Brexit talks enter key week as time and confidence run out by Bloomberg

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© Bloomberg. Michel Barnier in Paris on August 26.

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(Bloomberg) – UK and European Union enter key week of Brexit negotiations, with bloc strengthening demands on how any trade deal will be enforced after losing confidence in Boris Johnson over his attempt to rewrite last year’s divorce agreement.

The latest round of scheduled talks between EU chief Brexit negotiator Michel Barnier and his UK counterpart David Frost will begin in Brussels on Tuesday, with officials on both sides expressing cautious optimism about the possibility of success. to an agreement.

If the two sides make enough progress by Friday, they could embark on a two-week period of intense talks – the so-called Brussels ‘tunnel’ – to strike a deal in time for a summit of leaders in Brussels. EU on October. 15, Johnson self-imposed deadline to reach a deal.

Otherwise, Britain would be almost certain to crash into the EU’s single market at the end of the year without a trade deal, which could poison relations with the bloc for a generation. Businesses and consumers would face additional costs and disruption with the return of quotas and tariffs for the first time in a generation.

The two main obstacles to a deal remain deciding which of the EU state aid rules the UK will have to follow after it leaves, and what access EU fishing vessels will have to the waters. British. But doubts over Johnson’s willingness to deliver on promises he has already made only added another layer of difficulty to reaching a deal, said two EU officials close to the talks.

The Prime Minister’s Home Market Bill would violate some of the agreements the UK made when it left the EU to prevent customs checks between Northern Ireland and the Republic of Ireland, a move the UK made. the London government admits it violates international law.

EU officials say the disagreement can be resolved – or made moot if the two sides reach a zero-tariff, quota-free trade deal. But the bloc has threatened Johnson with legal action unless the government changes or withdraws the legislation by the middle of this week. The dispute has cast a shadow over negotiations over future trade and security relations between the UK and the EU, officials said.

The two sides will try to work things out on Monday afternoon when Cabinet Minister Michael Gove and European Commission Vice-President Maros Sefcovic hold separate talks on the implementation of the Irish border deal. .

Technically, the UK and the EU are trying to keep this issue at bay from Barnier and Frost’s negotiations over their future relationship – but officials privately admit that a row in Gove and Sefcovic’s joint committee over the Northern Ireland could call into question the rest of the week’s talks. further.

The controversy over the internal market bill has convinced the EU, as well as many European countries, that there must be a stronger “governance” mechanism in the deal, the two officials said. The EU does not want to make UK confidence commitments; he wants to make them legally binding and accompany them with clear sanctions to prevent Johnson from unilaterally breaking them in the future.

This still leaves the two main sources of disagreement to be resolved – the level playing field or the rules aimed at ensuring fair competition between British companies and their European rivals, as well as fishing.

The first is still proving difficult to resolve, mainly due to the reluctance of the British government to define what its future state aid policy will be. On this last point, the UK is looking for a completely different way of calculating fishing quotas that would allow UK vessels to catch much more than they currently do. The EU is still firmly against it, with countries like France warning that it could destroy their own fishing industries.

In a statement on Friday, the UK government noted that “differences over fisheries and a level playing field remain significant” and that much work remains to be done. “If the gaps in these areas are to be addressed, the more constructive attitude of the EU will have to translate into more realistic political positions in the days to come.”

More than three in four companies surveyed by the Confederation of British Industry, the UK’s largest business lobby group, want a deal signed, with nearly half saying the coronavirus pandemic has hampered their preparations for Brexit.

It is possible that negotiations will drag past Johnson’s Oct. 15 deadline, but not by far. The EU sees the end of October as the very last moment to sign an agreement. It will have to translate a treaty of hundreds of pages into all of its official languages ​​to be delivered to each of its 27 governments, and then be ratified by the European Parliament – all by December 31.

(Add the CBI (NS 🙂 survey in the penultimate paragraph.)

© 2020 Bloomberg L.P.

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