• The Star Staff

Going ‘the extra mile,’ Britain and EU give Brexit talks more time

By Mark Landler and Stephen Castle

Britain and the European Union passed another do-or-die moment in their trade negotiations Sunday with neither a breakthrough nor a breakdown. But as the talks stretched on, there were distinct glimmers of hope that the two sides might at last find a way to bridge the gulf between them.

Prime Minister Boris Johnson and the president of the European Commission, Ursula von der Leyen, agreed to extend the negotiations after what both described as a “useful” midday phone call. She dropped her previous admonition that Britain and the European Union were far apart on key issues.

Johnson struck a warier tone, noting that the gaps remained significant and that Britain should prepare for a failure to reach a deal by the Dec. 31 deadline. But even he said that British negotiators would not walk away from the talks and reaffirmed, “There is a deal to be done, if our partners want to do it.”

Tellingly, neither set a fresh deadline for the negotiations, although as a practical matter, the two sides have only until New Year’s Eve, which is when the transition period to hammer out a long-term trade agreement expires. After that, Britain and the EU would begin levying tariffs on each other’s goods.

Mujtaba Rahman, an analyst at the political risk consultancy Eurasia Group, said, “Today was the moment where it all could have gone wrong — and it didn’t go wrong.”

“Both sides have committed to avoiding a cliff edge, which means the likelihood of an agreement has now risen substantially,” he added.

At the heart of the talks is the thorny question of how the EU would respond if Britain diverged from the bloc in its industrial policy. Both sides initially staked out a hard line: Brussels insisting it had to be able to defend the single market from unfair competition from British companies getting state support; and the British declaring it was a matter of sovereignty to be free to chart their own course.

In recent days, however, the EU has softened its stance, according to people briefed on the talks who requested anonymity to speak about behind-the-scenes negotiations. Rather than automatically impose tariffs to counteract British divergence, the two sides are negotiating other ways to resolve disputes over state aid and other competition policies.

That could allow Johnson to claim a victory, which would help him sell a trade agreement to the Brexiteers in his Conservative Party. But Britain has given ground in important respects as well.

On Wednesday in Parliament, before he traveled to Brussels for a dinner meeting with von der Leyen, Johnson dismissed the EU’s position as an unacceptable infringement of British sovereignty.

Brussels, he said, wanted to ensure that “if they pass a new law in the future with which we in this country do not comply or do not follow suit, they should have the automatic right to punish us and to retaliate.”

Johnson’s use of the word “automatic” was noteworthy because it suggested there were other ways the two sides could resolve such disputes. Before that, British negotiators had refused to accept any other safeguards against future divergence except those in standard trade agreements, although they did commit not to water down existing rules on labor and environmental standards.

“It seems as if the U.K. has conceded the principle,” said David Henig, director of the U.K. Trade Policy Project at the European Center for International Political Economy, a research institute. “There is a difference between having a difference on a point of principle and trying to find a practical solution that satisfies both sides.”

There were other more subtle signals of progress. Von der Leyen delivered her statement after speaking to Johnson in English, saying, “We both think that it is responsible at this point in time to go the extra mile.” A week ago, after a less hopeful phone call with him, she spoke in French and German.

None of this means the talks could not still run aground. Time is short, the two sides still need to work out a politically fraught deal on fishing quotas and negative blowback from pro-Brexit Conservative lawmakers could yet persuade Johnson to pull back from endorsing the difficult details.

“If Ursula is optimistic, then that’s great,” Johnson said to Sky News. “But as far as I can see, there are some serious and very, very, very difficult issues that currently separate the U.K. from the EU.”

Britain, he said, had made extensive preparations for a failure in the talks, after which its trade with the EU would default to World Trade Organization terms. Some analysts dismissed that as a calculated effort to take a tough posture before the inevitable compromises to come.

Henig, the analyst, said the prime minister was under intense pressure from British business not to risk a trade war in January over Britain’s theoretical right to take measures for which it currently has no plans.

That point was underscored Sunday when Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, appealed to the negotiators “to finish the job and agree the deal we all so desperately need, without further delay.”

“‘No deal,’” he said, “would be nothing less than catastrophic for the automotive sector, its workers and their families and represent a stunning failure of statecraft.”