Why is a post-Brexit trade deal between the UK and EU so hard to reach?

Britain’s red lines stem from the rationale for leaving the bloc and about sovereign power

It can seem that negotiations for a trade deal between the EU and UK have been going on forever. But in fact, they have been conducted at record speed. The first round was held only in March.

Trade deals, which are notoriously difficult and detailed, often take the guts of a decade to agree. But Britain wanted to be fully detached from the EU in the quickest time possible, and forewent a chance to buy more time in July even after the pandemic disrupted the talks.

The previous deal of 2019 only covered the terms of Britain's exit from the EU, including the financial settlement and how to avoid a border on the island of Ireland. Since the UK left the bloc in January it has been in a transition period, broadly continuing the status quo until the new terms take over on January 1st. The new deal would cover everything from cross-border energy trade, to aviation safety agreements, to co-operation between police forces.

The 27 remaining EU member states agreed a negotiating mandate in February and charged Michel Barnier with carrying it out. Each member state argued for aspects that would defend their national interests as much as possible, as well as the joint red lines of protecting the bloc's single market and legal order.

Britain's red lines stem from the rationale for Brexit and are about sovereign power. It wants the ability to set its own rules and determine who can fish in its waters, and rejects European courts as the ultimate authorities that can adjudicate any potential disputes.

Stumbling blocks

Both sides want to have tariff-free trade with the other, and 95 per cent of the text is said to be almost finalised. But three obstacles have stood in the way of an agreement all year and remain the final stumbling blocks: the so-called level playing field, governance and fisheries. Each stems from fundamental ideological differences between the two sides.

EU boats catch about €650 million worth of fish in waters defined in recent decades as Britain’s exclusive economic zone. Many continental boats have fished there for decades or centuries, making for two irreconcilable and highly politically sensitive demands. Britain wants to take back the whole haul and dole out access in annual talks, while the EU broadly wants the status quo to continue. Each has only compromised as far as offering to cede 20 per cent to the other.

The level playing field is perhaps the most significant obstacle. The EU insists that British companies cannot sell barrier-free into the single market unless they follow broadly the same standards as EU firms. Otherwise, Britain could cut regulations and give its companies a permanent economic advantage over EU counterparts who are bound to follow stricter standards.

The EU is seeking a way to agree comparable standards that won’t diverge too much over time, and a means to enforce them to ensure Britain sticks to its commitments.

This is anathema to Britain, because having the freedom to set its rules free from any EU authority was the point of Brexit.

This overlaps with the final issue of governance, which is about what authority could arbitrate disputes and enforce the deal.

The London government’s introduction of laws that would break aspects of last year’s withdrawal agreement has hardened EU determination that such guarantees need to be iron clad.