U.K., EU on Course to Strike Trade Deal Despite Public Tensions


The U.K. and European Union are on course to strike a trade deal in coming days even though several big differences between them still need to be bridged, people close to the negotiations said.

Despite the abrupt suspension of face-to-face talks this week after a member of the EU negotiating team tested positive for Covid-19, officials on both sides are optimistic.

A deal could now be struck toward the end of next week or, more likely, during the week of Nov. 30, said the people, who asked not to be identified because the talks are private. For that to happen, the British government, and to a lesser extent the EU, still need to take big political decisions -- and if they don’t, the negotiations could founder, the people cautioned.

U.K., EU on Course to Strike Trade Deal Despite Public Tensions

The delicate choreography now being worked out by the two sides has been complicated by the fact British Prime Minister Boris Johnson and EU chief negotiator Michel Barnier have both had to quarantine after coming into contact with the coronavirus.

The EU is pressing Johnson, who will end his isolation on Thursday, to take a final decision on the compromises it sees as necessary if there is to be a deal. The U.K. has so far resisted the bloc’s demands on the level playing field for businesses and on how exactly any agreement will be enforced.

Potential Compromise?

The EU wants the U.K. to follow the bloc’s environmental and labor standards even if they change in future, something Johnson has opposed. Both sides still disagree on the extent to which penalties can be applied if either side breaches the terms of any agreement.

The two sides have also failed to reach a compromise on what access EU boats will have to U.K. fishing waters from next year, although their differences in this area are narrowing.

U.K., EU on Course to Strike Trade Deal Despite Public Tensions

Privately, officials say the contours of a deal are emerging: if Johnson offers concessions on the level playing field, he might be able to claim victory on fisheries.

EU leaders though, are continuing to heap pressure on Johnson, and have raised the prospect that a deal won’t be reached. That outcome could trigger disruption at the U.K.’s borders and leave consumers and businesses reeling from the additional costs of tariffs and quotas.

Late on Thursday, the leaders of France, Belgium and the Netherlands called on the bloc to make contingency plans in case a deal fails to materialize. Envoys from the bloc’s 27 member states were told at a meeting in Brussels the following day that the U.K. hadn’t offered sufficient compromises.

Completed Texts

The negotiating teams are more optimistic than the messaging to EU governments would suggest, although some major capitals still have their doubts over whether Johnson will play ball.

In a sign of the progress made, the legal text of agreements on all subjects except the three most contentious ones have been drafted. Officials said sections on state aid -- where the EU wants the U.K.’s subsidy control policy to be set out in the treaty and for it to be overseen by an independent regulator -- are almost complete.

But several issues are inter-linked. Disagreements persist not only on the technicalities of fishing access, but also on the EU’s insistence that it forms part of the overall dispute-resolution mechanism. That way, either side could impose trade penalties if the other broke the agreement on fish.

Officials said many factors over the next few days will determine when and whether a deal is done -- including the availability of senior figures, which has added an additional last-minute complication. Barnier will probably stay in quarantine until Nov. 26, and is likely to travel to London for the final round of talks.

“After difficult weeks with very, very slow progress, now we’ve seen in the last days better progress,” European Commission President Ursula von der Leyen told reporters in Brussels on Friday. “But there are quite some meters to the finish line.”

©2020 Bloomberg L.P.

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