Brexit or not, EU tells Britain to tweak transport levy or face court

Brexit may be done, but the European Union's executive served a reminder on Wednesday that Britain is not yet free from its laws, demanding that it change transport levies or face proceedings in front of the European Court of Justice.

Both sides are talking tough ahead of the formal launch of negotiations on a new relationship next month after Britain left the EU at the end of January.

For now, Britain remains in a status-quo transition period until the end of 2020, aimed at giving both sides time to work out a new deal on trade, security and other issues defining future ties.

"EU law continues to apply in full to the UK for the duration of the transition period. In particular, the UK remains subject to the EU's enforcement mechanisms, such as infringement procedures," the European Commission said in a statement.

It said Britain's road charges for heavy goods vehicles violated bloc rules, including by discriminating against foreign hauliers because British hauliers are compensated through a reduction on the annual tax paid of U.K.-registered vehicles.

Britain has two months to comply with the EU's directive on road charging, failing which the Commission may refer the matter to the Luxembourg-based European Court of Justice.

Escaping the jurisdiction of the EU's top court was a central promise of Brexit to the British people, as was pursuing ambitious global trade deals for Britain on its own.

'EU CHERRY-PICKING'

In exchange for a new trade deal with the EU, the bloc is demanding strong guarantees of fair competition.

The head of the bloc's executive, German conservative Ursula von der Leyen, this week told London to agree such level playing field obligations based on ambitious social protections and climate action plans.

But Britain says it wants a basic free trade agreement (FTA) with the 27-strong EU that would not weigh on its competitiveness.

"It's now the EU who are cherry-picking, suggesting ambition only where it suits them and adding obligations that go beyond a standard FTA. We are clear and consistent about what we want – not a bespoke or special FTA, but similar to the one the EU already has with Canada," a UK government source said on Wednesday in reacting to von der Leyen's comments.