UK, EU on cusp of striking Brexit trade deal at last

BRUSSELS (AP) — Negotiators from the European Union (EU) and Britain worked through the night and into early hours yesterday to put the finishing touches on a trade deal that should avert a chaotic economic break between the two sides next week.

Trade will change regardless come on January 1, when the United Kingdom (UK) leaves the bloc’s single market and customs union. But both sides have been working furiously to avoid a nightmare scenario, in which the imposition of tariffs and duties would cost billions in trade and hundreds of thousands of jobs and potentially so snarl ports that many goods would struggle to get through. That possibility was starkly illustrated this week when a brief French blockade of British trucks over coronavirus concerns created chaos at ports that is still being sorted out.

After resolving nearly all of the remaining sticking points, negotiators combed through hundreds of pages of legal text yesterday that should become the blueprint for a post-Brexit relationship.

As during much of the nine-month negotiations, the issue of EU fishing fleets in British waters proved the most intractable and divisive, with negotiators still haggling over quotas for some individual species as dawn came and went.

Still, sources on both sides said the long and difficult negotiations were on the cusp of being wrapped up as negotiators, holed up at EU headquarters in Brussels with a stack of pizzas, worked to deliver the text to their leaders yesterday.

A man walks in the rain outside European Union headquarters in Brussels. PHOTO: AP

Irish Foreign Affairs Minister Simon Coveney said there appeared to be “some sort of last-minute hitch” over fish, but that it was not surprising. The agreement would then go to the 27 EU nations seeking unanimous approval, as well as the blessing of the EU and British Parliaments. It’s expected to get those approvals.

Britain’s currency, the pound, rose on expectations of a deal, up 0.5 per cent against the dollar to just under USD1.36.

It has been four-and-a-half years since Britons voted 52 per cent-48 per cent to leave the EU in order to — in the words of the Brexiteers’ campaign slogan — “take back control” of the UK’s borders and laws.

It took more than three years of wrangling before Britain left the bloc’s political structures on January 31. Negotiating how to disentangle economies that were closely entwined as part of the EU’s single market for goods and services took even longer.

Despite the apparent breakthrough, key aspects of the future relationship between the 27-nation bloc and its former member remain uncertain. But it leaves the mutually dependent, often fractious UK-EU relationship — and its GBP675 billion (USD918 billion) in annual trade — on a much more solid footing than a disruptive no-deal split.

If a deal is announced, British Prime Minister Boris Johnson will be able to claim to have delivered on the promise that won him a resounding election victory a year ago, “Get Brexit Done”.

Even with a deal, trade between Britain and the EU will face customs checks and other barriers on January 1. But an agreement would avert the more disastrous effects of tariffs and duties. Britain withdrew from the EU on January 31, and an economic transition period expires on December 31.

Johnson has always insisted the UK will “prosper mightily” even if no deal is reached and the UK has to trade with the EU on World Trade Organization terms from January 1.

But his government has acknowledged that a chaotic exit is likely to bring gridlock at Britain’s ports, temporary shortages of some goods and price increases for staple foods. Tariffs will be applied to many UK exports, including 10 per cent on cars and more than 40 per cent on lamb, battering the UK economy as it struggles to rebound from the impact of the coronavirus pandemic.

Rumours of a pre-Christmas trade deal surfaced in recent days based on progress on the main outstanding issues: fair competition, resolution of future disputes and fishing.

The EU has long feared that Britain would undercut the bloc’s social, environmental and state aid rules to be able to gain an unfair edge with its exports to the EU. Britain has said that having to meet EU rules would undercut its sovereignty.

Compromise was finally reached on those “level playing field” issues, leaving the economically minor but hugely symbolic issue of fish to be the final sticking point. Maritime EU nations are seeking to retain access to UK waters where they have long fished, but Britain has been insisting it must exercise control as an “independent coastal state”.