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EU-UK trade deal hangs in the balance with four weeks to go

BRUSSELS/LONDON (Reuters) - The European Union and Britain talked into late on Thursday to try to secure a Brexit trade deal, with an EU official saying an agreement was closer than ever but a UK government source warning chances for a breakthrough were receding.

FILE PHOTO: A British Union Jack flag flutters outside the European Parliament in Brussels, Belgium January 30, 2020. REUTERS/Francois Lenoir/File Photo

Since Britain left the EU in January, negotiators have struggled to overcome their differences, with each side urging the other to make concessions to unlock a trade deal before London’s transition period out of the bloc ends on Dec. 31.

EU Brexit negotiator Michel Barnier is due to update 27 national envoys to the bloc’s hub Brussels on Friday on the latest in the talks. A senior British government source said the prospect of a breakthrough in the next few days was receding.

A member of Barnier’s team said earlier on Thursday that significant gaps remained on the three most contentious issues and that the final outcome was still uncertain.

“The long and the short story is that talks are continuing in London. Significant divergences remain,” Stefaan de Rynck told a seminar in the Belgian capital. “Both sides are working hard to overcome them but the outcome is uncertain.”

He likened the negotiations to a marathon and said the sides were “probably past kilometre 40” of the just over 42 km (26 mile) race.

Late on Thursday, after a day of mostly silence, the British government said: “At the eleventh hour, the EU is bringing new elements into the negotiation. A breakthrough is still possible in the next few days but that prospect is receding.”

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An EU official dismissed that as last-minute rhetoric aimed at winning concessions. While the person agreed an agreement was “closer than ever”, they admitted it was still not clear if there would be one at all.


EU sources said discussions centred around the so-called level playing field on state aid and fixing future minimum labour and environmental standards, as well as what “effective remedies” each side could take if the other let them slip.

The two are trying to agree rules to govern nearly $1 trillion in annual trade after Britain leaves the EU’s orbit on Dec. 31. But the three main sticking points have never really shifted, on agreeing fishing rights in UK waters, ensuring fair competition for companies and ways to solve future disputes.

An EU diplomat who declined to be identified said earlier on Thursday the bloc’s negotiators had moved to “within millimetres” of the limits of their negotiating mandate.

“We’ve reached a point where we are so close to the limits of our mandate that we need a movement on the side of the UK if we want to strike a deal,” the envoy said.

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After many missed deadlines, there was no guarantee that Barnier and his UK counterpart, David Frost, would resolve those differences and seal a deal, which would still need the approval of the 27 EU states, as well as the European Parliament.

Failure to secure a deal would clog borders, rattle financial markets and disrupt supply chains as the world tries to cope with the vast economic cost of the COVID-19 pandemic.

In a move that could further undermine the talks, the British government said that, despite EU protests, parliament would press ahead with draft laws next week that would breach London’s earlier divorce treaty with the bloc.

The EU objects to the bill because it unpicks the Brexit divorce treaty. The UK chamber is also introducing new legislation next week that is widely expected to contain more provisions that overrule parts of London’s January EU withdrawal agreement deal relating to Northern Ireland.

Irish Foreign Minister Simon Coveney said he hoped for a new trade agreement in the next few days.

British Education Secretary Gavin Williamson reported “good progress” but said London would accept only “a deal that is right for Britain, if such a deal is available.”

“If such a deal isn’t available, then we’re not going to sign up to something that is to our detriment,” he told Sky.

Additional reporting by William James, Writing by Guy Faulconbridge, Gabriela Baczynska and Elizabeth Piper; Editing by Nick Macfie, Timothy Heritage and Catherine Evans