THE UK and the European Commission have reached agreement on a transition deal which will allow talks on their future trade relationship to be triggered later this week.

Brexit Secretary David Davis hailed the agreement as a “significant step” following talks with EU chief negotiator Michel Barnier in Brussels.

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But Barnier cautioned that some issues remained to be settled, including the thorny question of the Irish border and the governance of the eventual withdrawal agreement.

Under the terms of the joint legal text agreed by Barnier and Davis, the UK will be able to negotiate and ratify trade deals with outside countries following Brexit Day in March 2019, to come into force after the end of a transition period lasting until the end of 2020. EU citizens arriving in the UK during the transition, as well as Britons settling on the Continent, will have the same rights as those in place before Brexit Day, Barnier said.

The agreement must be approved by EU leaders meeting at the European Council summit on Thursday and Friday. This will allow vital negotiations on future EU-UK trade relations to get under way in earnest.

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Talks will continue on outstanding issues over the summer before a final text of the withdrawal is agreed in October and sent to the European and UK Parliaments for ratification.

The European Commission’s proposals for “backstop” arrangements for the Irish border remain in the new text, despite being angrily rejected by Prime Minister Theresa May when first published last month. They will be the subject of intense negotiation in the months leading up to the deadline for a final agreement in October.

Under the arrangements – to be put in place if the UK fails to come forward with a better solution – Northern Ireland would continue to be considered “part of the customs territory of the Union”, effectively creating a customs border along the Irish Sea.

When first proposed in February, May said “no UK prime minister could ever agree” to the proposal. It is one of a handful of sections of the text released by Barnier and Davis not to be marked green, signifying “formal agreement”, or yellow – “political agreement with details to be clarified”.

Davis said he had agreed with Barnier on the need to include legal text detailing a “backstop” solution acceptable to both sides.

But he added: “It remains our intention to achieve a partnership that is so close as to not require specific measures in relation to Northern Ireland, and therefore we will engage in detail on all the scenarios set out in the joint report.”