The negotiators are considering the idea of review clauses to break the deadlock in trade talks between the EU and the UK, with the possibility that parts of the deal could be re-examined a few years after it came into force.
EU diplomats said the two sides were discussing whether review clauses and transitional arrangements had the potential to alleviate the pain of compromise needed to reach an agreement – but warned that the two sides still had very different views on how this could work .
The Brexit talks will practically resume this week after a member of the EU negotiating team tested positive for Covid-19 – the positive case forced EU chief negotiator Michel Barnier and senior members of his team to self-isolate on Thursday.
With time running out to ratify an agreement by the end of the UK’s transition period on December 31st, both sides are looking for creative compromises.
Depending on the results of the Covid-19 tests, physical negotiations can resume from Friday in London. UK Prime Minister Boris Johnson stands ready to speak to European Commission President Ursula von der Leyen about progress later this week. “We assume that this will happen at some point, whether it is a deal or not,” said a British official.
Both sides are still trying to bridge the fault lines in talks on EU opposition to loss of fishing rights in UK waters and UK opposition to EU demands for guarantees of a level playing field for business.
Time is running out. Fundamental differences still exist, but we’re still working hard on a deal
“Time is of the essence. Fundamental differences still exist, but we’re still working hard on a deal,” wrote Barnier on Monday on Twitter.
The concept of a review clause was already raised in the negotiations last week in order to overcome the impasse in the fisheries sector.
The UK suggested last week that the EU could keep some of its current quota rights for several years. After that, further negotiations on future agreements would have to be conducted.
A senior EU official at an internal meeting with national ambassadors on Friday confirmed that the EU negotiating team was ready to look into the idea, but only if the review clause was tied to the wider EU-UK economic relationship.
Such a move, the diplomats said, would allow the EU to deprive Britain of valuable access to the European market if talks over fish turn sour.
British officials confirmed that British negotiator David Frost had proposed a transitional agreement on fisheries but said it had to be “short”.
A cabinet minister said a transition would fit the UK because “we don’t have enough boats to catch all the fish in our waters” which means an interim solution would make sense while the UK builds a larger domestic fishing fleet.
However, the two sides disagree on how long a temporary agreement should last. Another key sticking point is that the UK continues to insist that access to its waters should be subject to annual negotiations despite a temporary agreement on quotas.
Those briefed on the UK’s negotiating position said the UK was nonetheless interested in sticking to the idea of review clauses to resolve issues in the talks.
According to those familiar with the negotiations, the UK believes that a trade agreement could be revised after four years, which creates the possibility, for example, of reintroducing tariffs on goods trade if the UK no longer wishes to comply with the terms of the level of competition in areas such as state aid.
However, Brussels is extremely unlikely to accept such a compromise as it repeatedly insists that tariffs can never replace the need for fair competition rules.
EU officials also pointed out that a review clause would not be needed to impose such penalties if the UK failed to meet its obligations as this would be covered by the enforcement powers enshrined in the agreement.
Meanwhile, senior officials expressed growing confidence in MPs that preparations for the new UK-EU trade border, which will come into effect on January 1, including computer systems, truck parks, will be completed on time, contrary to recent predictions from industry groups will. Customs brokers and veterinarians who are required to fill out export declarations to the EU.
Cabinet Office Permanent Secretary Alex Chisholm said “tremendous strides” had been made in preparations since investigations into a damned National Audit Office report released this month that predicted the UK was likely to have “widespread disruption” would be exposed.