No-deal still possible despite progress in UK talks: EU

BRUSSELS • The head of the European Union's executive has reported "genuine progress" in Brexit talks but said the risk of Britain leaving the EU without a new trade deal on Dec 31 remained, an outcome she said the bloc was prepared for.

Britain and the EU are in a last-ditch effort to agree on terms to keep trade flowing without tariffs or quotas from the start of next year, after London's current standstill transition out of the 27-nation bloc ends. "The next days are going to be decisive," said European Commission president Ursula von der Leyen yesterday. "The European Union is well prepared for a no-deal scenario, but of course we prefer to have an agreement."

She added: "With very little time ahead of us, we will do all in our power to reach an agreement. We are ready to be creative. But we are not ready to put into question the integrity of our single market."

Negotiators have agreed on the outline of a new partnership treaty on goods and services, as well as on transport, she said, adding that "genuine progress" had been made on issues from judicial cooperation to coordinating welfare benefits.

An EU official involved in the negotiations said a deal was possible, but not likely before the weekend at the earliest.

The three main obstacles to a deal are sharing out fishing quotas and agreeing on access to waters, finding ways to settle future disputes, and ensuring economic fair play for companies, including on state aid.

"We need to establish robust mechanisms, ensuring that competition is - and remains - free and fair over time. In the discussions about state aid, we still have serious issues, for instance when it comes to enforcement," said Dr von der Leyen.

The German conservative said the EU needed to be able to retaliate on trade if Britain undercuts labour or environmental standards, and wanted long-term predictability for its fishing sector, which faces a reduced catch after Brexit.

A senior British minister, Mr Michael Gove, said on Tuesday that the EU would have to move for there to be a new partnership agreement.

EU states have pushed the commission - which is negotiating with Britain on behalf of the bloc - to update contingency plans for a no-deal outcome, though the executive has so far held off.

The official involved in the talks said the plans would be updated only next week if a deal has still not been reached, adding that EU and British ideas for solutions on the three main contentious issues - which include putting transition periods and review clauses in the deal - were "dramatically different".

While the EU wants to lock in joint production standards for the future, as well as ensuring a long-term perspective for its fishing industry, the official said, Britain wanted to be able to drop any such commitments after several years.

REUTERS