As Brexit Crunch Nears, EU Trade Plans Said to Fall Short

Updated on
  • Consensus forming in EU that U.K. will get Canada-style deal
  • EU negotiators briefed envoys in Brussels on Wednesday

Commuters walk over London Bridge towards the City of London.

Photographer: Luke MacGregor/Bloomberg

The European Union is ready for an offer from Theresa May that could unlock Brexit trade talks, even as a consensus is forming in Brussels that the future deal available won’t be anything like the “deep and special partnership” the British leader craves.

EU negotiators told government envoys on Wednesday that both sides will start work on a joint document setting out the progress that’s been made so far in separation talks, according to a person familiar with the discussion. While there’s still skepticism from some members, including France and Germany, of a breakthrough at a summit mid-December, negotiators anticipate an improved offer on the bill soon that could end the impasse, the person said.

If the two sides fail to reach agreement on the joint document by the beginning of next month, then cliff edge Brexit may become all but unavoidable, as patience on both sides is wearing thin, according to some participants in the meeting. In the meantime, internal preparations continue on a negotiating mandate to discuss trade, and the feeling is that a Canada-style deal, adjusted for the U.K’s geographical proximity, can be struck, according to the person.

That model -- while considered the most ambitious of all EU accords -- falls short of what the U.K. has in mind. The EU insists that Britain can’t enjoy the preferential access to the bloc’s single market reserved for countries including Norway, while resisting the strings attached to that model, including continuing alignment with Brussels-generated rules and standards for goods and services.

In London, International Trade Secretary Liam Fox struck a defiant tone, telling lawmakers on Thursday that Britain won’t be “dictated” by the EU on what to do in areas including standards for the quality of products. “We will determine in the United Kingdom what we think those should be, and then we will negotiate with any of those countries that are willing to negotiate on those terms,” Fox said.

Brexit Countdown: Key Dates on the Way to December’s Deadline

The U.K. wants the best trade deal that’s ever been struck with the EU -- with financial services included -- and on top it also seeks accords with countries such as the U.S. -- where regulations are dramatically different to those of the bloc. Trade experts say nations can’t enjoy both privileges. 

“It is not only about rules or laws. It is about societal choices -- for health, food standards, our environment and financial stability,” EU’s chief negotiator Michel Barnier said earlier this week.

More than a year after the referendum that triggered Brexit -- and with just 16 months to go until the U.K. departs -- negotiations have still not broached trade, nor the crucial transition period that businesses are crying out for to smooth the exit process.

If an agreement isn’t reached in December so that trade talks can start, the chances of a chaotic breakup increase.

Breakthrough Near

With eyes on a December deal, May will meet European Council President Donald Tusk on Friday. Tusk tweeted on Wednesday that he was meeting Barnier to prepare for the Brexit meeting. Tusk and May met last week on the sidelines of a summit in Gothenberg, Sweden.

“Whatever May said to Tusk in Gothenburg appears to have impressed the EU side,” Charles Grant, director of the influential Centre for European Reform think tank, said in an interview.

Grant puts the chances of a breakthrough in December at about 60 percent to 70 percent, and said a dinner between European Commission President Jean-Claude Juncker and May on Dec. 4 is expected to be a key moment.

While the U.K. has made clear it’s preparing to offer more cash -- as long as the EU side gives something in return -- the issue of the Irish border could still derail progress. Both sides have said it’s up to the other to propose solutions, while all options proposed so far are unacceptable to either.

On the issue of citizens rights, negotiators told envoys that there’s 95 percent convergence between the two sides, according to the person familiar with the discussions, including a piecemeal approach to the role of the European Court of Justice.

While some major points have been sorted out, the situation isn’t such that one can say “that there has been sufficient progress to embark upon the second part of the negotiations, about the future of the relationship,” Juncker said on Thursday, adding that he’s “not crazy enough” to say whether May will increase her financial offer.

— With assistance by Tim Ross, and Catherine Bosley

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