British and EU trade negotiators held the first day of what could be months of talks aimed at forging a new post-Brexit relationship on Monday, with timing tight and the sides far apart on key issues.
The EU’s chief negotiator Michel Barnier and UK counterpart David Frost met in Brussels, launching several months of intense closed-door negotiations involving around 100 officials on each side.
“We approach these negotiations in a constructive spirit. We want to agree an ambitious and fair partnership,” Barnier tweeted after the talks, at which the negotiators did not shake hands because of fears of the novel coronavirus.
“We will respect our prior joint commitments. We will close the round on Thursday and I will debrief the press afterwards,” he said.
A UK spokesman said Frost and members the UK delegation met Barnier and his task force for around two hours.
“The UK will engage constructively to reach a free trade agreement which fully respects the UK’s political and regulatory autonomy,” he said.
The negotiations began just over a month after Britain left the EU, and are meant to wrap up by the end of this year — an exceedingly tight timeframe that few see as feasible for anything but a bare-bones accord.
The deadline is effectively December 31, the end of the UK’s current transition period during which it trades like an EU member with no tariffs or other barriers.
British Prime Minister Boris Johnson has ruled out extending the transition and both sides are looking to an EU-UK summit in June to decide whether talks are worth continuing.
The negotiations have been clouded by mistrust and weeks of chest-beating as each side has accused the other of reneging on high-ambition goals set out in a political declaration struck last year.
This week’s talks in Brussels are to end on Thursday, after two days in which the teams will divide to cover 11 key topics for the future relationship. The next round is to take place in London, and thereafter alternate between the two capitals.
Mandates published last week highlighted the EU’s aim of securing a “level playing field” to prevent Britain from undercutting European standards on labour, tax, environment and state subsidies.
Meanwhile the UK is insisting on setting its own rules in the name of “economic and political independence”.
The acrimony pushed the British pound 1.3 percent lower against the euro on Monday owing to fears that Britain’s hard-line stance would hurt the economy.
Experts warned that the two sides are on a collision course, with a deal highly unlikely without concessions.
“A deal between the EU and the UK by the end of the year is still possible, but it will require both parties to drift away from their opening positions,” said Sam Lowe, a senior research fellow at the Centre for European Reform.
“In practice, it requires the UK to move a lot, and the EU to move a little,” he said.
Underlining tensions, Barnier, in an uncharacteristic display of podium-thumping, has warned Britain that any backsliding on its EU divorce terms would torpedo trade talks.
The Brexit deal notably requires checks on British goods crossing the Irish Sea into the UK territory of Northern Ireland that Johnson now says are unnecessary.
“Clearly, at the beginning of any negotiation, there’s a bit of posturing. Both sides want to state the strongest possible case,” said Fabian Zuleeg, head of the European Policy Centre.
Experts see a deal limited to goods as the most likely outcome, but that would still require customs checks for products crossing the Channel and lacks the ambition called for by businesses.
But fishing — of relatively minor economic importance but of totemic significance to Britain and EU states such as France and Spain — could be the flashpoint that scuppers a deal.
Barnier has emphasised that fishing is “inextricably” linked to the whole agreement. The EU demands that its fishing boats continue to have access to British waters in return for British fishermen being able to sell their catches to their biggest and closest market.
If there is no broad trade deal, economic pain will be felt on both sides — but especially in Britain and in Ireland, the EU member most dependent on trade with the UK.
Without a deal, UN economists calculate the UK would lose export revenues of up to 29 billion euros ($32 billion) a year. The EU buys nearly half of all British exports.