The European Union wants Britain to stick to the bloc's rules on state aid, environment and workers' rights after Brexit to prevent it from gaining unfair access to the Europeans' single market, diplomatic sources and officials told Reuters.
The EU sees this as key to ensuring a "level playing field" should the so-called Irish border backstop kick in after Brexit, tying all of the United Kingdom in a customs zone with the bloc.
"It is important that Britain would not undercut our own products on our own market in the all-UK Irish backstop," one source said of the EU demand that comes as the two sides are seeking a Brexit deal as soon as this month.
The EU has made concessions on the biggest hurdle in the talks - the Irish border backstop or an emergency fix to ensure the frontier there stays open regardless of how Brexit goes - but there are still differences on the life span of such a solution, a review mechanism or the depth of regulatory alliance under the all-UK backstop, which has been sought by London.
The EU has presented the three areas as the bare minimum it deems necessary, complemented by no internal trade tariffs or quotas and the same external tariff.
It does not want to allow Britain to be able to pull out unilaterally but proposes that any such decision could be done by a joint committee.
The bloc is now waiting on whether British Prime Minister Theresa May can get her cabinet and parliament behind that.
Should that be possible, EU and British Brexit negotiators would recommend that "decisive progress" has been achieved in Brexit talks and the EU would call a special summit of its 27 national leaders to endorse it.
While it is still possible later in November, Irish Taoiseach Leo Varadkar warned on Wednesday that chances for a deal this month were fading.
For Britain, it is important to lock a deal before the turn of the year to give businesses the clarity they need to plan for the first quarter of 2019 when Britain is due to become the first country ever to leave the EU. (Reuters)