Johnson's emergency coronavirus lockdown adds to pressure on Brexit talks

People familiar with both sides' positions said the talks should wrap up before Christmas. PHOTO: AFP

LONDON (BLOOMBERG) - British Prime Minister Boris Johnson's emergency virus lockdown is heaping last-minute pressure on negotiators as they race to reach a post-Brexit trade deal.

Officials said the announcement has focused minds on bringing the talks to a conclusion within days.

As the British Prime Minister was detailing the new restrictions for London and South-east England on Saturday (Dec 19), negotiators in Brussels were inching closer towards an agreement.

People familiar with both sides' positions said the talks are unlikely to wrap up on Sunday, but should do so before Christmas.

Whether nine months of talks between the UK and European Union result in a trade accord will depend on the two sides bridging their disagreements over fishing, the last remaining major obstacle.

But that is proving difficult: European countries with large fishing industries are resisting any further concessions proposed by the European Commission.

Nevertheless, officials from both sides said the gap can still be bridged.

"The EU are still struggling to get the flexibility needed from member states and are continuing to make demands that are incompatible with our independence," a UK government official said in a statement.

"We're continuing to try every possible path to an agreement, but without a substantial shift from the commission, we will be leaving on WTO terms on Dec 31."

Cost of failure

Failure to reach a trade deal would mean the UK doing business with its largest and nearest commercial partner on terms set by the World Trade Organisation, meaning millions of businesses and consumers would face the cost and disruption of tariffs and quotas.

The pandemic has heavily disrupted the post-Brexit trade talks since they started in March.

Both chief negotiators were forced into isolation after displaying symptoms early in the process, and for months, the two sides could talk only by video link.

With most other major issues now settled, the entire deal now effectively depends on how much the EU is prepared to give up of its fishing catch in UK waters.

While Britain was a member of the EU, the bloc controlled fishing rights through its Common Fisheries Policy, a system that Mr Johnson argues penalised the UK's domestic industry.

Teams from the European Commission in Brussels held a second round of talks with national capitals on Saturday.

The deliberations were tense and not straightforward, one EU diplomat said.

EU's offer

After its discussions with member states on Friday, the Commission made an offer that would see the bloc lose around 25 per cent of the current €650 million (S$1.05 billion) of fish it catches annually in British waters.

The UK rejected it, and has been pushing for the EU to give up 60 per cent, according to the officials who spoke on condition of anonymity.

The EU also offered to reduced the phase-in period of the new arrangements to six years, after originally wanting 10.

The UK rejected the offer of six and has proposed just three years.

The British team feels it has the upper hand after making recent concessions on the other major roadblock, the level competitive playing field for businesses.

But Mr Michel Barnier, the EU's chief negotiator, made clear on Friday that access to the single market will be conditional on keeping UK fishing waters open to boats from the bloc.

The talks could still break down.

Despite the cautiously optimistic tone coming from negotiating room, one person familiar with the UK government's position said a no-deal outcome remains the more likely.

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