MNI SOURCES: EU To Stay In UK Talks, Chances Of Deal Seen Slim

The European Union will persist with negotiations for a possible post-Brexit trade deal despite anger in Brussels over legislation which would break UK commitments to keep Northern Ireland aligned with European standards and pessimism over the chances of agreement, a source close to the discussions told MNI.

The spat over the UK's Internal Market Bill should not affect the content of any eventual agreement, the source said. While no landing zone is in sight for a possible compromise deal, the official suggested talks could be revived after Jan. 1 following a "cooling off period" if they fail to prevent a shift in EU-UK commerce to World Trade Organisation terms when the transition period expires in December.

The official's comments cast light on the EU's negotiating stance as the talks near the end-September deadline imposed by the EU for the UK to withdraw the Internal Market Bill. The legislation, which would renege on pledges in the UK's Withdrawal Agreement with the EU, passed a second reading in the House of Commons on Monday despite a revolt from some within the governing Conservative Party who now plan to try to amend the Bill next week.

The EU considers the Internal Market Bill a breach of good faith, the source said, but added that it will will not derail talks nor affect their content.

QUESTION OF TRUST

"It has nothing to do with the substance of a future deal and there will be no link to the substance – we are not going to say, we're upset with you so we'll put a 10% tariff on cars [for instance]," the official said.

"It's just a question of trust – if we conclude something with the UK how do we know they won't subsequently renege on that? But that's a separate issue … Talks will carry on until we agree or one side walks away or both sides agree there is no point."

If the legislation is approved before the end of this year, the European Commission could launch infringement proceedings, or if it passes at a later date then the EU might resort to an arbitration panel under the terms of the Withdrawal Agreement, the source said.

"Eventually, we could impose a penalty or parts of the deal might be suspended. But for now, we're not thinking about that," the official said. "The IM is problematic, but you don't solve a problem by not talking."

At the same time, Brussels has little confidence in the prospects for success in the talks, according to the source.

NO LANDING ZONE

"The talks are going on, it's just very difficult to see what to talk about if there is no movement on fisheries or state aid," the official said, while conceding that the storm over the UK bill could focus minds. "I don't know where we land."

Nor is there any is indication that the German EU presidency will try a high-level political approach to broker a deal, the source said, adding that nonetheless a resumption of talks at some point in the future could not be ruled out even if they fail to prevent a switch to WTO terms.

Another EU source agreed that Brussels is exasperated by the UK move but not about to break off negotiations.

"The EU doesn't want to give the impression that we walked away – and it doesn't cost member states anything. But the last UK move has really left people flabbergasted and exhausted. I think many now wish this only to be over."