EU puts onus on Britain to agree new trade terms, stands ready for no deal
By Gabriela Baczynska and Marine Strauss
The European Union put the onus on Britain on Thursday to compromise on their new economic partnership, saying it was ready for an abrupt split which could disrupt trade worth a trillion euros every year.
Sporting face masks and guarding their distance during only their third face-to-face meeting during the coronavirus pandemic, EU national leaders granted more time for negotiations with Britain to produce a new trade pact before the end of the year.
"We want a deal, but obviously not at any price. It has to be a fair agreement that serves the interests of both sides. This is worth every effort," said German Chancellor Angela Merkel.
Britain – and with it Gibraltar - left the EU in January and, during a standstill transition period, the estranged allies have been locked in complex negotiations to keep trade between them free of tariffs or quotas from 2021.
Talks have narrowed gaps on issues from social welfare to transport but three contentious areas have so far prevented a deal: fair competition, dispute resolution and fisheries, which is particularly important to France.
"In no case shall our fishermen be sacrificed for Brexit," said French President Emmanuel Macron. "If the right terms can't be found at the end of these discussions, we're ready for a no-deal for our future relations."
With businesses and markets increasingly jittery as the deadline nears, EU leaders demanded Britain "make the necessary moves to make an agreement possible" and decided to step up contingency preparations for an abrupt split.
While EU leaders stressed the unity of the 27-nation bloc in the face off, British Prime Minister Boris Johnson will assess the summit's decision before deciding his next steps.
His Brexit negotiator David Frost, however, is expected to advise him to go on negotiating and a spokesman for the British premier said: "We've always been clear that a negotiated outcome is our preference."
Ireland, the EU member most exposed to any chaotic rupture, said smooth post-Brexit trade between the world's sixth largest economy and biggest trading bloc was even more essential given the economic havoc of the Covid-19 crisis.
"We still can get this resolved within the timeframe available to us," said Irish Prime Minister Michael Martin.
The pandemic has thrust Europe into unprecedented recession and many nations are tightening restrictions again to combat a second infection wave sweeping the continent as winter looms.
The coronavirus upset the summit itself when one of the key participants, the head of the bloc's executive, Ursula von der Leyen, left the meeting abruptly to go into precautionary self-isolation after one of her staff tested positive.
Given the economic malaise and global instability, it would be "crazy" if the two sides failed to agree a deal, said Dutch Prime Minister Mark Rutte.
Many in financial markets expect a thin deal by early November, though after several more weeks of drama.
The EU has warned, however, it will not leave fishing rights to be settled last and they must be part of a wider deal together with issues like financial services where London has a weaker hand.
The sides are also far apart on fair competition safeguards covering social, labour and environment standards, as well as state aid.
Britain wants to be able to regulate its own corporate subsidies freely in the future, while the EU seeks to lock in joint rules. Otherwise, the bloc says Britain cannot have free access to its cherished single market of 450 million consumers.
"We want a good deal, but not at any cost," Ms von der Leyen said shortly before having to leave the summit room.