As divisions within the Conservative Party continue to threaten the progress of Brexit, one senior EU diplomat expressed concern the UK “would still be in Brexit La-La land” by next summer with so many issues yet to be agreed.
Cabinet meetings in London this week have failed to yield any concrete progress and there are reportedly concerns in Brussels that UK ministers will struggle to agree a unified position on trade.
EU member states want the UK to take the lead when Phase Two negotiations begin next year, but negotiators in Brussels are reportedly preparing a reduced version of the EU-Canada trade deal as a last-resort if the UK Government cannot get its house in order.
One official told the Financial Times: “If the commission sees that it’s not getting any clarity on this then it is preparing a ‘take it or leave it’ proposal.
“This would be in case everything goes pear-shaped.”
David Davis has previously insisted Britain will get a “Canada plus plus plus” agreement which would allow free trade in every sector, but this news suggests the EU are not, at least initially, preparing to offer such assurances.
The official added: “There will come a time, I don’t know when. We will say, here is what we prepared earlier. Now read and sign on the dotted line.”
Ceta, the trade agreement between Canada and the EU, took seven years to negotiate and only came into force this year.
The agreement means there are no customs duties on 99 per cent of goods traded between the EU and Canada, and EU companies are able to make bids for government contracts in Canada, and vice versa.
This type of deal would likely be welcomed by Brexiteers because it would allow Britain to enjoy a healthy trade relationship with the bloc while being free from paying into the Brussels budget, free to control UK borders and free from the jurisdiction of the European Court of Justice (ECJ).
There is, however, one major sticking point – trade in services.
Services are Britain’s biggest industry by a huge margin and UK ministers have already outlined a desire to agree a degree of privileged access on services.
Meanwhile, UK officials are also thought to be keen to come to an agreement on fisheries, aviation, security and foreign policy coordination, which are not included in the Ceta deal.
Theresa May is expected to make a major speech in the new year to outline the Government’s position on post-Brexit trade, which ought to kickstart negotiations.