The European Union and Britain decided to plough through yet another self-imposed deadline on Sunday and continue their post-Brexit trade talks, but Prime Minister Boris Johnson warned that no deal is now the most likely scenario.
“As things stand, I’m afraid we’re still far apart on key things, but where there’s life, there’s hope,” he told Sky News after a crunch phone call with European Commission President Ursula von der Leyen, where the two leaders agreed not to abandon talks.
Just a little more than two weeks remain to clinch a deal.
“We’re going to keep talking. The UK certainly won’t walk away from talks … the most likely thing now is we’ve got to get ready for World Trade Organization (WTO) terms, Australia terms,” Johnson said.
Australia launched free trade talks with the EU in 2018, but the two sides have not clinched a deal yet, meaning they still trade mainly on minimalist WTO rules, which means significantly higher tariffs for the time being. All WTO members agree to basic rules of trade, which are far less favourable than the current agreements between Britain and the EU.
After a brief phone call, the two leaders announced they had instructed their negotiators to continue “to see whether an agreement can even at this late stage be reached.”
“We think it is responsible at this point to go the extra mile,” they stated, without immediately naming another deadline.
Britain formally left the EU at the end of January, but remains a member of the bloc’s internal market and customs union until a transition period runs out at the end of the year. So far, little has changed in practice on the ground.
If no deal governing future relations is struck by the end of the month, the harshest of tariffs will be instated and cumbersome customs checks will slow down business.
Both sides must prepare for significant upheaval, in case trade is hampered by new formalities that could paralyse traffic across the English Channel.
If a deal is struck, it would also need ratification, meaning the approval process would run down to the wire.
A deal has been blocked mainly by disagreement on competition assurances – with the EU fearing Britain could try to undercut its businesses with lower environmental or social standards – EU access to British fishing waters, and how to govern disputes.
“I do think there is a deal to be done, if our partners want to do it, but we remain very far apart on… key issues,” Johnson told Sky.
“The UK can’t be locked into the EU’s regulatory orbit and we’ve obviously got to take back control of our fisheries four and a half years after people voted for it.
“In the meantime, get ready, with confidence, for January 1, trade on WTO terms if we have to.”
Irish Foreign Affairs Minister Simon Coveney said it was promising that the EU and the British Government issued a joint statement, as they need to work together, but added it would be a “huge political failing” if there was no deal.
“It’s not going to be done by one side out-manoeuvring the other, with a clear winner and a clear loser,” he told RTE Radio’s This Week programme.
“[A deal] really needs to be done over the next coming days. From the Irish perspective, we want a deal.”
Helen Dickinson, chief executive of the British Retail Consortium (BRC), said the ongoing uncertainty made it difficult for businesses to prepare for January 1.
“Without a deal, the British public will face more than 3 billion pounds [4 billion dollars] in food tariffs and retailers would have no choice but to pass on some of these additional costs to their customers, who would see higher prices filter through during 2021,” she said.
“Moreover, new checks and red tape that will apply from January 1 will create an additional burden for retailers and their customers,” Dickinson added.
Tensions rose this weekend when Britain said it has four Royal Navy vessels on standby to defend its fishing waters from EU fleets, which currently have access but would lose it if the month ends without a trade deal.
Earlier on Sunday, Foreign Secretary Dominic Raab told Sky News that British negotiators had worked “very hard at the working technical level” to secure agreement.
“But what really matters is what the EU is willing at a political level to commit to,” he said.