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Britain and EU to try to rescue post-Brexit trade talks

* Negotiators to speak by phone after in-person meeting scrapped

* British PM Johnson has said there is no point continuing talks

* EU diplomats still expect UK to come back to table

* UK could quit huge EU single market on Dec.31 with no trade deal

LONDON/BRUSSELS, Oct 19 (Reuters) - Britain and the European Union will on Monday attempt to breathe life into post-Brexit trade talks that appeared all but dead last week, with each side telling the other it needed to fundamentally change course.

British Prime Minister Boris Johnson said on Friday there was no point in continuing talks and it was time to prepare for a ‘no-deal’ exit when transitional arrangements end on Dec. 31.

But Michael Gove, one of his senior ministers, struck a more conciliatory tone on Sunday, saying the door was still ajar to a deal if the bloc was willing to compromise.

EU chief negotiator Michel Barnier had been due in London for talks with his British counterpart David Frost this week. Instead, they will now speak by telephone on Monday to discuss the structure of future talks, Barnier’s spokesman said.

Negotiations broke down on Thursday when the European Union said Britain needed to give ground.

Issues still to be resolved include fair competition rules, dispute resolution and fisheries.

Gove said on Sunday that the bloc had squandered some of the progress that had been made because it had not been willing to intensify talks or produce detailed legal texts.

“We hope that the EU will change their position; we’re certainly not saying if they do change their position that we can’t talk to them,” he said.

Asked by Sky News if Barnier should come to London, Gove said the ball was “in his court”.

EU diplomats and officials cast Johnson’s move as little more than rhetoric, portraying it as a frantic bid to secure concessions before a last-minute deal was done, and European leaders have asked Barnier to continue talks.

“A DEAL, BUT NOT AT ANY PRICE”

German Chancellor Angela Merkel said compromises on both sides would be needed. French President Emmanuel Macron said Britain needed a Brexit deal more than the 27-nation EU, which remained united.

“We are ready for a deal, but not at any price,” Macron said.

A “no deal” finale to the United Kingdom’s five-year Brexit crisis would disrupt the operations of manufacturers, retailers, farmers and nearly every other sector - just as the economic hit from the coronavirus pandemic worsens.

“It is not my preferred destination,” Gove said in an opinion piece in the Sunday Times.

“But if the choice is between arrangements that tie our hands indefinitely, or where we can shape our own future, then that’s no choice at all. And leaving on Australian terms is an outcome for which we are increasingly well prepared.”

Critics say that an “Australian-style” deal is simply code for no deal at all with Britain’s largest export market.

Britain is launching a campaign this week urging businesses to step up preparations for a no-deal exit. In a statement accompanying the launch, Gove says: “Make no mistake, there are changes coming in just 75 days and time is running out for businesses to act.”

More than 70 British business groups representing over 7 million workers on Sunday urged politicians to get back to the negotiating table next week and strike a deal.

“With compromise and tenacity, a deal can be done. Businesses call on leaders on both sides to find a route through,” they said.

Reporting by Paul Sandle and Jan Strupczewski; Editing by Kevin Liffey

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