Tusk said the EU wanted a free trade agreement with Britain post-Brexit with zero tariffs on goods, but he warned it would not be the "frictionless" arrangement London has angled for.
"My proposal shows that we don't want to build a wall between the EU and Britain. On the contrary the UK will be our closest neighbour and we want to remain friends and partners," Tusk told a press conference in Luxembourg.
"It should come as no surprise that the only remaining possible model is a free trade agreement," Tusk said.
He said the EU would aim for an agreement "covering all sectors and with zero tariffs on goods" but said it must include access for EU fishing boats to British waters -- a highly sensitive issue for hardline Brexit supporters.
"This will be the first FTA in history that loosens economic tries instead of strengthening them," Tusk said.
"Our agreement will not make trade between the UK and the EU frictionless or smoother. It will make it more complicated and costly for all of us. This is the essence of Brexit.
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