EU summit to say Brexit progress 'still not sufficient'

[BRUSSELS] European Union (EU) leaders meeting in Brussels on Thursday and Friday to discuss Brexit will say that progress in talks with Britain is "still not sufficient" to seal a new trade deal, according to a draft summit decision seen by Reuters.

As the year-end deadline approaches to put in place a new relationship with ex-member Britain, the 27 national EU heads will also agree to step up contingency preparations for an abrupt split, without a deal to avoid trade tariffs or quotas.

With a trillion euros (S$1.6 trillion) of annual trade at stake, the summit will also tell the EU's Brexit negotiator, Michel Barnier, to intensify talks to get an agreement by Dec 31, when the current standstill agreement expires.

"It is in the interests of both sides to have an agreement in place before the end of the transition period," EU summit chairman Charles Michel said in a invitation letter to leaders.

"This cannot, however, happen at any price. The coming days are decisive. Key issues include, in particular, the level playing field, fisheries and governance," he said.

These three areas, covering guarantees of fair competition, fishing rights and dispute settlement procedures, have long been the main sticking points, although some progress has been made in recent weeks.

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The leaders will also tell Britain it must implement in full its earlier Brexit divorce treaty with the bloc, according to the draft, prepared in advance of the meeting.

This refers to a bill now going through the British Parliament that would give the government the power to break that treaty - a measure that it says may be necessary to protect trade between Northern Ireland and the rest of the United Kingdom, and will only be used if the talks with the EU fail.

British Prime Minister Boris Johnson is due to talk to the head of the bloc's executive, European Commission President Ursula von der Leyen, on Wednesday to discuss next steps on the eve of the leaders' summit.

"Without engagement on governance and no movement on fish, it's not unthinkable that we will run out of time for an agreement," one EU diplomat said.

"That said, there is also a positive context - parties are trying to find a way forward, but the bottom line is that the UK is not willing to pay Europe's asking price." The EU says a deal must be agreed this month to leave time for ratification by the European Parliament. However, EU diplomats have told Reuters the bloc is gearing up to negotiate until mid-November to avoid being blamed if the talks fail.

"A deal is still possible, I am not so pessimistic," a second EU diplomat said.

REUTERS