Germany Presses France Over Fishing Ahead of Brexit Summit

(Bloomberg) -- Germany put pressure on France to back down on its demands over fishing, one of the biggest obstacles to a post-Brexit trade deal with the U.K., as Boris Johnson warned he is “disappointed” about the progress of the negotiations.

European leaders will gather in Brussels for a summit on Thursday as discussions with the U.K. over their future relationship enter a critical phase: the prime minister is waiting for the end of the meeting before he decides whether it is worth continuing to work toward an accord.

While EU officials expect Johnson to agree to hold at least two more weeks of negotiations, they acknowledge much work remains to be done. Resolving the two sides’ disagreements over fisheries and business subsidies will be key to securing a deal.

But the process is now becoming as much of a negotiation between the EU’s 27 national governments -- especially between the powerhouses of Germany and France -- as it is between the EU and Britain, as the bloc works out what sort of deal it can live with, one European diplomat said.

French President Emmanuel Macron’s demands to maintain his country’s current access British fishing waters are now the biggest roadblock to a deal, to the increasing frustration of his European allies.

In a thinly veiled attack on the French position, a German government official said on Wednesday that once interested European coastal nations realize that the alternative to no deal is no access to British fishing grounds, there could be increased flexibility.

Disappointing Progress

Over the past week, Johnson has stepped up talks with European leaders, speaking to both German Chancellor Angela Merkel and Macron. On Wednesday evening, Johnson held a call with European Commission President Ursula von der Leyen and European Council President Charles Michel.

“The Prime Minister noted the desirability of a deal, but expressed his disappointment that more progress had not been made over the past two weeks,” a Downing Street spokesperson said in a statement. “The prime minister said that he looked forward to hearing the outcome of the European Council and would reflect before setting out the U.K.’s next steps.”

Johnson is likely to be told by his chief negotiator, David Frost, that an accord is possible if officials can begin intensive talks in coming days, according to a person familiar with the matter. Both sides see now see early November as the likely final deadline.

“Still a lot of work ahead of us,” von der Leyen said in a tweet after the call. “The EU is working on a deal, but not at any price.”

In a sign the EU is hardening its position, the latest draft of the summit communique, seen by Bloomberg, calls on the bloc’s chief negotiator, Michel Barnier, to continue talks with the U.K. rather than “intensify” them, as an earlier version did. The document also requires the Commission to step up its contingency plans in case the negotiations break down.

Fishing Compromise?

Even countries that disagree with France’s hard-line stance are unwilling to compromise on fish before the U.K. makes a similar leap on the issue of state aid. Britain hasn’t yet, although EU officials said they are encouraged by informal discussions that suggest the U.K. is gradually preparing to make an acceptable offer.

The EU has relented on its demand that the U.K. permanently stick to the bloc’s state aid rules, even if they change in future. But it wants the U.K.’s subsidies regime to be policed by an independent regulator that has the power to make legally binding decisions very quickly. Either side would be able to retaliate if the rules were breached, possibly in separate areas of the trade deal.

An agreement in this area is almost certain to be needed before France, which catches around a 25% of its fish in British waters, contemplates giving up some of that haul. The U.K. has proposed a different formula for calculating fishing quotas that would benefit its own industry, and also wants to make EU boats’ access subject to annual negotiations.

Tightrope

Macron is treading a tightrope. While a trade deal with the U.K. would be economically beneficial to France -- and the rest of the EU -- selling out his fishing industry could play into the hands of his political rivals.

While France is holding firm, there are small signs that a compromise might emerge. The government in Paris no longer necessarily believes the country’s share of the catch should remain exactly at is now, one EU diplomat said.

In an interview with Bloomberg Television on Wednesday, Germany’s finance minister, Olaf Scholz, hinted that he expects the two sides will seal a deal -- even if talks may go down to the wire.

“My experience,” he said, “is that sometimes, in the last moment, you will find a solution.”

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