the guidelines state.

Call for "robust guarantees"

They also warn that the future relationship must include "robust guarantees that ensure a level playing field" to prevent Britain from gaining unfair competitive advantages by undercutting EU standards in areas such as taxation or social and environmental safeguards.

This will require "substantive" rules as well as enforcement and dispute settlement mechanisms to be built into the free trade deal, the guidelines say.

On Friday, British Prime Minister Theresa May gave a landmark speech calling for a bespoke free trade deal with the EU "covering more sectors and co-operating more fully than any free trade agreement anywhere in the world."

"Change in tone, but not in substance"

But the European Commission dismissed her vision as "double cherry-picking," in an internal document leaked Wednesday.

Addressed to the 27 EU member states remaining after Britain's exit, the document assessed May's speech as a "change in tone, but not in substance" that was aimed mainly at domestic audiences.

"While the speech was long on aspirations, it was short on workable solutions that would respect the EU 27 principles," said the commission document, whose content was first reported by The Guardian and later confirmed to dpa.

The EU said May was proposing a "new model" for a future relationship that was "taking in selective elements of EU membership and of third country trade agreements," calling it "double cherry-picking."