As Brexit breakthrough nears, EU's trade plan said to fall short

EU negotiators told envoys on Wednesday that both sides will start work on a joint document setting out the progress that’s been made so far, according to a person familiar with the discussion. While there’s still skepticism from some members of a breakthrough at a summit mid-December, negotiators anticipate an improved offer on the bill soon, the person said.

The whole point of putting more money on the table is to convince the EU side to move talks on to the future trading relationship. EU members have started talking about what kind of trade deal they will seek with the UK, and the feeling is that a Canada-style deal can be struck, according to the person.

That model - while considered the most ambitious of all EU accords - falls short of what the UK has in mind.

EU chief negotiator Michel Barnier cast doubt this week about the kind of trade deal the UK could aspire to if it’s not willing to commit to staying close to EU regulation. 

Best of both

The UK wants the best trade deal that’s ever been struck with the EU - with financial services included - and on top it also seeks accords with countries such as the US - where regulations are dramatically different to those of the bloc. Trade experts say nations can’t enjoy both privileges. 

“It is not only about rules or laws. It is about societal choices – for health, food standards, our environment and financial stability,” Barnier said on Monday.

More than a year after the referendum that triggered Brexit - and with just 16 months to go until the UK departs - negotiations have still not broached trade, nor the crucial transition period that businesses are crying out for to smooth the exit process.

If an agreement isn’t reached in December so that trade talks can start, the chances of a chaotic breakup increase.

Breakthrough near

With eyes on a December deal, May will meet European Council President Donald Tusk on Friday. Tusk tweeted on Wednesday that he was meeting Barnier to prepare for the Brexit meeting. Tusk and May met last week on the sidelines of a summit in Gothenberg, Sweden.

“Whatever May said to Tusk in Gothenburg appears to have impressed the EU side,” Charles Grant, director of the influential Centre for European Reform think tank, said in an interview.

Grant puts the chances of a breakthrough in December at about 60% to 70%, and said a dinner between European Commission President Jean-Claude Juncker and May on December 4, which neither side has officially confirmed, is expected to be a key moment.

While the UK has made clear it’s preparing to offer more cash - as long as the EU side gives something in return - the issue of the Irish border could still derail progress. Both sides have said it’s up to the other to propose solutions, while all options proposed so far are unacceptable to either.

On the issue of citizens rights, negotiators told envoys that there’s 95% convergence between the two sides, according to the person familiar with the discussions, including a piecemeal approach to the role of the European Court of Justice.