A Brexit trade deal is now looking "unlikely" because of British intransigence on key issues, the EU's chief negotiator has warned.
Speaking on Thursday after a round of negotiations in London Michel Barnier said told reporters that "the time for answers is quickly running out".
"By its current refusal to commit to open and fair competition and to a balanced agreement on fisheries, the UK makes a trade agreement, at this point, unlikely. Until the very last day of this negotiation and despite the current difficulties the EU will remain engaged, constructive, and respectful," he said.
"In any case the UK has chosen to leave the single market and customs union on 1 January next year in little more than 5 months. This will bring inevitable changes. On our side we are getting ready."
Mr Barnier warned that not signing a deal by October would have serious economic consequences.
"If we do not reach an agreement on our future partnership there will be far more friction – for instance on trading goods in addition to new customs formalities there will be tariffs and quotas," he said.
"This is the truth of Brexit and I will continue to tell the truth. If we want to avoid this additional friction we must come to an agreement in October at the latest so that our new treaty can enter into force on 1 January next year. This means that we only have a few weeks left and that we should not waste time."
Taking questions from journalists after his statement, the EU's chief negotiator said progress had to be made: "You don't do that with ultimatums or threat, I've never seen negotiations being carried forward in that sort of way. I don't think we've got time for these games."
Mr Barnier's UK counterpart David Frost issued a statement warning that "considerable gaps remain" in talks and accepting that a deal would not be reached in time for the end of July, when Boris Johnson had said he wanted one to be signed by.
But he was more up-beat on the prospects of an eventual trade agreement, adding: “Despite all the difficulties, on the basis of the work we have done in July, my assessment is that agreement can still be reached in September, and that we should continue to negotiate with this aim in mind. Accordingly we look forward to welcoming the EU team back to London next week as planned for informal discussions and to the next negotiating Round beginning on 17 August.”
He added: "Considerable gaps remain in the most difficult areas, that is, the so-called level playing field and on fisheries. We have always been clear that our principles in these areas are not simple negotiating positions but expressions of the reality that we will be a fully independent country at the end of the transition period.
“That is why we continue to look for a deal with, at its core, a free trade agreement similar to the one the EU already has with Canada – that is, an agreement based on existing precedents. We remain unclear why this is so difficult for the EU, but we will continue to negotiate with this in mind.
“Looking forward, there are large areas of convergence in many of the areas on which we are negotiating and ample precedents and texts on which we can base our work. We will keep working hard to bridge the gaps and find a way through."
The next round of formal negotiations is in mid-August, with further discussions expected in London next week.
The main stickingpoints in talks are on fisheries, where Mr Barnier says the UK "is asking for near-total exclusion from the UK's waters" of EU vessels – and on regulatory alignment.
"On important areas such as climate, environment, labour, and social law the UK refuses effective means to avoid undercutting by lowering standards," the EU's chief negotiator said.
"The UK wants to maintain its regulatory autonomy: OK, we respect that. But can the UK use this new regulatory autonomy to distort competition with us? We have to answer this question as we commit to a new economic partnership. We want to trade with the UK free from tariffs, free from quotas, but also free from unfair competition. I am sure that UK businesses want that too. The UK tells us it needs certainty for its businesses, but that cannot be at the price of long-term uncertainty and disadvantages for our business in the EU. We respect the UK government's political choice and we are ready to work on solution. But the EU will not accept to foot the bill for the UK's political choices."
Mr Frost said the UK had "always been clear that our principles in these areas are not simple negotiating positions but expressions of the reality that we will be a fully independent country at the end of the transition period".
"We continue to look for a deal with, at its core, a free trade agreement similar to the one the EU already has with Canada – that is, an agreement based on existing precedents. We remain unclear why this is so difficult for the EU, but we will continue to negotiate with this in mind," he added. UK sources say both sides engaged on the level playingfield and that the UK had proposed a robust legal text. On fishing the UK says the EU wedded to the status quo.
Downing Street said on Wednesday that the UK was now looking for the "outline" of a free trade agreement by the end of the year, hinting that a full agreement may not be possible.
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