EU Warns U.K. Hasn’t Compromised Enough for Brexit Deal

The European Union warned that the U.K. hasn’t moved sufficiently to overcome the main obstacles to a post-Brexit trade deal as three of the bloc’s leaders called for contingency plans to be stepped up in case there is no agreement.

At a meeting in Brussels on Friday, Secretary General of the Commission Ilze Juhansone told envoys from the EU’s 27 member states that negotiations could now slip into December as progress has been slow, according to people in the meeting who asked not to be identified because they weren’t authorized to speak publicly. The pound trimmed its earlier gains.

The talks were roiled this week by the disclosure that a member of the EU team had tested positive for coronavirus. Face-to-face negotiations have been now suspended, and Michel Barnier, the bloc’s chief negotiator, is to go into quarantine just as time to reach a deal runs out.

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. If that happens, businesses and consumers will face disruption as tariffs and quotas return.

In recent days, though, officials on both sides had privately voiced cautious optimism that a deal could be concluded as soon as next week. The EU briefing to the ambassadors and the comments by the three leaders may be an attempt to pressure the U.K. government to compromise further before a deal is struck at a later date.

Officials said talks are at a delicate stage and envoys were not briefed in detail so as not to undermine the negotiations and put possible compromises at risk.

While the EU has been saying for weeks that there are still disagreements on fishing, the level playing field and how any agreement will be enforced, the reality appears more nuanced. Both sides have made concessions and some progress in recent days.

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

In a sign of the progress made, the legal text of agreements on all topics except the three most contentious ones have been drafted.

Some advances have been made on state aid, von der Leyen said. But two EU officials said that on other so-called level playing field issues, the U.K. is still resisting EU pressure include ratchet clauses -- which would force Britain to raise its legal standards in areas including environment and social protection if EU legislation changes in the future.

On fishing, the two sides still can’t agree on how much of the British catch EU boats will be allocated. On governance, the two sides haven’t agreed on cross retaliation clauses, the official said.

With timing running out, EU officials discussed whether they could implement a deal on Dec. 31 but leave the formal ratification process to next year. That could put the bloc’s executive arm on collision course with the European Parliament and member states anxious to protect their rights to approve any accord.

“The whole team is engaged and working tirelessly day and night to indeed reach the natural deadline,” von der Leyen said. “We have to be done by the end of the year.”

The path to a deal
Monday Nov. 16Talks resumed in Brussels
Thursday Nov. 19EU leaders held a video-conference call
Friday Nov. 20Commission official briefed EU diplomats on progress; Prime Minister Boris Johnson and European Commission President Ursula von der Leyen may hold a call thereafter -- but this hasn’t been confirmed.
Monday Nov. 23Talks resume in London; officials hope to make a breakthrough early in the week and reach an agreement.
Thursday Dec. 10-11EU holds a summit. If a deal hasn’t been signed by now, expect preparations for Britain’s messy exit from the single market to figure prominently.
Wednesday Dec. 16European Parliament scheduled to vote on any deal. But this could be delayed to between Christmas and the New Year.
Thursday Dec. 31End of Brexit transition period. The final, immovable deadline. If the two sides haven’t signed a trade deal, Britain will default to trading with the EU on World Trade Organization terms.

©2020 Bloomberg L.P.

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