EU and Britain close in on post-Brexit trade deal in marathon talks

·4-min read

European Union and British negotiators inched their way to within touching distance of a trade deal early Thursday, raising hopes a chaotic economic break between the two sides on New Year’s Day could be averted, officials said.

After resolving a few remaining fair-competition issues, negotiators tussled over EU fishing rights in UK waters as they worked right into Christmas Eve to secure a provisional deal for a post-Brexit relationship after nine months of talks.

Sources on both sides said the long and difficult negotiations were in their final stretch, though one UK negotiators said talks could still have "some hours to run" as both sides combed through the fine print of a draft deal that runs to some 2,000 pages.

A European Union official, agreeing that a deal could be some hours away, said the two sides were still haggling over the EU's right to fish in British waters.

British Prime Minister Boris Johnson held a Cabinet conference call to brief his senior ministers on the outlines of the deal, ahead of an announcement widely expected later Thursday.

Johnson and EU Commission President Ursula von der Leyen are likely to bring news of an agreement before the tentative deal goes to the 27 EU capitals seeking unanimous approval and the blessing of the EU and British parliaments.

No matter what happens, trade between Britain and the EU will face customs checks and some other barriers on January 1, when the UK leaves the bloc’s single market and customs union. A trade deal would avert the imposition of tariffs and duties that could cost both sides billions in trade and hundreds of thousands of jobs. Britain withdrew from the EU on January 31, and an economic transition period expires on December 31.

Johnson has always insisted the UK will “prosper mightily” even if no deal is reached and the UK has to trade with the EU on World Trade Organization terms from January 1.

But his government has acknowledged that a chaotic exit is likely to bring gridlock at Britain’s ports, temporary shortages of some goods and price increases for staple foods. Tariffs will be applied to many UK exports, including 10% on cars and more than 40% on lamb, battering the UK economy as it struggles to rebound from the impact of the coronavirus pandemic.

Over the past few days, Johnson and von der Leyen have been drawn more and more into the talks and have been in contact by phone seeking to unblock negotiations.

Rumors of a pre-Christmas trade deal surfaced in recent days based on progress on the main outstanding issues, other than fishing.

The EU has long feared that Britain would undercut the bloc’s social, environmental and state aid rules to be able to gain an unfair edge with its exports to the EU. Britain has said that having to meet EU rules would undercut its sovereignty. On those issues, a compromise had been reached, a diplomat from an EU country said.

The economically minor but hugely symbolic issue of fish came to be the final sticking point, with maritime EU nations seeking to retain access to UK waters where they have long fished, and Britain insisting it must exercise control as an “independent coastal state".

Some EU nations insisted that upon close scrutiny, Britain’s latest proposals on quotas for EU vessels in UK waters were far less conciliatory than first met the eye, imperiling a deal at the last minute.

On Wednesday, brokering on quotas and transition times for EU vessels to continue fishing in UK waters was in full swing, with progress reported from several sides.

A deal must be ratified by parliaments in both Britain and the EU. The British Parliament is currently on a Christmas break but could be recalled next week so lawmakers can vote.

Johnson’s large majority in Parliament should ensure the agreement passes, but any compromises will be criticized by hardline Brexit supporters in his Conservative Party. The party’s eurosceptic European Research Group said it would carefully scrutinise any deal “to ensure that its provisions genuinely protect the sovereignty of the United Kingdom after we exit the transition period at the end of this year".

If the two sides fail to meet the January 1 deadline, a deal could provisionally be put in place and approved by the EU parliament in January.

Businesses on both sides are clamoring for a deal that would save tens of billions in costs.

The border is already reeling from new restrictions placed on travelers from Britain into France and other EU countries due to a new coronavirus variant sweeping through London and southern England. On Wednesday thousands of trucks were stuck in traffic jams near Dover, waiting for their drivers to get virus tests so they can enter the Eurotunnel to France.

While both sides would suffer economically from a failure to secure a trade deal, most economists think Britain would take a greater hit, because it is smaller and more reliant on trade with the EU than the other way around.