(Bloomberg) -- The U.K. and the European Union are heading for a chaotic split without a new trade deal as talks between the two sides frayed.
During crisis meetings Thursday, Prime Minister Boris Johnson’s government rebuffed an EU request to scrap his plan to re-write the Brexit divorce accord even after the bloc gave him a three-week ultimatum to do so and threatened legal action. The dispute risks jeopardizing already faltering efforts to secure a trade deal between the two sides by Dec. 31. The pound fell.
“The U.K. has not engaged in a reciprocal way on fundamental EU principles and interests,” EU chief Brexit negotiator Michel Barnier said in a statement. “Significant differences remain in areas of essential interest for the EU.”
Barnier’s view was backed up by his U.K. counterpart, David Frost, who said in a statement that “a number of challenging areas remain and the divergences on some are still significant.”
Talks will continue, but the bleak picture painted by the two men highlight the increasing chance that the U.K. will fail to reach a trade agreement with the bloc by the end-of-year deadline, when the Brexit transition period concludes. That will trigger tariffs between the U.K. and the world’s biggest single market and snarl commerce with extra paperwork at the border.
Negotiators plan to meet again next week in Brussels, Frost said.
Breaking the Law
Earlier, the bloc gave the U.K. a three-week ultimatum to drop its Internal Market legislation, which would alter commitments made in the Brexit Withdrawal Agreement and its Northern Ireland Protocol. Northern Ireland Secretary Brandon Lewis admited earlier in the week that it would break international law.
Cabinet Office Minister Michael Gove says he told European Commission Vice President Maros Sefcovic that “we would not be withdrawing this legislation.”
“We have to make sure that the protocol is implemented in a way that respects the fact that Northern Ireland is an integral part” of the U.K., Gove said in a pooled TV interview.
The government also published its legal position, saying its Parliament is sovereign and can pass laws that breach the country’s treaty obligations.
No Progress
After eight rounds of negotiations, the areas of disagreement remain essentially the same, according to Barnier. The U.K is refusing to include guarantees of fair competition, and it hasn’t engaged on issues such as fisheries, judicial cooperation and law enforcement, he said.
In a sign that the talks could break down, Barnier said the bloc is “intensifying its preparedness work to be ready for all scenarios.”
There was no tangible progress on any area during the talks, an EU official said. Asked specifically about fisheries, where a British counterpart said earlier there had been substantial progress, the EU official denied it.
The U.K., for its part, indicated that the EU position on the so-called “level playing field” cuts across British sovereignty, notably on subsidy control.
Parliamentary Battle
Aside from the EU opposition to its legislation, the U.K. government is also bracing for domestic battles. Tory rebels in the House of Commons and wider opposition in the House of Lords are likely to make it tough to get the Internal Market Bill passed as it stands, according to two officials.
Ministers aim to rush the Bill through the Commons in the next two weeks, but in a sign of the opposition the government may face, Michael Howard, a former leader of Johnson’s Conservative Party and a member of the upper chamber, slammed the plan, adding to to rebukes from former Tory Prime Ministers Theresa May and John Major.
“How can we reproach Russia or China or Iran when their conduct falls below internationally accepted standards when we are showing such scant regard for our treaty obligations?” Howard asked in the House of Lords.
©2020 Bloomberg L.P.
