LONDON/BRUSSELS (Reuters) – British Prime Minister Boris Johnson said on Thursday there was “a strong possibility” Britain and the EU would fail to strike a new trade deal, but vowed to do whatever he could to avoid a tumultuous split in three weeks.
The European Union and Britain are at loggerheads over fishing rights, economic fair play and dispute settlement, despite months of talks to cover trade from Jan. 1 when the United Kingdom finally exits the bloc’s orbit.
The two sides have set a deadline of Sunday to find agreement and prevent a chaotic break.
After a meeting with his senior ministers, Johnson said the treaty on the table did not work for Britain.
“We need to be very, very clear there’s now a strong possibility, strong possibility that we will have a solution that’s much more like an Australian relationship with the EU, than a Canadian relationship with the EU,” Johnson said.
Australia, unlike Canada, has no comprehensive trade deal with the EU, leaving its trade mostly subject to tariffs. Johnson uses the comparison to suggest a deal is not necessary, though Australia has only a fraction of Britain’s trade with Europe.
Under such a scenario, Britain would see trade barriers imposed with the EU, its main economic partner, in just three weeks.
Sterling dropped against the U.S. dollar to $1.3262 on the remarks, down from around $1.33. It was last almost 0.9 percent lower on the day at $1.3274.
Johnson spoke as the 27 national EU leaders met in Brussels and the bloc’s chief executive, European Commission President Ursula von der Leyen, said bridging the persistent differences in UK trade talks was “difficult”.
“We are willing to grant access to our single market… but the conditions have to be fair,” she said. “This fine balance of fairness has not been achieved so far.”
“FAIRNESS” VS “SOVEREIGNTY”
The British prime minister, who campaigned for Brexit on the platform of regaining Britain’s sovereignty, said the issue was the EU insisting on tying Britain to the bloc’s future labour, social and environmental standards, as well as state aid rules.
The EU wants a so-called “ratchet clause” to ensure that Britain matches any future improvements in EU standards, to keep access to its market.
“No-deal would not be a good thing but a bad deal would be even worse. Giving access to the common European Union market… should be on a level playing field,” said Belgian Prime Minister Alexander de Croo.
Earlier on Thursday, the bloc set out its contingency plans for an abrupt split in ties to keep “certain air services” between Britain and the EU, basic connections by road freight and for road passengers for six months if the UK reciprocated.
Britain would examine the proposals, a government spokeswoman said. But London quickly rebuked the Commission’s offer to keep reciprocal access to fishing waters for a year.
While Johnson said the public and businesses needed to ready themselves for the prospect of no deal, he kept alive the prospect an accord could still be found.
“I will go to Brussels, I will go to Paris or go to Berlin or wherever, to try to get this home and get to a deal,” he said.
Britain left the EU in January and has since been in a transition period, with rules on trade, travel and business unchanged. That ends on Dec. 31.
If by then there is no agreement to protect around $1 trillion in annual trade from tariffs and quotas, businesses on both sides will suffer.
In a sign of potential disruption ahead, trucks heading towards the English port of Dover were stacked up for miles on Thursday, with Brexit stockpiling and pre-Christmas traffic blamed.
(Additional reporting by Alistair Smout, Thyagaraju Adinarayan, Tommy Wilkes, Paul Sandle and Kate Holton in London, by John Chalmers and Robin Emmott in Brussels; Writing by Michael Holden, John Chalmers, Guy Faulconbridge and Gabriela Baczynska; Editing by William Maclean, Edmund Blair and Peter Graff)