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Brexit talks stall as UK resists EU demands on fair competition

Negotiations between the UK and the EU on their post-Brexit future relationship have become deadlocked, negotiators admitted on Friday, prompting calls for both sides to change approach ahead of a crucial summit in June.

At the end of the third round of talks between Brussels and the UK, David Frost, Britain’s chief Brexit negotiator, said discussions had stalled because of disagreements over the EU’s demands on the so-called level playing field. The bleak assessment was shared by his EU counterpart Michel Barnier who said the two sides risked reaching a “stalemate”.

The chief negotiators’ comments underlined that, with only one scheduled negotiating round left before the EU and UK take stock in June, the two sides have little progress to show for their efforts and remain deeply divided.

Boris Johnson has previously threatened to walk away from the negotiations if insufficient progress has been made by next month’s high-level talks between the prime minister and EU institutional leaders. Britain has mooted the alternative of an “Australia-style” deal — a relationship where both sides trade on basic World Trade Organization terms, similar to a no-deal Brexit. 

Following a week of talks conducted by video conference, the major stumbling block is over the EU demands requiring the UK to apply similar standards to the EU on areas such as the environment and labour law even after Britain’s standstill transition period expires at the end of this year. Mr Frost attacked the EU’s attitude and accused the bloc of being unreasonable.

“We made very little progress towards agreement on the most significant outstanding issues between us,” Mr Frost said, adding it was “hard to understand why the EU insists on an ideological approach which makes it more difficult to reach a mutually beneficial agreement”.

“[It would] bind this country to EU law or standards, or determine our domestic legal regimes, in a way that is unprecedented in free trade agreements,” he added.

Mr Barnier responded by accusing Britain of seeking to continue to reap the benefits of the single market while escaping its rules, and of a lack of realism. 

“Why should we help British businesses to provide their services in Europe when we would have no guarantee that our businesses would get fair treatment in the UK?” Mr Barnier said.

“We are not going to bargain away our European values to the benefit of the British economy. Economic and trade fair play is not for sale. It is not a nice to have, it is a must have.”

EU access to UK fishing waters has become one of the major flashpoints of the talks © Annie Sakkab/Bloomberg

On the other vexed issue of fishing rights, Mr Frost said both sides were no closer to an agreement.

“The EU continues to insist on fisheries arrangements and access to UK fishing waters in a way that is incompatible with our future status as an independent coastal state,” he added. Mr Frost described the EU’s proposals as “manifestly unbalanced and against the interests of the UK fishing industry”.

He added: “We very much need a change in EU approach for the next round” of talks, which are due to begin on June 1 — the last before the summit of EU leaders and Mr Johnson later in the month. Mr Frost also announced that the UK would publish its draft legal texts of a trade deal next week.

Mr Barnier was more positive on fish, saying that both sides were moving from “maximalist” positions in order to “look at the [fishing] quotas species by species”. 

On the general state of the talks, he said: “The UK will have to become more realistic, it will have to move beyond its lack of understanding, it will have to change its strategy.” 

If a deal cannot be struck, the Johnson government has repeatedly insisted it will not seek an extension and will leave the EU’s single market and customs union with no trade deal on December 31.

EU officials insist that a deal must be struck by October to be ratified in time, leaving barely seven months for the future-relationship talks, which cover everything from freight to fighting terrorism.

This article was first published at https://www.ft.com/content/76a846de-b9a6-45fd-b58e-7910e327d30a

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The Markets Today