LDN - Business

Brexit trade talks difficult as EU and UK still split on key issues

[December 23, 2020] By Guy Faulconbridge and Gabriela Baczynska

LONDON/BRUSSELS (Reuters) - Britain and the European Union remained divided over competition and fishing on Wednesday as they tried to clinch a Brexit trade deal in time to avoid a turbulent split at the end of the year.

Ireland said a deal was still possible before Britain leaves the EU's orbit on Dec. 31, 11 months after it formally quit the bloc and entered a transition period keeping it in the bloc's customs union and single market until the year ends.

But with a dizzying array of conflicting signals coming from the two sides, Britain has not yet managed to agree a deal that would ease the pain of its departure by keeping in place zero-tariff and zero-quota access to the single market.

British Housing Secretary Robert Jenrick told Sky News that "at the moment there isn't sufficient progress" at the talks.

Irish Prime Minister Micheál Martin said the gap on how much fish EU boats could catch in British waters was still wide, but that he believed there should be a deal given the economic shock that failure would trigger.

"On balance, I think given the progress that has been made that there should be a deal," Martin told national broadcaster RTE. "A no-deal would be an appalling shock to the economic system on top of COVID-19."

British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen are in close contact and were expected to hold another call on Wednesday.

British sources said talks remained "difficult" and underscored the differences. EU sources were more upbeat.

The British pound rose, as did midcap stocks. Investors expect swings in the currency as overnight volatility was holding above 25%.

Johnson, who is also grappling with a deepening COVID-19 outbreak and a border crisis at Europe's busiest truck port, has said he will not sign up to any deal that undermines British sovereignty.

Walking away from the talks might win applause from many Brexit supporters in Britain but could cause severe disruptions to goods trade which makes up half of annual EU-UK commerce, worth nearly a trillion dollars in all.

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Secretary of State for Housing, Communities and Local Government Robert Jenrick arrives on Downing Street, following the outbreak of the coronavirus disease (COVID-19), London, Britain, June 9, 2020. REUTERS/Toby Melville/File Photo

DEAL TIME?

Britain, which joined the EU's precursor in 1973, has often had stormy relations with the countries in the Franco-German led project which sought to bind the ruined nations of post-World War Two Europe into a global power.

The scale of possible Brexit disruption has been laid bare by France closing its borders to Britain for 48 hours, citing a new coronavirus variant. This left thousands of European truckers stranded in southern England and disrupted food supplies.

The EU is making a "final push" to strike a trade deal though rifts over fishing rights remain, EU negotiator Michel Barnier said on Tuesday.

Ireland's Martin said that if there was a breakthrough on Wednesday or Thursday, officials in Europe could be working on the text on Christmas Day.

"I'm still reasonably optimistic but there's no news to report to you this morning," Britain's Jenrick said. "There's still the same serious areas of disagreement whether that's on fisheries or the level playing field."

Level playing field is trade jargon for ensuring fair competition. EU leaders fear that after Brexit the United Kingdom could ease regulation to undercut others and gouge EU market share. Enforcement is an important issue.

Beside competition, the sides are haggling over how much EU fishermen can catch in Britain's waters: essentially how many sole, sand eels and mackerel EU boats can fish per year, where and how to renew such agreements.

Barnier told EU envoys on Tuesday that Britain's latest offer on sharing out the fish catch from British waters from 2021 was "totally unacceptable", according to EU diplomats.

(Reporting by Guy Faulconbridge, Kate Holton, Sujata Rao, Elizabeth Piper, Gabriela Baczynska, Michael Shields, Padraic Halpin; editing by Michael Holden, Kirsten Donovan and Timothy Heritage)

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