British officials described talks in Brussels this week as “constructive”, which came after the EU proposed new measures to ease trade barriers stemming from the agreed Brexit deal.
But it is understood there is still major divide when it comes to Brexit minister Lord Frost’s demand for an end to the European Court of Justice (ECJ)’s role in trade arbitration.
UK sources close to the negotiations warned that real progress must be made soon on “governance” issues, saying a process of “endless negotiation” had to be avoided.
A team from the EU Commission is set to travel to London on Tuesday for several days of intensive discussions, before Lord Frost and EU Commission vice president Maros Sefcovic meet in person in Westminster for talks at the end of the week.
A UK government source said: “The talks this week were constructive and we’ve heard some things from the EU that we can work with – but the reality is that we are still far apart on the big issues, especially governance.
“There’s been plenty of speculation about governance this week but our position remains unchanged: the role of the European Court of Justice in resolving disputes between the UK and EU must end.”
The source added: “We need to see real progress soon rather than get stuck in a process of endless negotiation because the issues on the ground in Northern Ireland haven’t gone away.”
The UK side said it wants to see momentum “soon” to work out whether the gap can be bridged – or if Boris Johnson will need to take the drastic step of triggering Article 16 in his withdrawal deal to suspend protocol arrangements.
The protocol, which was agreed to maintain a free-flowing land border on the island of Ireland, has created a series of economic barriers on the movement of goods from Great Britain to Northern Ireland.
EU proposals would see an 80 per cent reduction in checks envisaged for retail agri-food products arriving in NI from GB. The EU plan also includes a 50 per cent reduction in customs paperwork.
Despite months of complaints about the burden of border checks, Lord Frost has made clear the removal of the European court’s oversight function in policing the protocol is now the big red line for the UK.
Under the terms of the protocol – agreed by Mr Johnson in his 2020 Withdrawal Agreement – the ECJ would be the final arbitrator in any future trade dispute between the two parties.
But the EU Commission has insisted it will not move on the ECJ issue, with some reports suggesting Brussels chiefs are gearing up for a trade war if a compromise deal cannot be struck.
EU officials could consider terminating the post-Brexit trade deal if the UK government does not honour protocol commitments, sources have told Bloomberg.
The EU would be able to justify ripping up the trade agreement by pointing out that agreements on Northern Ireland were a necessary condition for a trade accord, a Brussels source told the outlet.