UK, EU can agree on mini-deals if trade talks fail by end-month, says Gove

London

UK Cabinet Office Minister Michael Gove said that Britain and the European Union could engage in a series of "mini unilateral" deals if no trade agreement is reached by the end of the month.

Mr Gove said that Britain and the bloc's 27 member states could form a new "special relationship" after the end of the transition period, close to the UK and US link, which could include agreements he described as "side deals", The Telegraph reported. Any trade agreement is "realistically unlikely" to be approved until after Christmas, meaning that lawmakers may only vote on a potential deal just hours ahead of the end of the transition period, he said.

Speaking in Parliament last week, Mr Gove said that like any set of neighbours, there will be conversations between the UK and EU member countries "choosing to make unilateral decisions that will make life easier for one or the other side, and it may be that those unilateral decisions are reciprocated", the newspaper reported.

People familiar with both sides of the negotiations said that the trade talks are unlikely to wrap up on Sunday, but should do so before Christmas as disagreements over fishing remain the key obstacle. European countries with large fishing industries are resisting any further concessions proposed by the European Commission. Nevertheless, officials from both sides said the gap can still be bridged.

"I think everybody wants a deal," said UK Health Secretary Matt Hancock on Sunday. "Unfortunately, the EU have put in some unreasonable demands" that do not respect Britain's 2016 referendum decision to leave the bloc, he told Sky News.

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Failure to reach a trade deal would mean the UK doing business with its largest and nearest commercial partner on terms set by the World Trade Organization - meaning millions of businesses and consumers would face the cost and disruption of tariffs and quotas.

The pandemic has heavily disrupted the post-Brexit trade talks since they started in March. Both chief negotiators were forced into isolation after displaying symptoms early in the process, and for months the two sides could only talk by video link.

"We do need to see that movement from the EU side, and I very much hope that they make the steps that are necessary so that we can conclude a deal and then we can all look forward," Mr Hancock said. "We have got a huge amount to get through as a continent because there are very significant problems with this virus on the continent as well."

With most other major issues now settled, the entire deal now effectively depends on how much the EU is prepared to give up of its fishing catch in UK waters.

While Britain was a member of the EU, the bloc controlled fishing rights through its Common Fisheries Policy, a system that Prime Minister Boris Johnson argues penalised the UK's domestic industry. Teams from the European Commission in Brussels held a second round of talks with national capitals on Saturday. The deliberations were tense, one EU diplomat said.

After its discussions with member states on Friday, the Commission made an offer that would see the bloc lose around 25 per cent of the current 650 million euros (S$1 billion) of fish it catches annually in British waters. The UK rejected it, and has been pushing for the EU to give up 60 per cent, according to the officials who spoke on condition of anonymity.

The EU also offered to reduce the phase-in period of the new arrangements to six years, after originally wanting 10. The UK rejected the offer of six and has proposed just three years.

The British team feels it has the upper hand after making recent concessions on the other major roadblock, the level competitive playing field for businesses. But Michel Barnier, the EU's chief negotiator, made clear on Friday that access to the single market will be conditional on keeping UK fishing waters open to boats from the bloc.

The talks could still break down. Despite the cautiously optimistic tone coming from negotiating room, one person familiar with the UK government's position said a no-deal outcome remains the more likely. BLOOMBERG