On fishing, the UK wants to ends it membership of the controversial Common Fisheries Policy (CFP) and become and independent coastal state- however the bloc wants to maintain access for European trawlers into British waters.
Michael Barnier has insisted the EU wants to ensure the UK follows a so-called “level playing field” on trade in order to protect the single market from being undercut by other agreements with nations around the world.
On fishing and level-playing field, Mr Frost said: “Any such deal must, of course, accommodate the reality of the UK’s well-established position on the so-called ‘level playing field’, on fisheries, and the other difficult issues.”
Following the transition period the UK wants to be governed by courts in the Britain rather than the European Court of Justice mediating any future disagreements.
On security arrangements Michael Barnier also warned the UK could be excluded from European Arrest Warrant and EU crime databases after it leaves the bloc.
Earlier this month Cabinet Office minister Michael Gove confirmed the deadline for an extension had passed and the UK would be ending negotiations at the end of the year.
Ahead of the crucial round of talks Mr Frost said: “We will go to Brussels in good faith to engage with the EU’s concerns.
“This needs to be a real negotiation and some of the EU’s unrealistic positions will have to change if we are to move forward.
“UK sovereignty over our laws, our courts, or our fishing waters, is of course not up for discussion.
“Equally we do not seek anything which would undermine the integrity of the EU’s single market.”
Meanwhile Boris Johnson has threatened to walk away from negotiations if a breakthrough could not be reached.
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Following a conversation on Saturday with Polish prime minister Mateusz Morawiecki, Downing Street confirmed Mr Johnson reiterated that the UK was prepared to leave on “Australia terms” if no agreement was forthcoming.
A Number 10 spokeswoman said: “On the UK’s future relationship with the EU, the Prime Minister welcomed the agreement on both sides to an intensified process of negotiations in July.
“He said the UK would negotiate constructively but equally would be ready to leave the transition period on Australia terms if agreement could not be reached.”