EU chief Brexit negotiator Michel Barnier (right) and British negotiator David Frost at the start of the first round of post -Brexit trade deal talks in Brussels, Belgium, March 2 2020. Picture: REUTERS/OLIVER HOSLET
EU chief Brexit negotiator Michel Barnier (right) and British negotiator David Frost at the start of the first round of post -Brexit trade deal talks in Brussels, Belgium, March 2 2020. Picture: REUTERS/OLIVER HOSLET

Brussels/London — The latest round of talks between Britain and the EU over their future relationship ended with both sides saying they are still far from a deal. In private, officials are making progress towards agreements in key areas.

After discussions in London, Michel Barnier, the EU’s chief negotiator, told reporters on Thursday that “big differences” remain between the two parties and that a deal is “unlikely” if the UK refuses to back down on its red lines.

His British counterpart, David Frost, said negotiators have to face the possibility that an agreement won’t be reached.

Beyond the public rhetoric, though, there were indications that both sides used this week to signal their willingness to compromise in what have been controversial areas: how any accord will be structured; what role the European court of justice will have in policing a deal; and just how far Britain will be required to apply the EU’s state aid rules.

The wire

The talks are now on course to run down to the wire, with discussions set to continue into September as officials seek a deal before European leaders meet in mid-October, just weeks before the UK finally leaves the EU single market and customs union at the end of 2020. If Britain and the EU fail to reach an agreement by then, businesses will face the imposition of tariffs and quotas which do not exist today.

The negotiations are balanced between breakdown and breakthrough, a senior UK official with knowledge of the negotiations said on Thursday.

Disagreements over what rights EU boats will have to fish in British waters, and what “level playing field” rules the UK will have to apply to ensure fair competition between businesses, remain the biggest stumbling blocks. In these areas, officials say neither side looks willing to blink first, and little progress has been made.

But after the week’s talks, the UK signaled that it had backed down in its opposition to the EU’s demand that the agreement come in the form of one over-arching deal. British Prime Minister Boris Johnson had originally rejected this approach, wanting a series of mini-agreements so that a disagreement in one area couldn’t lead to retaliation on other unrelated issues.

For the EU’s part, Barnier indicated the bloc is willing to compromise on its plan for the European court of justice to oversee the deal — something Euro-sceptic members of Johnson’s Conservative party are vehemently opposed to — and on its insistence that it retains control over the UK’s state aid policy in future.

State aid

The EU had initially demanded that the UK stick to the bloc’s state aid rules, even if they changed over time. On Thursday, Barnier only said: “We need consistency, or some kind of equivalence.”

Nevertheless, it’s clear both sides believe that more progress should have been made by now. Officials had hoped this week would see significant advances after last month’s call between Johnson and the EU’s leadership appeared to inject fresh impetus into negotiations.

While the UK has been pressing for an outline agreement by the summer, the EU has considered the deadline to be the summit of EU leaders in October. Any deal would then go to all the EU governments for ratification.

Both sides’ chief negotiators say they will continue negotiations and that they are still willing to reach an agreement. “I want to reaffirm the EU’s willingness to reach an ambitious partnership agreement,” Barnier said.

“Despite all the difficulties, on the basis of the work we have done in July, my assessment is that agreement can still be reached in September,” Frost said. “We should continue to negotiate with this aim in mind.”

The two men will hold informal talks next week before a formal round of negotiations start on August 17.

Bloomberg

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