Crunch post-Brexit trade talks get underway as Boris Johnson and Ursula von der Leyen dine in Brussels
Crucial crunch talks aimed at salvaging a post-Brexit trade deal between the UK and the EU are underway in Brussels.
Boris Johnson has travelled to the European Commission headquarters to dine with president Ursula von der Leyen and hold talks, after negotiations between officials ended in deadlock.
Time is running out to reach a deal before the deadline of December 31, when the UK stops following EU trading rules.
If no deal is reached, World Trade Organization tariffs will be imposed on imports and exports between the UK and the bloc.
Earlier, the prime minister tweeted a picture of him boarding a plane, saying: "A good deal is still there to be done.
"But whether we agree trading arrangements resembling those of Australia or Canada, the United Kingdom will prosper mightily as an independent nation."
The two negotiators and a "handful of other officials from both sides" will join Mr Johnson and Ms von der Leyen at the dinner, at which the "main issues" of fisheries, level playing field and governance will be discussed.
Brexit trade talks - the sticking points at a glance:
- Fishing rights: The UK wants total control over its own fishing waters after the Brexit transition period ends, with a 12 mile exclusion zone around the British Isles banning all foreign vessels. The EU wants the UK to stick to the Common Fisheries Policy, an EU agreement which gives member nations the rights to fish in European waters - more here.
- Level Playing Field: This is a concept all EU nations agree to, which ensures member nations cannot undercut others by setting their own rules on issues such as the environment, taxation and state aid. The EU says a zero-tariff trade deal is dependent on the UK agreeing to a level playing field. The UK disagrees, saying a fundamental aspect of Brexit is that the UK will be able to set its own rules.
- Governance of a deal: It's likely that any trade deal will eventually result in disputes. The EU wants the European Court of Justice to be the final authority in ruling over disputes. The UK says the ECJ should have no role and final decisions should be made by a bespoke arbiter.
The PM's press secretary Allegra Stratton said Mr Johnson "feels that there is a good deal to be done but he and von der Leyen both believe that there needs to be some political momentum now".
It is hoped the discussions could pave the way for fresh talks between Lord Frost for the UK and the EU's chief negotiator Michel Barnier in the coming days.
Their meeting comes ahead of a European Council summit on Thursday where Ms von der Leyen is expected to debrief the leaders of the 27 member countries on the state of play with the negotiations.
During Prime Minister’s Questions earlier on Wednesday, Mr Johnson set out the main problems he has with the EU’s position, although he said “a good deal is still there to be done”.
Addressing the issues which have repeatedly stalled negotiations - issues over fishing rights, the “level playing field” measures aimed at preventing the UK undercutting the EU on standards and state subsidies, and the way that any deal would be governed - the PM said: “Our friends in the EU are currently insisting that if they pass a new law in the future with which we in this country do not comply or don’t follow suit, then they want the automatic right to punish us and to retaliate.
“Secondly, they are saying that the UK should be the only country in the world not to have sovereign control over its fishing waters.
“I don’t believe that those are terms that any prime minister of this country should accept.”
He again insisted the UK would “prosper mightily” with or without a deal – a claim which has been disputed by economic experts including the Office for Budget Responsibility and the governor of the Bank of England.
Failure to reach an agreement would see tariffs imposed on UK exports to the EU, the country’s biggest trading partner, and could also increase bureaucracy.
The Office for Budget Responsibility has suggested that a no-deal outcome could wipe 2% off gross domestic product, a measure of the size of the economy, in 2021.
The Bank’s governor Andrew Bailey has warned that the long-term damage caused by a no-deal situation would be worse than the economic hit from coronavirus.
Speaking ahead of the trip, Ms Stratton said: “The prime minister is going to be clear this evening that he cannot accept anything that undermines our ability to control our laws or control our waters.
“He is going to put that clearly to von der Leyen and see what her response is.”
The dinner comes amid a backdrop of pessimism from both sides, with UK sources acknowledging “an agreement may not be possible”.
And the EU’s negotiator Mr Barnier has warned the bloc’s foreign ministers that a no-deal scenario is more likely than an agreement.
But Cabinet Office Minister Michael Gove suggested there could be a limited compromise over fishing rights, with the UK prepared to be “very generous” in the way changes are phased in.
Yet he also told BBC Radio 4’s Today: “What is not up for compromise is the principle that the UK will be an independent coastal state and it will be a matter for negotiation between the UK and the EU, with the UK in control of our waters.”
German chancellor Angela Merkel stressed the importance of the “level playing field” to protect the EU’s single market – the rules governing trade in the bloc.
She told the parliament in Berlin: “We must have a level playing field not just for today, but we must have one for tomorrow or the day after, and to do this we must have agreements on how one can react if the other changes their legal situation.
“Otherwise there will be unfair competitive conditions that we cannot ask of our companies.”
Meanwhile, traders were hedging their bets that a Brexit deal could finally be signed, with the pound rising just 0.26% against the dollar. It was also up 0.47% against the euro as markets closed for the day.
Neil Wilson, financial analyst at Markets.com, said: “This only shows that traders think both outcomes – deal or no-deal – are still very much in the running.
“We await signals from the dinner between Boris Johnson and Ursula von der Leyen this evening.”