With time running out, EU and UK near post-Brexit trade deal

BRUSSELS (AP) — European Union and British negotiators closed in on a trade deal Wednesday, raising hopes a chaotic economic break between the two sides on New Year’s Day could be averted, officials said.

After resolving a few remaining fair-competition issues, negotiators dealt last with EU fishing rights in UK waters as they worked to secure a deal for a post-Brexit relationship after nine months of talks.

Sources on both sides said the negotiations were in a final phase, with one EU official saying: “I expect to see some white smoke tonight.”

The official asked not to be identified because the talks were still ongoing. The British government said an agreement might come as soon as Wednesday night, but it was not guaranteed.

Customs checks and some other barriers will be imposed under whatever circumstances on January 1, but a trade deal would avert the imposition of tariffs and duties that could cost both sides billions in trade and hundreds of thousands of jobs. Britain withdrew from the EU on January 31, and an economic transition period expires on Dec. 31.

British Prime Minister Boris Johnson has always insisted the U.K. would “prosper mightily” even if no deal were reached and the UK had to trade with the EU on World Trade Organization terms.

But his government has acknowledged that a chaotic exit is likely to bring gridlock at Britain’s ports, temporary shortages of some goods and price increases for staple foods.

Tariffs will be applied to many UK exports, including 10% on cars and more than 40% on lamb, battering the UK economy as it struggles to rebound from the impact of the coronavirus pandemic.

Rumours of a pre-Christmas trade deal surfaced in recent days based on progress on the outstanding issues beyond fishing.

However, some EU nations insisted that upon close scrutiny, Britain’s latest proposals on quotas for EU vessels in UK waters were far less conciliatory than first met the eye.

On Wednesday, the brokering on quotas and transition times for EU vessels to continue fishing in UK waters were in full swing, with progress reported from several sides.

In London, UK Cabinet minister Robert Jenrick said, “We will need to get those final issues resolved, and there’s some way further to go on that.”

He said he nonetheless felt optimistic.

The EU has long feared that Britain would undercut the bloc’s social, environmental and state aid rules to be able to gain an unfair edge with its exports to the EU. Britain has said that having to meet EU rules would undercut its sovereignty.

On those issues, a compromise had been reached, a diplomat from an EU country said.

If both sides fail to meet the January 1 deadline, it’s unclear under what conditions trade would take place before a deal would eventually be approved.

Over the past few days, Johnson and EU Commission President Ursula von der Leyen have been drawn more and more into the talks and have been in contact by phone seeking to unblock negotiations.

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