VALLETTA (AFP, REUTERS) - The European Union demanded that Britain make "sufficient progress" on its divorce before any talks on a future trade deal can start as it laid out its tough Brexit negotiating plans on Friday (March 31).

EU president Donald Tusk's draft guidelines say the other 27 countries are ready for a transitional deal after Britain's exit in March 2019, but that such an arrangement would have to be under EU rules.

British Prime Minister Theresa May had in her letter triggering the two-year exit process on Wednesday called for talks on the divorce and a future deal to run in parallel as soon as negotiations start.

The EU has proclaimed its unity on Brexit, even as it reels from Britain's intention to become the first member state to leave in the bloc's 60-year history.

Tusk's strategy will now be sent out to the leaders of the 27 remaining EU countries ahead of a special summit on April 29 when they will agree on them so that talks can start in May.

Germany and France had already set out a united and uncompromising stance against May's demands.

Tusk's guidelines say that the EU called for a "phased approach" that prioritises an orderly withdrawal that reduces the disruption caused by Britain's departure in March 2019.

"The European Council will monitor progress closely and determine when sufficient progress has been achieved to allow negotiations to proceed to the next phase" on a future relationship," the draft guidelines say.

The EU said that no trade deal can be agreed on before Brexit takes effect.

But it is also open to a transitional arrangement after Brexit as a "bridge" to a future deal some years down the line, but said that it would have to be under EU rules.

It said it is making preparations in case talks break down.

EU PROCLAIMS UNITY

Speaking in Malta, Tusk said Britain must honour all its financial liabilities that come with EU membership before finalising its Brexit divorce.

The EU "will make sure that the UK honours all financial commitments and liabilities the UK has taken as a member state," he said. "It is only fair towards all those people, communities, farmers, scientists and so on, whom we, all the 28, promised and owe this money."

The EU's chief negotiator, France's Michel Barnier, is expected to get the green light to start talks with Britain on May 22, an EU official said.

May formally notified the EU of Britain's intention to leave in a letter to Tusk on Monday that diplomats described as surprisingly conciliatory in tone for the most part.

But May's warning in the letter that failure to clinch a deal on trade would affect Britain's cooperation on terrorism and security still rankled with many.

"It's not a threat," Brexit minister David Davis told BBC radio after warnings from Brussels against using security as a bargaining chip in the talks.

A British government spokesman said on Friday that the draft negotiating guidelines from the EU show a constructive approach ahead of negotiations.

"It is clear both sides wish to approach these talks constructively, and as the prime minister said this week, wish to ensure a deep and special partnership between the UK and the European Union," the spokesman said, in an e-mail distributed from May's office.

The EU insists it is unified ahead of the negotiations.

"Brexit is not the end of everything, but we must make it a beginning of something that will be new, stronger and better," European Commission chief Jean-Claude Juncker said in Malta Thursday.

French President Francois Hollande followed German Chancellor Angela Merkel in snubbing May's proposed structure for the negotiations, saying the exit agreement should come first.

The fate of three million EU citizens living in Britain and one million British people within the bloc's nations is at the top of leaders' agenda.

Also looming large is the so-called "exit bill" which Britain will have to pay, estimated to be as much as 60 billion euros (S$89.8 billion), and the border between Northern Ireland and Ireland.

SHORT NEGOTIATIONS

EU leaders hope to resolve those issues by the end of the year before moving on to the future relationship and a possible transition.

But that leaves only 10 months before October 2018 when Barnier says the talks must wrap up to give time for the European Parliament and member states to approve what the negotiators come up with.

In the first signs of a business fallout since May's Brexit notification, the prestigious Lloyd's of London insurance market said it would open a new Brussels subsidiary to ensure smooth operations in the EU.

Britain has meanwhile started laying plans for the daunting task of bringing thousands of items of EU regulation into British law on the day that Britain leaves the EU.

But May is struggling to bring unity in the wake of the divisive Brexit referendum last June that saw 52 percent vote in favour of leaving the EU and 48 percent against.

As well as fears for the Northern Irish peace process from a return of a hard border, the referendum result has also led to a renewed campaign for independence in pro-EU Scotland.