Final occasion for concluding EU-UK free trade deal at Brussels summit

The summit was meant to provide the very last occasion for concluding a free trade deal between Britain and the EU, but no such deal appears to be in the offing. PHOTO: EPA-EFE

LONDON - European Union leaders are gathering in Brussels today for a summit which, according to British Prime Minister Boris Johnson, was meant to provide the very last occasion for concluding a free trade deal between Britain and the rest of the continent.

No such deal appears in the offing and, in last-minute talks on the eve of the summit, Mr Johnson appears to have moved the goalposts by claiming that he would be happy to get just "a confident sign" that a trade deal is feasible to be satisfied with progress in the negotiations.

In theory, that provides both sides with some respite.

Still, time remains very short, and few of the critical areas of disagreement between the two have been addressed, let alone resolved. "The negotiations are in a difficult phase", admitted Mr Michel Barnier, the EU's chief negotiator with Britain.

The British formally left the European Union in January, subject to a transition period which keeps their trade relations with Europe unchanged, but that runs out at the end of the year.

If no free trade deal is concluded, full border controls and Customs duties will have to go up as the clock strikes midnight in the new year, inflicting incalculable damage to trade with what is now the EU's third-largest trading partner, after the US and China.

Both sides want to avoid such a disastrous outcome. But both sides have refused to budge, claiming that they do not fear the collapse of the negotiations and are fully prepared for every eventuality.

There are three major sticking points. The first is the EU demand that, in return for a free trade deal, Britain promises not to undercut EU manufacturers and traders by offering special subsidies to its own producers.

Second, the EU wants its own courts to get powers to judge any future trade disputes with Britain. And then, there is the European demand to continue enjoying the same free access it had to Britain's fishing waters, which are particularly rich and a major source of revenue, especially for French fishermen.

The British are prepared to give a guarantee not to undercut the EU in subsidies. But they are not prepared to subject themselves to EU courts or allow unrestricted fishing in their waters; as Mr Johnson frequently points out, the whole purpose of leaving the EU was not to be subjected to such demands.

Still, many of the current positions are posturing. In private, EU negotiators have accepted that they may need to invent a new process of dispute resolution with the British, separate from European courts.

And all diplomats know that the dispute about fishing is ridiculous. Fishing accounts for not more than 0.1 per cent of the economies of either the United Kingdom or the European Union, so it would be strange if a spat over fish torpedoes negotiations over €500 billion (S$800 billion) worth of bilateral UK-EU trade.

But sensitive political calculations matter. French President Emmanuel Macron, already under attack from his rural voters for ignoring their interests, cannot afford to carry blame for sacrificing the livelihood of his fishermen.

And Mr Johnson also must be careful, for a concession on fishing will be hugely unpopular with fishermen in Scotland, where demands for formal separation from Britain are increasing.

On the eve of the summit, German Chancellor Angela Merkel, whose country holds the rotating presidency of the EU for the remainder of this year, has tried to cool tempers by emphasising the need for compromise.

"We have to take into account the reality", she said, " that an agreement has to be in the interests of both parties, in British interests as well as the interests of the 27-member European Union".

Chancellor Merkel's appeal was welcomed by both sides. Still, it is not without its own dangers.

For the British have always entertained the hope that, when trade talks with the EU get stuck, it would be Dr Merkel, as leader of Europe's biggest nation, who will step in and force other EU member-states to accept a compromise.

British negotiators may therefore now think that the German leader's appeal for a compromise is a prelude for German pressure on the French to relent over fisheries.

Yet the British may well be wrong not only in interpreting Germany's position, but also in assuming that their interminable problems continue to preoccupy the rest of Europe.

For with Covid-19 cases rising again to crisis levels and the recession deepening, EU leaders would be excused if they relegate the fate of a country which is no longer in their Union to the margins of their summit.

Join ST's Telegram channel and get the latest breaking news delivered to you.