What Changed in a Week of Brexit Talks? Everything and Nothing

(Bloomberg) -- U.K. and European Union negotiators have given themselves just three weeks to finalize a post-Brexit trade deal, less than seven days after Boris Johnson’s officials described the talks as over.

That change was driven more by process -- the EU made enough concessions about the way the talks are structured to bring the British back to the negotiating table -- than it was about substance. Big disagreements remain between the two sides, and shouldn’t be underestimated, according to officials close to the discussions.

But progress in the first should help the U.K. and EU resolve their differences, officials on both sides said. They also pointed to a marked improvement in the political backdrop to the discussions.

Less than a week ago, neither side was sure the other was prepared to work to achieve a positive outcome. Yet in discussions over three days between the chief negotiators, in liaison with political leaders in London, Paris and Berlin, those doubts have largely dissipated, the officials said.

The U.K.’s David Frost and his EU counterpart, Michel Barnier, have a shared goal: they want a deal. But they needed buy-in from their political bosses to go for one. By mid-week, both were convinced they had it.

“An agreement is within reach,” Barnier told the European Parliament on Wednesday, hours before the U.K. agreed to resume talks. “We must therefore find, with the British if they are willing, solutions to the most difficult problems.”

Same Obstacles

The obstacles remain the same: what limits on business subsidies the British government will have to follow, and what access EU fishing boats will have to U.K. waters after the end of the post-Brexit transition period on Dec. 31. But the negotiations will be helped by changes in the way they are structured.

For the first time since the talks started in March, the EU will no longer refuse to discuss certain issues because of its principle of “parallelism” -- meaning that certain topics were off limits unless and until the U.K. compromised in other areas.

This means that British concessions on state aid, one of the biggest stumbling blocks to an accord, can now start to be discussed formally and settled. Before this week, the subject could only be raised informally, leading some in EU circles to believe Britain hadn’t shifted its position at all.

The EU wants the principles of Britain’s subsidies regime to be set out in the text of the overall deal. It also wants to reach agreements on an independent regulator, and how the sides can retaliate against each other if the rules are breached.

The two sides have also agreed to start drafting the legal text of the final deal, something the British had long pushed for. Negotiators will draw up three columns setting out the U.K.’s position, that of the EU, and where they are finding common ground. While this sounds like a trivial development, it makes a huge contribution to getting an agreement, officials said.

Fishing Compromise?

Even though Johnson’s walkout threat was largely described by the EU as political theater, it has helped both sides focus. The U.K.’s willingness to return to the table has enabled Barnier to tell European governments that Johnson wants a deal, and that they too should compromise.

While hopes of deal have risen in the European Commission, which is negotiating on the EU’s behalf, some governments are still worried that Britain won’t make the necessary leap.

On the other side, not all EU member states have signaled they are willing to compromise on fish, the second big obstacle to an accord. France is among countries still holding out for the same access to British waters they have today. There is no guarantee this disagreement will be resolved either, officials say.

“I don’t see any substantial progress on any of the central issues up to now,” Michael Roth, Germany’s deputy foreign minister, told Bloomberg in an interview. “We’ve kept saying in the past months ‘time is running out, it’s getting close, this is the endgame’ -- but now we really have come to this point.”

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