As Virus Disrupts Brexit, EU and U.K. Are Far Apart on Deal

(Bloomberg) --

With time slipping away and negotiations disrupted by the coronavirus, Britain and the European Union are far apart on key issues they need to resolve if they are to strike a trade agreement by the year-end.

On Friday, the EU reiterated its demands for a role for the European Court of Justice, a level competitive playing field, and access to U.K. fishing waters in a draft of the agreement it wants to reach with the EU. Under the 441-page plan, Britain would also have to continue to respect the European Convention on Human Rights.

Prime Minister Boris Johnson has already ruled out any ECJ jurisdiction, refused to commit to applying the ECHR, and vowed to take back control of British waters.

The U.K. had planned to produce its own draft trade deal ahead of next week’s talks. That document is likely to be far more limited in scope because Johnson is seeking a limited deal on goods trade similar to the one Canada reached with the EU.

Negotiations between the two sides, which started last month, have been held up by the coronavirus outbreak. Next week’s set of face-to-face talks in London have been canceled, although some officials may hold discussions by video link. If they don’t strike a deal by the end of the year, the U.K. will revert to World Trade Organization terms, which would mean the return of tariffs and quotas.

The EU has said that it won’t agree to a trade deal with the U.K. unless there’s an agreement on fishing rights. The draft legal text reiterates that there must be reciprocal access to each other’s waters and an annual negotiation of catch levels. Some member states, in particular France, have pushed for longer-term access.

As expected, the EU’s proposed deal doesn’t include any provisions facilitating the cross-border provision of financial services. The EU has insisted that market access will instead be governed by its so-called equivalence system, where decisions are unilateral and not subject to negotiation. Under one clause of the trade accord, both sides would use their “best endeavor” to adhere to global standards governing finance.

©2020 Bloomberg L.P.

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