With little time left here’s Nicky Donnelley’s assessment of last week’s developments:

STATE OF PLAY

Following a call with EU Commission President Ursula von der Leyen, Prime Minister Boris Johnson has warned that EU negotiators must “bring something to the table” as “things are looking difficult” in trying to bridge the gap in post-Brexit trade deal negotiations. 

Sounding more optimistic, EU’s chief negotiator Michel Barnier told MEPs talks had reached the “moment of truth”, saying that the main obstacle to a deal was over whether Brussels would be able to impose tariffs on UK goods, and fisheries products “in particular”, if the UK Government decided to close its fishing waters to EU fishing fleets in the future.

On the other main sticking point of fair competition rules for business, Barnier said the EU accepted the principle that the UK might in future want to diverge from EU regulations, but that this would also have implications for UK access to the European single market. 

Negotiations are now expected to continue over the weekend with the ultimate deadline for a deal being the end of the transition period (31 December). Were a deal to be agreed, discussions will then move on its implementation and ratification.

In the UK, Downing Street has announced that the Commons, which rose for the Christmas recess on Thursday, will be recalled, possibly next week, to pass the required legislation before 31 December. However, in the EU, MEPs have already indicated that, unless a deal is agreed by this Sunday, they will be unable to ratify the deal in 2020, due to the limited amount of time left to properly scrutinise it. 

Even if the Council agrees to provisionally apply the agreement in the meantime, the text will need to be finalised, translated and discussed in EU capitals, before any decisions are taken. It is expected that Member States will express disquiet about rubber-stamping the deal without properly scrutinising it. 

As indicated by EU Chief Brexit Negotiator Michel Barnier in his weekly update with Member States, this means that there could be a short ‘no-deal’ period at the beginning of January 2021, while the EU finalises the deal. 

OTHER KEY DEVELOPMENTS 

  • The UK Internal Market Act received Royal Assent on 17 Thursday, having been approved in the House of Commons on 16 December. The Act is intended to set up the arrangements for trading among the four countries of the UK after the conclusion of the Brexit transition period, and to restrict the way that powers which are devolved to the domestic administrations can operate in practice. 
  • The CBI has published 48 recommendations for the UK and EU to help ease the disruption likely to be caused by the end of the Brexit transition period, regardless of whether there is a deal or not. Among the recommendations is a call for a six-month grace period for companies to adjust to new customs arrangements after 1 January. 
  • A surge of stockpiling by UK companies before the end of the Brexit transition period on 31 December has triggered road congestion at Dover with queues reaching 20 miles on 18 December and Holyhead, which has registered record volumes of freight (20% up on last year) being shifted across the Irish Sea. There are also long queues at Calais. 
  • The UK is reported to be drawing up plans to turn London into a rival to Singapore as a hub for shipping companies to register vessels after the Brexit transition period. 

Other trade deal

  • The UK has signed a Customs Assistance Agreement with the US, ensuring trade between the countries is not disrupted after the Brexit transition ends on 31 December.