ReutersGabriela Baczynska and John Chalmers and Guy FaulconbridgePublishing

date:Dec 07, 2020  •  Last Updated 7 hours ago  •  3 minute read

BRUSSELS/LONDON — Post-Brexit trade talks hung in the balance on Monday as Britain and the European Union made a last-ditch attempt to bridge significant differences and reach a deal that would avoid a disorderly exit in just 24 days.

With growing fears of “no-deal” chaos after the United Kingdom finally leaves the EU’s orbit on Dec. 31, talks will resume in Brussels before British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen review the situation on Monday evening.

Irish Prime Minister Micheal Martin said on Sunday the chances of a deal were 50-50. Investment bank JPMorgan said odds of a no-trade deal exit had risen to one third from 20%.

The British pound tumbled on concerns that there would be no agreement covering annual trade worth nearly $1 trillion.

EU chief negotiator Michel Barnier was “rather downbeat as to the prospects of agreement” when he spoke to national envoys over orange juice and pastries in Brussels on Monday morning, according to one diplomat who took part in the meeting.

“EU-UK negotiations have entered the endgame, time is running out quickly,” another EU diplomat said. “It is for the UK to chose between… a positive outcome or a no deal outcome.”

In London, a lawmaker in Johnson’s governing Conservative Party said France would have to make concessions on fishing, and the EU would have to drop what he said were new demands on fair competition known as the level playing field.

Irish Foreign Minister Simon Coveney told RTE News: “I’d like to be giving more positive news but at the moment these negotiations seem stalled, and the barriers to progress are still very much in place.”

Britain, which joined the EU in 1973, formally left the bloc on Jan. 31 but has been in a transition period since then under which rules on trade, travel and business remain unchanged.

For weeks, the two sides have been haggling – as yet without a result – over fishing rights in British waters, ensuring fair competition for companies and ways to solve future disputes.

The Sun newspaper reported that Johnson, a figurehead for Britain’s campaign to leave the EU, was ready to pull out of the talks within hours unless the EU changed its demands.

NO DEAL?

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

Sterling fell 1% to 2-1/2 week lows against the dollar to $1.328, a U-turn in market sentiment from Friday when it had risen above $1.35 for the first time this year.

With just days left for a deal to be agreed, EU diplomats said it a decisive moment for both the United Kingdom and the bloc which built the ruined nations of Europe into a global power after the devastation of World War Two.

In a move that could further undermine the talks, the British government will press ahead with draft laws this week that would breach London’s earlier divorce treaty with the bloc.

Junior Foreign Office Minister James Cleverly said on Monday the clauses that breach the treaty would be re-inserted.

(Additional reporting by Elizabeth Piper, Sujata Rao-Coverley, Paul Sandle and Sarah Young in London, and Conor Humphries in Dublin, Writing by Guy Faulconbridge and John Chalmers, Editing by Timothy Heritage)

… Monday as Britain and the European Union made a last-ditch attempt … trade worth nearly $1 trillion. EU chief negotiator Michel Barnier was … in the meeting. “EU-UK negotiations have entered the … running out quickly,” another EU diplomat said. “It …

Turkish President Recep Tayyip Erdogan appeared intransigent on his country’s stance in the eastern Mediterranean and tensions with Greece, Cyprus, and the EU, calling on the latter to avoid acting “willfully blind” and serving the two countries.

In a video message at a Turkish university workshop on the Eastern Mediterranean, Erdogan said: “The Eastern Mediterranean has been at the centre of developments in recent years and many countries are watching what is happening. Turkey, the country with the largest coastline in the Mediterranean, cannot follow the developments … from the sidelines. We are closely monitoring what is happening to protect our own interests and the interests of the Turkish Cypriots.”

“We have clarified that we will not accept plans and maps aimed at limiting Antalya (coast of southeastern Turkey). We do not seek to violate anyone’s interests and laws. But we will not yield to blackmail, threats, pirate behaviour, we will not allow plans for imperialist expansion. We want to leave behind what happened in the previous months,” the Turkish president continued.

“We want to continue with mutual respect and dialogue to solve the problems, without excluding anyone from the solutions. We must give space to diplomacy if we want a permanent solution “, he added and then took aim at Greece, Cyprus, and the EU.

“We maintain our composure in matters with Greece and Cyprus after 2003. We also maintain the same compromising attitude today. The European Union must get rid of its strategic blindness as soon as possible and must not allow itself to be used as a “spearhead” in the Eastern Mediterranean by Greek Cypriots and Greece. The Union, in the name of solidarity, must not be unfair to Turkey.”

The EU is scheduled to meet in the week to discuss sanctions against Turkey as a result of its belligerent stance in the region.

“European Union foreign ministers will discuss measures against Turkey during their meeting today, as there has been no de-escalation of the conflict in the eastern Mediterranean in recent months”, German foreign minister Heiko Maas said today.

“Germany has worked hard over the past few months to facilitate a dialogue between the European Union and Turkey,” Heiko Maas said before meeting with his European counterparts.

“But there have been too many challenges, and tensions between Turkey, Cyprus, and Greece have prevented any direct talks,” he added.

“That is why we are going to talk about the consequences we have to draw – also in view of this week’s EU summit,” he said.

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EU member states cannot find a common ground to respond to an escalating situation with Turkey ahead of a crucial summit later this week, EURACTIV has learnt.

“The feelings in Brussels are numb”, diplomatic sources told EURACTIV on Friday (4 December).

On 10-11 December, EU leaders will meet to discuss again the bloc’s next steps regarding Turkey following a series of disagreements on a number of issues ranging from illegal gas drillings in the Eastern Mediterranean to involvement in Nagorno-Karabakh or Libya, and a recent standoff in the France-Turkey relations.

In theory, the December summit is the deadline set by EU leaders to give Ankara time to de-escalate and move toward a positive agenda with Europe.

“I think that the cat and mouse game needs to end,” EU Council chief Charles Michel said in reply to a question by EURACTIV last Friday.

“We will have a debate at the European summit on 10 December and we are ready to use the means at our disposal”, he said. However, he did not mention the word ‘sanctions’.

The sources admitted that it’s now common knowledge that Turkey has done nothing positive to improve its chances at the summit. However, some EU countries are still cautious to impose sanctions against Ankara.

On 30 November, Turkey’s Oruç Reis survey vessel returned to the southern port of Antalya from Mediterranean waters. The same happened ahead of a previous EU summit in October, when Turkey avoided sanctions and EU leaders decided to revisit the issue in December.

The two fronts

On 25 November, sources close to the issue told EURACTIV that Turkish President Recep Tayyip Erdoğan would back down at first sign of EU unity.

However, achieving EU unity seems to be a long shot.

Led by Germany, a group of countries (Italy, Spain, Malta) invoke a number of arguments against imposing sanctions such as the return of Oruç Reis to Turkey or push for a “wait and see” approach, according to which Europe’s reaction should align with the stance toward Turkey of the new US administration.

In addition, particularly in Berlin, policymakers claim that Turkey’s role in migration should also be taken into account.

Another argument is the role of the bilateral NATO’s deconfliction mechanism introduced on 1 October. In Athens, critics suggest that this mechanism is of low value practically and apparently Greece was under huge political pressure to accept it.

Well-informed sources told EURACTIV that at the last summit, Germany rejected a Greek proposal to impose sanctions the first time Turkey takes a new provocative action.

Instead, Germany invoked NATO’s deconfliction mechanism as an adequate measure in case of a new Greek-Turkish confrontation.

In Madrid, analysts estimate that “Real Politik will prevail”.

“Turkey is one of Spain’s key trade partners. Spain has increased its investments in Turkey from 2012 to 2019 by between 3 and 4% per year. Turkey is one of the main destinations for Spanish exports of automobiles and other metallurgical resources, while Turkey exports a large quantity of textile products to Spain,” sources said.

These countries, according to the sources, would prefer to postpone the thorny issue until the next EU summit in March.

Portugal, which will take over the EU rotating Presidency after Germany, keeps a low profile on the issue. But critics suggest that Lisbon does not want to inherit Turkey’s “hot potato”.

Regarding Bulgaria’s leader Boyko Borissov, who is known as a close friend of Erdoğan, sources said his reaction was unpredictable.

Another group of countries push for a stricter EU stance. Together with Greece and France stand Cyprus, Austria, Slovenia and Slovakia.

Probable scenarios

The sources do not rule out “light sanctions” similar to the ones imposed on Ankara due to its illegal gas drillings off Cyprus.

The best-case scenario according to Athens, would be for EU leaders to give a mandate to EU top diplomat Josep Borrell to come up with a list of “written sanctions” in case Turkey continues escalating.

At a meeting of foreign minister in Berlin last August, Borrell presented some “options” to deal with Turkey. However, these options have only been presented orally and have never been put on a paper.

However, a new written list of sanctions will not be adopted at this summit.

Sources said such a list could be adopted at a foreign affairs meeting in January but it’s highly likely that it will be discussed at the March EU summit. In practice, this will mean granting Ankara another grace period.

Michel’s international conference hits the wall

In addition, sources say diplomatic efforts are currently taking place in order to come up with conclusions on Turkey before the summit, as there are fears that the veto posed by Hungary and Poland on the Recovery Fund and the Brexit deadlock will likely overshadow the discussion over Turkey.

Last but not least, EURACTIV was informed that Michel’s initiative for a Multilateral Conference on the Eastern Mediterranean involving all non-EU partners of the region is apparently failing.

Sources said Egypt, a key player in the region, refuses to sit at the same table with Turkey.

Last-ditch discussions between the U.K. and the European Union over future trade ties are set to resume in Brussels later Sunday, two days after they were “paused” amid “significant differences” on an array of issues.

Britain’s main negotiator, David Frost, arrived in the Belgian capital on Sunday to pick up discussions with his EU counterpart, Michel Barnier.

READ MORE: Post-Brexit trade talks to continue Sunday after pause during decisive stage

The meeting was authorized by European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson after a telephone call on Saturday.

The two leaders noted that fundamental differences between the two sides remain over the “level playing field” — the standards the U.K. must meet to export into the bloc — how future disputes are resolved and fishing rights for EU trawlers in U.K. waters. Still, they said a “further effort should be undertaken by our negotiating teams to assess whether they can be resolved.”

Negotiators may only have until Monday evening to make some headway. Johnson and von der Leyen said they would talk again and underlined that “no agreement is feasible if these issues are not resolved.”

With the U.K.’s post-Brexit transition period due to end this year, the discussions are clearly at a crunch point, not least because of the necessary approvals required on both sides after negotiators reach a deal. Without an agreement in place, tariffs will end up being imposed on traded goods at the start of 2021.

Both sides would suffer economically from a failure to secure a trade deal, but most economists think the British economy would take a greater hit, at least in the near-term, as it is relatively more reliant on trade with the 27-nation EU than vice versa.

© 2020 The Canadian Press

LONDON — The European Union and the United Kingdom decided Saturday to press on with negotiating a post-Brexit trade deal, with all three key issues still unresolved ahead of a year-end cutoff.

European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson said after a phone call that their negotiators will return to the table today as fundamental differences persist over the rules for fair competition, legal oversight of the deal and fishing rights for EU trawlers in U.K. waters.

“Significant differences remain,” the two leaders said in a statement after their tea-time call to assess the state of play over the future relationship.

While the U.K. left the EU on Jan. 31, it remains within the bloc’s tariff-free single market and customs union through Dec. 31. Reaching a trade deal by then would ensure there are no tariffs and trade quotas on goods exported or imported by the two sides, although there would still be technical costs, partly associated with customs checks and nontariff barriers on services.

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The talks would surely have collapsed by now were the interests and economic costs at stake not so massive. But because the EU is an economic power of 450 million people and Britain has major diplomatic and security interests beyond its commercial might, the two sides want to explore every last chance to get a deal before they become acrimonious rivals.

“Whilst recognizing the seriousness of these differences, we agreed that a further effort should be undertaken by our negotiating teams to assess whether they can be resolved,” Johnson and von der Leyen said after speaking for about an hour.

“We are therefore instructing our chief negotiators to reconvene tomorrow [Sunday] in Brussels,” the pair said in their statement, adding that they would reassess the chances of success Monday night.

The two leaders noted that progress has been achieved in many areas but that divisions remain on fishing rights, the “level playing field” — the standards the U.K. must meet to export into the bloc — and how future disputes are to be resolved.

“Both sides underlined that no agreement is feasible if these issues are not resolved,” von der Leyen and Johnson said Saturday.

An EU source, who spoke on condition of anonymity because the talks were ongoing, said the fair competition rules that the U.K. should meet before it can export tariff-free into the 27-nation bloc were still a major stumbling block.

At the heart of the negotiations is reconciling how Britain wrests itself free of EU rules with the bloc’s insistence that no country, however important, should get easy access to its lucrative market by undercutting its high environmental and social standards.

The politically charged issue of fisheries also continues to play an outsized role. The EU has demanded widespread access to U.K. fishing grounds that historically have been open to foreign trawlers. But in Britain, gaining control of the fishing grounds was a main issue for the Brexiteers who pushed for the country to leave the EU.

With the U.K.’s post-Brexit transition period due to conclude, the discussions are clearly at a crunch point, not least because of the necessary approvals required on both sides after negotiators reach a deal. Without an agreement, tariffs will end up being imposed on traded goods at the start of 2021.

Both sides would suffer economically from a failure to secure a trade deal, but most economists think the British economy would take a greater hit, at least in the near term, as it is relatively more reliant on trade with the EU than vice versa.

The EU’s chief Brexit negotiator, Michel Barnier, appears ready to go again.

“Work continues tomorrow,” he said in a tweet Saturday.

“If Hungary and Poland still refuse to confirm the current state of affairs, it will be necessary to find a more radical solution, which means that the recovery plan for Europe will include 25 [EU members]. Legally, it is complicated but possible. Our stance is clear: we will not sacrifice either recovery [package], nor the rule of law”, Beaune said on Sunday in an interview with Le Journal du Dimanche.

The leaders of the EU’s member states struck a deal to create a 750 billion euro ($909 billion) COVID-19 recovery fund, named NextGenerationEU, back in July. However, controversy has arisen as the bloc seeks to make access to the funds contingent on the observation of European values, such as democratic norms and respect for the rule of law.

At a meeting of the Permanent Representatives Committee (Coreper II) on 16 November, Poland and Hungary refused to give their consent to the recovery fund in opposition of the rule of law mechanism, outlining their belief that it could result in double standards applied to different EU members.

They also refused to approve the bloc’s proposed 1.074 trillion euro budget, which is expected to run from 2021 through 2027, disrupting the European Union’s plan to adopt it before the end of the year.

European Commission President Ursula von der Leyen urged Poland and Hungary on 25 November to take their dispute to court, rather than hold up efforts to approve the budget and recovery fund.