The latest round of talks between Britain and the EU on their future relationship ended on Friday with “no significant progress”, but afterwards both sides showed fresh signs of a willingness to compromise to get a deal.
Michel Barnier, chief EU negotiator, suggested he was willing to be flexible over a Brussels demand that Britain continue to abide by European state aid rules as part of any future trade agreement.
Meanwhile Britain repeated its offer to accept some tariffs on agricultural products, in exchange for the EU dropping its demands on state-aid as well its requirement that the UK stick closely to the bloc’s environmental and labour standards. Brussels has always maintained that these “level playing field” conditions are key to any trade deal.
Since March UK and EU negotiators have conducted four rounds of talks, mostly by video conferencing due to the disruption from the coronavirus pandemic. But so far the two sides have made little progress and with six months to go until Britain’s Brexit transition period expires, there are growing concerns over a messy no-deal scenario at the end of the year.
Asked whether the EU would insist that the UK stick to the bloc’s state aid regime as part of the “level playing field”, Mr Barnier told reporters after the talks concluded at Friday lunchtime that his priority was to find a way to protect businesses from unfair competition.
“We need to work together to come up with the appropriate toolbox, the robust commitments,” he said. “What we care about is how effective these mechanisms will be so that they can ensure long-term, fair sustainable competition.”
Meanwhile the UK reiterated an offer to accept a less ambitious trade deal, with tariffs on “sensitive agricultural products”, in exchange for the EU dropping some of its level playing field demands.
The offer would involve British farm exports being hit by tariffs in exchange for the UK avoiding requirements that the British government sees as an affront to the country’s sovereignty. The move would be unlikely to go down well in Britain’s rural farming communities.
UK negotiators believe it might be a way to make progress but Mr Barnier last month publicly rejected the idea that tariffs could compensate for a weaker level playing field.
One British negotiating official said: “So far the idea has fallen on stony ground but it’s still in there in the discussion.”
Mr Barnier and his UK counterpart David Frost said the two sides were reaching the limit of what could be achieved with virtual negotiations.
“The truth is that there was no substantial progress,” Mr Barnier said. “We can only take note that there has been no substantial progress since the beginning of these negotiations, and that we cannot continue like this forever.”
Brussels has warned that an agreement must be found by October for a deal to be ratified before the transition period ends on December 31, while Britain wants to wrap up negotiations over the summer. “October will be too late,” said one British official.
Despite the suggestion of a compromise on state aid, Mr Barnier said no headway had been made this week on the level playing field issue.
The two sides also remain far apart on fishing rights, with the UK resistant to granting the EU long-term guaranteed access to its waters, and the two sides at loggerheads over how to share out fishing rights for stocks that straddle the maritime border.
In a sign of the stark divide between the two sides, Mr Barnier hit out at the UK for what he said was Britain’s retreat from a political declaration that Mr Johnson agreed with EU leaders last year — a document that set out shared principles for the future relationship between the UK and the EU.
“We cannot and we will not accept this backtracking on the political declaration,” Mr Barnier said, claiming that Britain was abandoning the document’s provisions on everything from the level playing field to the fight against money laundering. Mr Frost denied the claims.
Attention will now shift to high-level talks set to take place later this month between Boris Johnson, the UK’s prime minister, European Commission president Ursula von der Leyen and other EU institutional chiefs.