Is a UK-EU deal now unlikely? The questions needing answers in this autumn's trade talks

Tue 1 Sept 2020
Posted by: William Barns-Graham
Trade News

brexit disputes

Parliament is returning from its summer recess this week, but talks have been ongoing throughout the summer between the UK and the EU over their future trading relationship.

The latest round of talks – which concluded on 21 August – failed to break the deadlock, with EU chief negotiator Michel Barnier accusing the UK government of “wasting valuable time”. He also said the prospect of a deal was now “unlikely”.

Barnier is due to meet his UK counterpart David Frost for informal talks in London today (1 September), according to the Times.

Below are the key issues which need to be resolved before the transition period finishes on 31 December 2020.

State aid and fisheries

After the last set of talks Frost said the EU would not progress the talks in any area until the UK accepts “continuity with EU state aid and fisheries policy”.

The UK continues to demand greater independence in the subsidies it sets and views state aid as an important tool to assist its economic recovery from the coronavirus pandemic.

However, the EU has continually called its own demands for ‘level playing field rules’ an important ‘red line’ in the talks, leaving the talks in a standstill.

The Times also reports that Barnier is currently refusing to discuss fisheries due to his ‘parallelism policy’ under which he will not progress any negotiating point until the UK makes initial concessions.

Other logjams

Access to the EU market for UK truckers also emerged as a contested issue in the talks during August.

According to the FT, the UK wants British truckers to be able to continue making pick-ups and drop-offs inside and between EU member states – a process known as “cabotage”. However, the EU has said this level of access would be too similar to that granted to members of the single market.

The Guardian has also reported that the UK is trying to reopen discussions on regionally protected specialty foods and drinks such as Parma ham and champagne, leaving Michel Barnier ‘flabbergasted’.

The UK and EU already agreed to preserving over 3,000 protections in the Withdrawal Agreement last year.

Time running out

The next set of formal talks are due to start on 7 September and an EU official told Politico that progress in next week’s talks was critical.

"If we don't have a breakthrough next week, it's hard to see how we can still avoid a disaster," they said.

It has also been suggested by officials that a deal needs to be secured by the European Council summit on 15-16 October for there to be sufficient time for ratification in European parliaments ahead of the end of the transition period on 31 December.

Is the UK ready?

Even if the UK and EU do not reach a deal, firms sending goods between the EU and UK and Great Britain and Northern Ireland will be required to complete customs paperwork for the first time, as a result of the UK leaving the single market and the Northern Ireland Protocol agreed to in the Withdrawal Agreement.

However, customs checks will be introduced in three phases over a six-month period from the start of next year for firms importing goods into Great Britain from the EU.

Research commissioned by logistics platform Descartes Systems published today found that almost a half (45%) of UK firms are concerned about delays to the supply chain as a result of the transition period finishing on 31 December 2020.