BRUSSELS/LONDON: German Chancellor Angela Merkel said she had no breakthrough to announce on Friday (Oct 2) as a week of EU talks with Britain ended, but remained optimistic that sealing a deal on a post-Brexit trade relationship was still possible before the end of the year.
Her words were echoed by Britain's chief negotiator, David Frost, who said that while progress had been made in some areas, the main differences between the two sides remained, with the gap on fisheries "unfortunately very large".
Both British Prime Minister Boris Johnson and the EU have set a mid-October goal for reaching a trade agreement, but the EU's chief Brexit negotiator Michel Barnier suggested talks would continue up until the end of the month.
There are still major hurdles to ensuring smooth ties after Dec 31, when a standstill post-Brexit transition ends, and a chaotic split without a new agreement in place would jeopardize an estimated trillion euros worth of annual trade.
Barnier noted fresh progress on aviation safety and safeguards of fundamental rights but said there was none on personal data protection or carbon pricing.
"Serious divergences" persisted, he said, citing a need for level playing field guarantees of fair competition, including on state aid, "robust" mechanisms to solve disputes, including "effective remedies", and an agreement on fisheries.
"I can't announce a breakthrough," Merkel told an earlier news conference after two-day talks among the 27 national EU leaders in Brussels. "As long as negotiations on Brexit are ongoing, I'm optimistic."
Britain's Frost again appealed to the EU to show more "realism and flexibility" to reach an agreement, repeating that some of the trickiest issues were "fundamental to our future status as an independent country".
"I am concerned that there is very little time now to resolve these issues ahead of the European Council on 15 October."
Johnson will speak to the head of the EU's executive, Ursula von der Leyen, on Saturday to agree next steps after the bloc launched a legal case against Britain over moving to undercut their Brexit divorce treaty.
Speaking after the summit on Friday, von der Leyen said it was time to "intensify" Brexit talks with time available by the end of the year to put a new deal in place running out.
"Where there's a will, there's a way," she said.
"We have made progress on many, many difficult fields but the main ones all remain very much open," she added, naming guarantees on a level playing field of fair competition as a key sticking point. "There is still a lot of work to do."
The issue of Northern Ireland has also come to the fore again, after Britain introduced its Internal Market Bill, which London admits would break international law.
Ireland's prime minister, Micheal Martin, told an EU summit that Britain must respect arrangements for the sensitive Irish border it had agreed under its earlier divorce deal with the bloc after a fraught week.
Referring to another major sticking point in the trade talks, Merkel also said the UK's new deal on fisheries with Norway announced this week "shows ... agreements can be found".
The deal includes access to each other's waters, as well as annual fishing quotas negotiations. The latter has long been favoured by Britain but so far rejected by the EU, where fisheries is politically sensitive for France.
An EU diplomatic source said Merkel's comment suggests that positions may be inching closer after the sides discussed a compromise that would also include a "phasing-out" or "transition" mechanism for fish quotas.
Under this idea, Britain would increase its quotas in time, rather than overnight from Jan 1, 2021, when it says it becomes an "independent coastal nation" in control of its own waters.
But Frost described the gap on fisheries as "unfortunately very large and, without further realism and flexibility from the EU, risks being impossible to bridge".
The EU says an agreement must be at hand by November to enable ratification before the end of the year. The bloc is adamant, however, that it would not implement any new UK deal if London undercuts the divorce agreement.