What is Theresa May's EU trade plan?

Theresa May set out her plans in her Florence speech. Credit: PA

The biggest outstanding Brexit question is not whether the Cabinet can unite behind a plan for our future trading relationship with the EU - whose difficulty has probably been overstated - but whether the rest of the EU will give that plan even cursory consideration.

What Theresa May wants has been clear for months - since at least her famous Florence speech in September and probably for longer.

It is a trading relationship with the EU that begins as the equivalent of continued membership of the European single market, and then diverges over time as our rules and regulations gradually diverge from the EU's rules and regulations.

As I understand it, the important Brexit sub-committee that met on Monday - which includes all the government's biggest hitters - broadly coalesced around this framework.

If there is disagreement between the Rudds and Hammonds on the one hand, and the Johnsons and Goves on the other, it is about how rapidly the UK would want to reform rules - like the Working Time Directive's restrictions on working hours - and not about the principle that the UK should take back the power to set rules that relate to business and the operation of the economy.

Michael Gove and Boris Johnson were vocal Leave campaigners. Credit: PA

For the Cabinet to fall out in an angry and emotional way about decisions on whether to start deregulating in more than three years from now or after five years would be ludicrous even by the standards of the most religious Leavers and Remainers.

But just because ministers can agree this is the way forward - which is likely to be broadly confirmed in Cabinet on Tuesday - does not mean Britain's commercial future has been decided.

Because whenever I talk to Eurocrats about this concept for our trading future with the EU, they make a number of simple but crushing points.

The first and most important is that they say that it would be fiendishly difficult to capture this idea of a journey towards divergence into a free-trade treaty.

The point is that most free trade deals, including the one that the UK takes as the model for what it wants - Canada's with the EU, called CETA - works precisely because both parties talk the language of wanting to see gradual convergence of rules and regulations, not divergence.

It is this spirit of co-operation and incremental steps towards greater regulatory alignment which means that disputes - or complaints from one side or the other of unfair competition - are the exception, not the norm.

There is trust underpinning the agreement, because the journey is towards a common destination, not different ones.

The UK is using Canada's trade agreement with the EU as a model. Credit: PA

The problem with embarking on a trade agreement with both sides explicitly accepting that over time rules and regulations would diverge - which is what Mrs May and her Brexit Secretary David Davis are selling to the rest of the Cabinet - is that disputes over possible unfair competition by one or other side would be the norm, not the exception.

So a trading agreement predicated on this idea of gradual divergence is one that would be a practical and bureaucratic nightmare: Brussels and London would constantly be bickering about whether this or that rule change was fair, and then referring their quarrel to an arbitration mechanism.

As a matter of principle, this unique trade agreement - and remember our Prime Minister constantly goes on about how what she wants is unprecedented - is not attractive to the rest of the EU.

Even if they could be persuaded to go for it, which I doubt, there will then be one Hell of a difficult conversation about what institution could be trusted to settle these disputes in an efficient and fair way.

Mr Davis and Mrs May believe CETA's arbitration mechanism would be appropriate for the "CETA plus plus plus" that they want.

But that is an arbitration mechanism for a Canada and an EU which - as I have mentioned - have made a public commitment if not to marry but at least to cohabit.

In that sense, it is probably more therapist than tribunal.

It may therefore be wholly inappropriate for a UK and an EU, which may say that they still love each other a tiny bit, but which want the right to be as selfish as they damn well like.