A no-deal Brexit could still hit on 1 January even if a trade agreement is signed before the New Year, Michel Barnier has told MEPs.
The EU’s chief negotiator said in a private meeting in Monday morning that there could be a short period of no-deal while the accord was applied, according to an EU official present.
Mr Barnier also reportedly told ambassadors from EU member states the same thing in a separate meeting.
It comes as Downing Street refused to set new deadline for talks to end, and also refused to elaborate on the steps that would be needed to ratify any agreement at the UK end in time.
While the EU and UK have both made preparations to apply a trade deal on a “provisional” basis, it is understood that this process might still not be fast enough to avoid a no-deal if talks go up to Christmas and beyond.
Under this scenario, contingency measures would have to be applied while the legal text was “scrubbed” to make it ready for provisional applications.
But there would still be expected acute chaos at channel ports, economic damage, and and tariffs due on goods from 1 January, with a further change in circumstances when the deal was introduced.
Provisional application of a text requires translation into 23 languages, an agreed legal basis, and decisions by the European Council – which all take time.
Similar warnings were issued ahead of the ratification of the Brexit withdrawal agreement last year, which required a further extension of article 50 to introduce in full.
The full ratification process for the deal, involving approval by the European Council and parliament, and potentially national parliaments, would take place after provisional ratification has been achieved early in the New Year.
National parliaments from the 27 EU member states would only have to vote on the deal if it covered areas not already delegated to the EU. The European Commission says it believes this will not be necessary, but officials at the European Council, which represents member states, sound less sure.
In that event, the parliament of a member state, or even a region, could veto the deal. The Belgian region of Wallonia famously held up ratification of the EU-Canada trade deal CETA in October 2016.
UK chief negotiator David Frost leaves the UK residence in Brussels ahead of a meeting with his counterpart Michel Barnier
(EPA)
Asked if negotiations could go beyond the end of 2020, the prime minister’s official spokesman said: “We have been clear on many occasions that we want the outcome to be reached, whether that’s a free trade agreement or leaving on WTO terms, by the end of the year.”
The spokesman said a no-deal Brexit was “possible”.
“No-deal is a potential outcome but we are still committed to trying to reach an FTA,” he added.
The spokesman declined to say whether legislation or a vote of the Commons would be required to ratify any deal.
Asked repeatedly what say MPs would have on the outcome of talks and what timetable might be for any vote, the spokesman said only: “We are confident that there is time to do whatever we need to do in parliament.”
Mr Barnier reportedly painted a pessimistic picture of negotiations to member state ambassadors in a meeting on Monday morning, following a decision yesterday by London and Brussels not to pull the plug on discussions.
A senior EU diplomat said there had been some limited progress on issues like how the deal could be enforced, but still mutual disagreement on state aid – and even “backtracking” on fisheries.
The deadline for the European Parliament to ratify any agreement has now long since passed, but officials are still hopeful a free trade agreement could be applied on a “provisional” basis to avoid a no-deal on 31 December.
It is our responsibility to give the talks every chance of success. Never before has such a comprehensive agreement – trade, energy, fisheries, transport, police and judicial cooperation, etc – been negotiated so transparently and in such little time.
Michel Barnier, EU chief negotiator
Ahead of the resumption of talks, Mr Barnier said: “It is our responsibility to give the talks every chance of success. Never before has such a comprehensive agreement – trade, energy, fisheries, transport, police and judicial cooperation, etc – been negotiated so transparently and in such little time.
“The next few days are important, if an EU-UK is to be in place on 1 January 2021. Fair competition, and a sustainable solution for our fishermen and women, are key to reaching a deal.”
Following a briefing by Mr Barnier to member states, a senior EU diplomat told the Reuters news agency that the chief negotiator was “guarded” on progress, while another summarised the meeting as: “Patient still alive … but keep the undertaker on speed dial.”
One key question under discussion is whether trade tariffs should be automatically imposed on Britain or the EU if either side breaches guarantees to maintain high standards in areas like labour rights and environmental protections.
The EU has been insisting on a so-called “ratchet” clause that would require both sides to progressively upgrade their rules independently, or face tariffs, while the UK wants simple “non-regression” clauses that would mean its rules could not be weakened from what they are now.
Diplomats say the bloc’s stance on the issue has softened in the most recent talks, but that it is not yet clear what the “ratchet” plan could be replaced with.
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Even if the so-called “level playing field” can be resolved, both sides also need to agree the politically-fraught issue of fishing access.
Nathalie Loiseau, a senior French MEP and a close ally of Emmanuel Macron, said ahead of negotiations resuming that she was “sceptical” a deal could be reached, but that it was worth trying.
“I’m not sure that ‘optimism’ is the word most appropriate, but commitment? Yes, we will try to find an agreement,” she told BBC Radio 4’s Today programme.
“If there is any chance to find a deal, we will not let it go. Still, I am somewhat sceptical, as we are still far apart on important issues.”
Alok Sharma, the UK’s business secretary, told the same programme: “We have decided to carry on these discussions, we don’t want to walk away from them as long as there is an opportunity to reach this Canada-style deal that we have always said we would like to do.
“Businesses and people in this country will want us to go the extra mile … we’ve always said all along that any deal that do has to respect the fact that we’re a sovereign and independent nation.”
Official forecasts predict no deal will swipe £40bn from the UK economy next year, putting 300,000 people out of work, with warnings of border chaos and higher food prices.
