BRUSSELS (Reuters) – British and EU negotiators need to find a compromise on the most persistent sticking points in their talks to protect a trillion dollars worth of annual trade from possible tariffs and quotas in eight weeks’ time when the UK’s transition out of the bloc ends.
The tortured negotiations resume in London on Sunday as the mid-November deadline nears for a new trade pact between Britain and the 27-nation EU, which then needs time for the European Parliament’s approval necessary to implement any deal from 2021.
Here are the key sticking points.
CORPORATE FAIR PLAY
The so-called level-playing field is about fixing minimum labour, environment and social production standards, as well as corporate subsidies or state aid, so that firms from one side cannot sell substandard goods on the other one’s market.
The EU wants to lock Britain as closely as possible into its own regulations, but London rejects that because the ability to shape the UK’s own laws independently was one of Brexit’s chief promises.
Specifically, the two sides are at odds over the ‘nn-regression clause’, a provision that would not allow either to backpedal on a certain minimum level of standards once they reached them independently.
The EU says such a clause is needed to safeguard its market of 450 million consumers from any cheap, poor-quality goods coming from the UK should it chose to use its regulatory freedom to gain a competitive edge.
The British government says it will maintain the highest standards but argues it should be offered similar terms to those the EU offered Canada in their trade deal.
Divvying up fishing rights – a totemic issue for both Brexit Britain and France – is proving a stubborn issue.
London insists on annual catch negotiations under the principle of “zonal attachment” but the EU demands a longer-term perspective for its fishing industry and more specific numerical targets for some 100 species under discussions.
Britain also wants a separate agreement on fisheries, while the EU insists it must be part of any wider free trade deal.
Tentative ideas for a compromise, including a transition period from 2021 to help square the circle, have yet to bear fruit as the sides remain disagree over the length of any such arrangement and what exactly would come at the end of it.
Governing the new relationship between the EU and Britain is the third major sticking point.
The bloc seeks a robust dispute setting mechanism that would include an oversight body in the UK independent of the government.
Under an idea of cross-retaliation rejected by Britain, the EU also wants to be able to restrict bilateral trade flows if London violates crucial parts of their agreement.
Prime Minister Boris Johnson’s government says that would be excessive and opts for more relaxed procedures to settle any future trade disagreements, which it says is standard practice in international free trade deals.
It has rejected the jurisdiction of the European Court of Justice.
(Reporting and writing by Gabriela Baczynska; Ediitng by Gareth Jones)