European Union and British negotiating teams face what they expect to be a breakneck few weeks as they attempt to reach a deal that may determine the depth of the economic blow Ireland faces in January on top of the strain of Covid-19.
The two sides are stuck over stark ideological differences that have meant little progress has been made over the summer towards the vast and complex pact that is needed to govern relations between the bloc and its former member.
The mood has darkened in Dublin and Brussels regarding the chances of an agreement, and a note of frustration has crept in after months of stalemate in which both sides have wearied of treading over the same old ground.
"Good luck" to Britain if it's a no-deal, the EU's chief negotiator Michel Barnier told an Institute of International and European Affairs event yesterday, adding that London was asking for the impossible and even backsliding on past agreements despite EU efforts to work towards compromise.
The UK side shot back, briefing that Barnier’s speech was “a deliberate and misleading caricature of our proposals aimed at deflecting scrutiny from the EU’s own positions which are wholly unrealistic and unprecedented”.
The EU says it will grant easy access to the single market to British businesses only with a guarantee they will not be given unfair competitive advantages
Negotiators have their eyes on the mid-October meeting of national leaders in the European Council as the deadline by which there will have to be movement in the talks. Early November is considered the time when the final full stop can be put on any deal, to give it enough time to pass through the full legislative process and for countries to prepare.
The future relationship deal is a different kettle of fish from the withdrawal agreement that was brokered at the eleventh hour last year, negotiators warn.
While the withdrawal agreement covered the “terms of the divorce” – including cash, the rights of the respective citizens living in the UK and EU and, crucially, how to avoid the appearance of a border across the island of Ireland – the future relationship agreement covers vastly more ground.
The rounds of talks have involved multiple teams holding separate discussions simultaneously on different topics, from aviation to police co-operation to the recognition of professional qualifications.
For this reason, people close to the talks play down the possibility that political leaders could swoop in at the last minute to hash out a compromise, emphasising that governments are already closely in tune with the negotiations.
Both sides say the biggest obstacles to an agreement are on fisheries and state aid rules.
Though the fishing industry accounts for only about 0.1 per cent of the British economy, it was symbolically important to the Brexit referendum and central to the perception that the vote was a reclamation of “sovereignty”.
The EU is arguing for the continuance of a quota system for fishing that would allow boats from member states to continue to access UK waters. Its leverage is that the UK relies on selling its fish to the continent; Britain exports the vast majority of its fish catch – up to 80 per cent – while most fish eaten in the UK is imported.
The UK insists that quotas are anathema to “taking back control” of its territorial waters, and that fishing rights should be decided in annual negotiations, something the EU rules out as unfeasible.
State aid is part of a much broader issue: the so-called “level playing field”. The EU says it will grant easy access to the single market to British businesses only with a guarantee they will not be given unfair competitive advantages through government help that would allow them to undercut EU counterparts. Britain argues that in this area, Brexit means that it need not care what the EU thinks or wants.
Mandate
The British insist they will not back down, arguing the election won by Boris Johnson in December, in which he won the biggest Conservative majority since the 1980s, is a mandate for a hardline interpretation of the meaning of Brexit, and that the political pressure of those in power does not allow room for compromise.
From the start of the talks, negotiators have said they do not consider a “no deal” to be such a bad option, and along with the British government have taken to referring to the prospect as the less-threatening “Australia-style” option.
But the economic prospect is far from sunny. The British government’s own calculations show that not reaching a deal would shrink its economy significantly. Economists expect disruption, layoffs and for the most vulnerable businesses to go bust outright.
Ireland and Britain's close neighbours such as Belgium and the Netherlands would also be affected, though to a lesser degree, but with highly exposed sectors such as food, agriculture and horticulture that rely on sales to Britain facing grave challenges.
The EU side believes that their British counterparts know an agreement would be better than none. Why else would they still be negotiating?
“Make no mistake, there will be a huge difference between a deal and no deal,” Barnier warned.