Brexit trade talks paused due to significant divergences; Johnson & EU chief to hold call

After one week of intense trade negotiations in London, the chief intermediaries from Britain and the European Union (EU) agreed on Friday to put the talks on hold due to "significant divergences."

Releasing identical statements on Twitter, UK's chief Brexit negotiator David Frost and his EU counterpart Michel Barnier said "the conditions for an agreement are not met due to significant divergences on the level playing field, governance and fisheries. The two sides have agreed to pause the talks in order to brief their Principals on the situation of the negotiations”.

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European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson will now take the discussions forward on Saturday afternoon, it said. The leaders will hold a telephone call, as their envoys - Michel Barnier and David Frost - broke up after an arduous week of meetings without a breakthrough. Britain and the EU had resumed face-to-face talks in London last week after an EU negotiator tested positive for coronavirus earlier in November.

The talks that have dragged for eight months are at a crucial stage as time is running out for both sides to secure a deal before the Brexit transition period expires on December 31. Britain is set to leave the EU single market at the end of the year with or without a trade agreement. Failure to reach a free trade agreement with the EU means bilateral trade will depend on World Trade Organization (WTO) rules in 2021.

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Speed-breakers in Brexit trade deal

The biggest hurdle appears to be fishing, a small part of the economy with outsized symbolic importance for Europe’s maritime nations. The UK wants to take back control of its water, however, the European Union is seeking access as most of its ships fish in the English waters 89-90% of the time. The bloc has threatened to impose tariffs on Britain's products if the UK doesn't allow its ships to fish in English waters.

A trade deal will allow goods to move between Britain and the EU without tariffs or quotas after the end of this year, though there would still be new costs and red tape for businesses on both sides of the English Channel.

If there is no deal, New Year's Day will bring huge disruption, with the overnight imposition of tariffs and other barriers to UK-EU trade. That will hurt both sides, but the burden will fall most heavily on Britain, which does almost half its trade with the EU. 

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