Post-Brexit trade deal between Boris Johnson’s government and Brussels on a knife-edge

(qlmbusinessnews.com via news.sky.com– Mon, 7th Dec, 2020) London, Uk – –

Negotiations on a post-Brexit trade deal have “entered the endgame” with the PM and EU president due to speak later.

By Greg Heffer, political reporter

Brexit trade talks go down to the wire with a phone call between Boris Johnson and European Commission President Ursula von der Leyen this afternoon.

The prime minister was due to speak with the EU chief at 4pm (5pm in Brussels) to assess whether a post-Brexit trade agreement can still be reached.

Meanwhile, the government offered a concession to the EU and said it would drop the most controversial parts of its Internal Market Bill – which could break international law – following “good progress” in talks over Irish border arrangements.

This afternoon's phone call between Mr Johnson and Ms von der Leyen is their second within 48 hours, after they agreed over the weekend to make a “further effort” to reach a deal, despite months of deadlock on key issues.

Saturday's call preceded another day of negotiations, which continued late into the night.

However the EU's chief negotiator, Michel Barnier, was said to have been “very gloomy” about the prospects of a deal when he spoke to the bloc's national ambassadors on Monday morning.

Irish foreign minister Simon Coveney told RTE news: “Having heard from Michel Barnier this morning, really the news is very downbeat.

“I would say he is very gloomy, and obviously very cautious about the ability to make progress today.”

One EU diplomat said: “EU-UK negotiations have entered the endgame, time is running out quickly.

“Despite intensive negotiations until late last night, the gaps on level playing field, governance and fisheries are still not bridged.

“The outcome is still uncertain, it can still go both ways.”

Meanwhile, an EU source told Sky News they were “not expecting anything substantial yet” although they predicted “some more drama” and said trade talks were “moving in the right direction on fishing”.

Downing Street said on Monday that “significant differences remain on critical issues”, including fisheries, which was still being negotiated by the UK's team in Brussels.

The prime minister's official spokesman said: “Our negotiations are ongoing but we remain committed to trying to reach a free trade agreement, and that is what our team is there trying to achieve today, but we are clearly in the final stages now.”

The spokesman also said the UK government was “prepared to negotiate for as long as we have time available if we think an agreement is still possible”, after Mr Barnier reportedly told members of the European Parliament the deadline for talks succeeding is Wednesday.

In a bid to soothe tensions, the UK government also confirmed it would “be prepared to remove” two parts of the Internal Market Bill.

The draft legislation has been condemned by critics both in Westminster and across European capitals for allowing ministers to override the Withdrawal Agreement – the UK's divorce deal with the EU that was agreed last year.

The government has admitted the legislation could see the UK breach international law, but argue it is needed to protect the integrity of the UK and the Good Friday Agreement in Northern Ireland.

Senior cabinet minister Michael Gove met with European Commission vice-president Maros Sefcovic in Brussels on Monday.

Following their meeting, the UK government released a statement saying it could scrap the controversial parts related to state aid and export declarations.

The bill is being debated on on Monday in the Commons after the Lords took out the same sections, but the government is expected to successfully reinsert them – setting up a “ping pong” battle between the two Houses.

Foreign Office minister James Cleverly told Sky News' Kay Burley those clauses would be reintroduced to the bill when it returns to the House of Commons today, with MPs set to vote on whether to keep or scrap the Lords' amendments this evening.

“It contains clauses that we may need to rely on and, if we do need to rely on them, better that they're there,” Mr Cleverly said.

“It's an insurance policy, like all insurance policies you'd prefer not to have to use it. But you would kick yourself if you need it and it isn't there.”A no-deal was unthinkable once – this week we'll find out if the PM is prepared to press that button

Asked whether it was worth risking the EU's anger by reintroducing the controversial legislation in full, Mr Cleverly replied: “Not having that in place would weaken our position and actually give an advantage to the EU negotiators.

“And, in a negotiation like this, it is really key that both parties negotiate hard – I'm sure the EU negotiators are negotiating hard, but so is David Frost (the UK's chief negotiator) and our negotiating team.

“We do it in a spirit of positivity, but we do want to get a deal that works for the UK, an agreement that works for the UK.”

The EU's national leaders will gather for a summit in Brussels on Thursday, which will come just three weeks before the end of the Brexit transition period on 31 December.

The pound fell by more than two cents against the US dollar on Monday morning to just over $1.32 as investors grew more anxious about the possibility of a no-deal outcome.

It was a sharp reverse from market optimism over the talks last week which saw sterling climb above $1.35 for the first time this year.

Without a post-Brexit trade deal being agreed by the end of this month, the EU and UK are likely to have to trade on World Trade Organisation rules with tariffs imposed in both directions.