British negotiators arrived in Brussels on Sunday for what is potentially the final attempt to strike a deal with the European Union over future trade ties, even though “significant differences remain” on three essential points.
While the UK left the EU on 31 January, it remains within the bloc’s tariff-free single market and customs union through 31 December.
With less than four weeks remaining before the 1 January cutoff day, the negotiators might have less than 48 hours to clinch a breakthrough because European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson will assess late on Monday if there is any point in continuing.
Reaching a trade deal by then would ensure there are no tariffs and trade quotas on goods exported or imported by the two sides, although there would still be technical costs, partly associated with customs checks and non-tariff barriers on services.
Britain’s main negotiator, David Frost, arrived on a high-speed Eurostar train on Sunday and said that “we are going to see what happens,” amid an ever gloomier outlook that a breakthrough could be achieved on all outstanding points.
The meeting was authorized after a phone call between von der Leyen and Johnson on Saturday, where the two leaders noted that fundamental differences between the two sides remain over a “level playing field” — the standards the UK must meet to export into the bloc — how future disputes are resolved and fishing rights for EU trawlers in UK waters.
Still, they said a “further effort should be undertaken by our negotiating teams to assess whether they can be resolved.” Johnson and von der Leyen said they would talk again and underlined that “no agreement is feasible if these issues are not resolved.”
Speed is now of the essence since EU member states have to unanimously support any deal. EU chief negotiator Barnier has been invited to a pre-dawn briefing of EU ambassadors on Monday, as the bloc’s 27 nations want to fully grasp what the chances are of getting a deal before EU leaders arrive in Brussels for a two-day summit starting on Thursday.
British environment secretary George Eustice warned that the talks were in a “very difficult position” after what he described as a series of “setbacks,” notably over “ludicrous” conditions on future fishing rights.
Both sides would suffer economically from a failure to secure a trade deal, but most economists think the British economy would take a greater hit, at least in the short-term, as it is relatively more reliant on trade with the EU than vice versa.
The main problem at the heart of the negotiations is how to reconcile how Britain wrests itself free of EU rules and the bloc’s insistence that no country, however important, should get easy access to its lucrative market by undercutting its high environmental and social standards.
The talks would surely have collapsed by now were the interests and economic costs at stake not so massive. But because the EU is an economic power of 450 million people and Britain has major diplomatic and security interests beyond its own commercial might, the two sides want to explore every last chance to get a deal before they become acrimonious rivals.
The politically charged issue of fisheries also continues to play an outsized role. The EU has demanded widespread access to UK fishing grounds that historically have been open to foreign trawlers. But in Britain, gaining control of the fishing grounds was the main issue for the Brexiteers who pushed for the country to leave the EU.