Brexit: EU and UK hold intense talks in final push for trade deal

Negotiators are locked in intense discussions in Brussels in a final heave to reach agreement on trade relations between the European Union and its former member Britain that will determine the fate of the Irish economy in just a few weeks' time.

In what British officials describe as a "last throw of the dice", the two sides led by the EU's Michel Barnier and the UK's David Frost are attempting to overcome deep differences over how to balance Britain's desire to diverge from EU standards with the bloc's determination to protect its market.

It follows a week of negotiations in London that ended with both sides admitting there was no prospect of a deal. European Commission president Ursula von der Leyen and British prime minister Boris Johnson spoke for almost an hour exchanging positions on Saturday, before announcing there would be one last bid for an agreement.

“Significant differences remain on three critical issues: level playing field, governance and fisheries. Both sides underlined that no agreement is feasible if these issues are not resolved,” the two said in a statement.

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“Whilst recognising the seriousness of these differences, we agreed that a further effort should be undertaken by our negotiating teams to assess whether they can be resolved.”

Economic damage

At stake is whether the economic damage of the coronavirus pandemic will be compounded by a "no deal"; an outcome expected to cause significant disruption to supply chains and forecast by the Department of Finance to cost Ireland almost three percentage points of its GDP next year, with tariffs threatening to make many exports to Britain uncompetitive.

The Irish Government also fears such an acrimonious outcome could damage relations with Britain and make future problems more difficult to resolve.

In recent days, attention has focused on the issue of the so-called level playing field: how to ensure that British companies follow comparable rules to EU ones, in order to have fair competition between them.

Outside of the negotiating room there are several obstacles in the path of an agreement, including hardened attitudes among EU member states and a plan by the British government to continue with contentious legislation.

A group of member states including France and the Netherlands have warned they could veto a deal if they believe it cedes too much in economic advantages to Britain. French president Emmanuel Macron has raised concerns about the effect of relinquishing access to fishing stocks in UK waters on coastal communities, a politically sensitive point as he gears up for an election campaign against Marine Le Pen.

For The Hague, the level playing field is the primary concern, due to fears Britain’s geographical proximity could make it a serious threat to Dutch industry if the London government could cut regulations and aid its companies while selling freely into the single market.

Flexibility

Barnier has warned that an agreement may not be possible unless he is granted some flexibility on the negotiating mandate the EU member states agreed together in February and charged him with carrying out. The 27 countries have summoned Barnier to brief their ambassadors in Brussels on the “current state of play” of the talks on Monday morning.

“Ambassadors will then review the situation based on the debrief by the EU chief negotiator,” a spokesman for the German presidency of the EU said.

Meanwhile in London, legislation that would override aspects of the withdrawal agreement signed with the EU last year are due to be considered in parliament on Monday and Tuesday. The EU has long warned that if the British government perseveres with the contentious amendments – which relate to Northern Ireland and would unpick agreements designed to avoid a hard Border on the island – a deal cannot be signed.

Any deal must be ratified by the European Parliament, and MEPs have grown increasingly frustrated there is already insufficient time to properly scrutinise an agreement, which would run to hundreds of pages and have complex implications for many areas of trade.

Four weeks

With less than four weeks remaining until a deep shift in economic relations set to hit on January 1st whether a deal is signed or not, companies have heaped pressure on national governments for certainty, and several capitals have appealed to the European Commission to begin rolling out contingency plans for a no deal outcome.

National leaders are due to gather in Brussels on Thursday and Friday at which they were due to discuss the Covid-19 pandemic, how to break a budget impasse, climate change and relations with the United States. But like many summits before it, the meeting may end up being hijacked by Britain's exit from the EU.