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UPDATE 3-Germany wants 'substantive' UK moves in 'critical stage' of Brexit talks

* EU ministers talk Brexit before Thursday-Friday leaders’ summit

* Britain’s post-Brexit standstill arrangement with EU ends Dec.31

* Several major issues still to be settled

* EU ministers say time is running out

* Eikon app: Brexit and its consequences here (Adds detail on UK position, EU diplomat on summit)

BRUSSELS, Oct 13 (Reuters) - Germany on Tuesday demanded “substantive” movement from Britain on fisheries, dispute settlement and fair competition guarantees in post-Brexit trade talks with the European Union, which it said were “at a very critical stage”.

Britain, home to the world’s sixth-biggest economy, in January became the only country to leave the EU. It has since been locked in painstaking talks with the world’s largest trading bloc to keep trade flowing freely despite Brexit.

With a year-end deadline nearing to put new trading arrangements in place, German EU affairs minister Michael Roth said the EU was working hard for a deal, but was also ready to trade from 2021 without an accord to avoid tariffs or quotas.

“We are at a very critical stage in the negotiations and we are extremely under pressure. Time is running out,” Roth said as he arrived for talks about Brexit in Luxembourg with ministers from the bloc’s 27 member states.

“That’s why we expect substantial progress by our friends in the United Kingdom in key areas: in particular on governance, ‘level playing field’ and fisheries.”

The EU-UK negotiation aims to reach a new partnership agreement on everything from trade to transport and nuclear cooperation from Jan. 1, when London’s post-Brexit standstill transition has run its course.

Around a trillion euros’ worth of annual trade are at stake.

EU leaders hold a summit in Brussels on Thursday and Friday to assess progress, and British Prime Minister Boris Johnson has also said he wants to know by Oct. 15 if a deal can be reached by the end of the year.

A key face of the Brexit campaign in Britain’s 2016 vote to leave the bloc, Johnson has talked to French President Emmanuel Macron and German Chancellor Angela Merkel in recent days.

LONG ROAD, LITTLE TIME

London has also called for flexibility from the EU, echoed the line that time is short, and said it is ready if necessary to trade on World Trade Organization terms - which include quotas and tariffs - if there is no deal.

But the EU Brexit negotiator, Michel Barnier, repeated his downbeat message of the last few days, echoing Roth.

“There is some movement here and there, but it is far from sufficient. ‘Level playing field’, fisheries and enforcement measures remain the key controversial issues,” an EU diplomat quoted him as telling the meeting.

France, which sets great store by fisheries, has so far shown little willingness to compromise with Britain on future access to fishing waters and sharing out quotas, despite growing pressure from others in the bloc to help unlock a deal.

French Europe Minister Clement Beaune said the bloc must be “very firm” on its top priorities, and that safeguards of fair competition were an indispensable condition for accessing the EU’s internal market of 450 million people without trade barriers.

Macron is expected to hammer that point when he meets his fellow EU national leaders in Brussels.

But, with both sides raising the stakes and markets increasingly jittery, the leaders are also seen as likely to authorise a continuation of talks with Britain until the end of the month.

“There is some movement, but some movement only. There won’t be a full package of solutions ready for the summit. There are still multiple differences,” said an EU diplomat.

“The road ahead is still long and we have little time left.”

Additional reporting by Marine Strauss, and by Sabine Siebold in Berlin; Writing by Gabriela Baczynska; Editing by Kevin Liffey

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