Is the UK finally ready to blink in Brexit trade deal talks with the EU?

As discussions get back under way in Brussels, European negotiators sense a new air of urgency from the British side, writes Adam Forrest

(Reuters)

Recent Brexit talks have followed a wearily familiar pattern. The UK’s chief negotiator David Frost and his counterpart Michel Barnier share a luxurious meal together, their teams hunker down for a few days – then the pair emerge to say “significance divergences” remain.

As the seventh round of discussions kicks off in Brussels on Wednesday (following the latest Frost-Barnier supper summit last night), few expect an imminent breakthrough.

And yet there is reason to suspect a free trade agreement – needed to prevent Britain from trading on World Trade Organisation (WTO) terms when the transition period ends at the end of December – may be possible in the weeks ahead.

In recent days both Mr Frost and Boris Johnson’s spokesman at No 10 have been keen to talk about forging a deal in September. A sign of desperation, perhaps?

EU officials believe the UK side is hungrier than ever to make a deal happen in 2020, following recent setbacks in attempts to forge independent trade deals with the US and Japan.

A London-Tokyo agreement seemed possible this summer until negotiators hit a stumbling block over Stilton, as trade secretary Liz Truss insisted on making blue cheese tariffs part of the negotiations.

Although Ms Truss is set to meet with US counterpart Robert Lighthizer in the coming weeks, there is an understanding a deal with Washington won’t be possible this side of the presidential election.

New Zealand didn’t exactly help by suggesting the British are out of shape when it comes to deal-making. Winston Peters, the country’s deputy prime minister, said the UK was not “match fit” to negotiate its own agreements after EU membership.

“The UK desperately needs this deal,” one EU official involved in the talks told Politico this week about the air of desperation on the British side. “If the clock is ticking, reality will start to sink in in London … surely the pandemic and the lack of trade alternatives must lead to some reason in London.”

Some what are the remaining sticking points? The UK and EU sides remain at loggerheads over fisheries, regulatory alignment, the role of the European Court of Justice, and the overall shape of a deal.

Mr Frost hinted last month that the UK was willing to compromise on “simpler structures” following the EU’s concerns about too many mini-agreements. Brussels, meanwhile, is thought to have finally grasped the political “sensitivity” of the Court of Justice of the European Union’s jurisdiction inside the UK.

Which leaves regulatory alignment and fish. The EU is particularly insistent that a deregulated UK would undercut European products. The EU wants the UK to sign up to the bloc’s rules on state aid, but No 10 wants complete independence on subsidising British firms.

On fisheries, Downing Street maintains that it’s a matter of national sovereignty rather than quid-pro-quo over quotas – it wants to decide how much foreign fishermen can catch in British territorial waters.

A spokesman for the EU Commission said Brussels wants an “ambitious and fair partnership with the UK”, but a deal must be achieved by the end of October for it to be ratified in time. Despite the big differences, a lot of the uncontroversial stuff has already been worked through. If breakthroughs can be made, a legal text could emerge quite quickly.

Commentators spent much of last summer talking about the gloomy mood music – before both sides pushed through the so-called “tunnel” of intense discussions and emerged on the other side with a withdrawal agreement.

However unlikely a deal may seem after so much sour rhetoric, the incentive to reach an agreement is strong and getting stronger all the time. Don’t rule out the possibility that Mr Frost and Mr Barnier will leave their polite dinners aside, and head down the tunnel in earnest instead.