BRUSSELS—British Prime Minister Boris Johnson will head to Brussels to see whether a last-minute trade deal can be hammered out despite big differences on key issues, leaders of the UK and the EU said Dec. 7.
Johnson and European Commission President Ursula von der Leyen said after a lengthy phone call that “significant differences” remained on three key issues and “the conditions for finalizing an agreement are not there.”
“We asked our chief negotiators and their teams to prepare an overview of the remaining differences to be discussed in a physical meeting in Brussels in the coming days," they said in a joint statement.
Despite the continuing impasse, plans for a top-level meeting will be seen as a good sign.
The two leaders spoke for the second time in 48 hours as their trade teams remained locked in stalled negotiations in Brussels.
Gaps remain on fishing rights, fair-competition rules, and the governance of future disputes, with just over three weeks until the two sides’ current economic relationship unravels at the end of the year.
EU chief negotiator Michel Barnier had no news of a breakthrough when he briefed ambassadors of the 27 member states Dec. 7 on the chances of a deal with London before the Dec. 31 deadline.
Irish Foreign Minister Simon Coveney said Barnier’s message was “very downbeat.”
“I would say he is very gloomy, and obviously very cautious about the ability to make progress today,” Coveney told Irish broadcaster RTE.
One official from an EU nation said “the difficulties persist" over the legal oversight of any trade deal and standards of fair play that the UK needs to meet to be able to export in the EU. On fisheries too, a lot of work remains, said the official, who spoke on condition of anonymity because the talks were ongoing.
Penny Mordaunt, a junior minister for Brexit planning, told lawmakers in the House of Commons that the “level playing field”—competition rules that Britain must agree to, to gain access to the EU market—was the most difficult unresolved issue.
“We are at a critical moment,” she said.
Britain's pound currency fell more than 1 percent against the dollar to under $1.33 amid the uncertainty.
Johnson's spokesman, Jamie Davies, declined to offer odds on a deal being struck.
“I’m not going to put a percentage on it," he said. “We are prepared to negotiate for as long as we have time available if we think an agreement is still possible.”
While the UK left the EU politically on Jan. 31, it remains within the bloc’s tariff-free single market and customs union through Dec. 31. Reaching a trade deal by then would ensure there are no tariffs and trade quotas on goods exported or imported by the two sides, although there would still be new costs and red tape.
At his early morning meeting with EU ambassadors, Barnier faced some anxious member states that feared that too much might have been yielded already to London. If talks continue after Dec. 7, they will be closing in on a two-day EU summit starting Dec. 10, where German Chancellor Angela Merkel and French President Emmanuel Macron will be major players.
Germany wants a deal partly because its massive car industry has always found a welcome export market in Britain. France—seen by Britain as the “bad cop” in trade negotiations—has taken the lead in demanding that UK companies must closely align themselves with EU rules and environmental and social standards if they still want to export to the lucrative market of 450 million people.
The politically charged issue of fisheries also continues to play an outsized role. The EU has demanded widespread access to UK fishing grounds that historically have been open to foreign trawlers. Britain insists it must control its own waters, doling out quotas annually.
While both Britain and the EU say they want a trade deal, trust and goodwill are strained after months of testy negotiations.
In a further complication, Johnson’s government plans Monday to revive legislation that breaches the legally binding Brexit withdrawal agreement it struck with the EU last year.
The UK government acknowledges that the Internal Market Bill breaks international law, and the legislation has been condemned by the EU, U.S. presidential candidate Joe Biden, and scores of British lawmakers, including many from Johnson’s own Conservative Party.
The House of Lords, Parliament’s upper chamber, removed the law-breaking clauses from the legislation last month, but Johnson’s government will try to reinsert them on Dec. 7.
Britain says the bill, which gives the government power to override parts of the withdrawal agreement relating to trade with Northern Ireland, is needed as an “insurance policy” to protect the flow of goods within the UK in the event of a no-deal Brexit. The EU sees it as an act of bad faith that could imperil Northern Ireland’s peace settlement.
On Dec. 9 the UK plans to introduce a Taxation Bill that contains more measures along the same lines and would further irritate the EU.
But the British government offered the bloc an olive branch on the issue, saying it would remove the lawbreaking clauses if a joint UK-EU committee on Northern Ireland found solutions in the coming days. It said talks in the committee, which continued Dec. 7, had been constructive.
EU member states have to unanimously support any post-Brexit trade deal, and the agreement still needs to be voted on by the European parliament, procedures that would push any deal right up to the end-of-year deadline.
Both sides would suffer economically from a failure to secure a trade deal, but most economists think the British economy would take a greater hit, at least in the short term, because the UK does almost half its trade with the bloc.