UK and EU agree to continue negotiations, but warn no-deal Brexit is likely


(CNN) — The UK and the European Union warned that a no-deal Brexit is likely, even as they decided, once again, to extend trade talks beyond Sunday’s self-imposed deadline.

The talks had initially been extended until Sunday after Wednesday’s meeting between European Commission President Ursula von der Leyen and UK Prime Minister Boris Johnson ended without a deal.

No new deadline was announced on Sunday, but von der Leyen said it was “responsible” to go “the extra mile.” He added that he had a “constructive and helpful” phone call with Johnson.

From London, Johnson said that the two sides remain “very far away on key issues” and warned that “most likely now we will have to prepare for the terms of the WTO (World Trade Organization), the terms of Australia,” he warned .

Australia does not have a free trade agreement with the European Union, although talks to secure it are ongoing. Johnson and his government have widely used the term “Australian terms” as a euphemism for a no-deal Brexit.

But the term is misleading, because Australia and the EU already have a Mutual Recognition Agreement, making it easier for manufacturers to obtain the necessary regulatory approvals to sell their products. However, the UK has no such agreement with the EU.

If an agreement is not reached, it would be forced to trade with the bloc according to the rules established by the WTO. That would mean new tariffs and other barriers, like regulatory controls and paperwork.

The British prime minister said his government will continue to try to reach a trade deal, but warned that there may not be a resolution before the Jan.1 deadline. “I think there is an agreement to be reached, but we are staying very far on key issues,” he said.

The European Union and the UK have been trying for months to reach a trade deal before the Brexit ‘transition period’ ends at midnight on December 31. Earlier this week, a joint statement by Johnson and von der Leyen cited three “critical” points: fishing rights, the UK’s ability to diverge from EU standards, and legal oversight of any deal.

Failure to reach a trade deal would be financially painful for both the EU and the UK, although the impact on the UK would be disproportionately greater because the EU is by far its largest trading partner. Losing access to that single market would alienate UK businesses from Europe’s 450 million consumers and burden them with additional fees and red tape.

The UK Office of Budget Responsibility (OBR) estimates that a no-deal Brexit would mean a reduction of 40 billion pounds (US $ 53 billion), or 2% of the UK’s economic output in 2021. And it would leave more than 300,000 people unemployed by the second half of next year.

However, the OBR said in November that even if London and Brussels reach an agreement, their new business relationship is expected to lead to a long-term loss of production of around 4% compared to what would happen if they remained in the business. European Union.

Ireland, which will lose the most on the EU side, said it was “absolutely imperative” that the UK and the EU reach a Brexit deal. Irish Prime Minister Micheál Martin told the BBC on Sunday that a no-deal scenario would be “very damaging to workers” in the UK, Ireland and across Europe, and would represent “a terrible failure of the art of government.”

Johnson said Thursday that he had directed his cabinet to prepare for the failure of the talks. And the EU has published plans aimed at keeping its borders open to commercial planes, trains and trucks.

The UK Defense Ministry said on Saturday that the UK will have “a number of robust measures” to put in place when the Brexit transition period ends, including “numerous” high seas patrol vessels available in its territorial waters.

Four high seas patrol vessels “will be available to patrol UK waters to assist other government departments when necessary,” the ministry said.


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