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Angela Merkel has said that the main obstacle to a Brexit deal is not access to British fishing waters, but future regulatory standards in the UK, adding that she expects talks to continue over the next few days.
Boris Johnson and the President of the European Commission, Ursula von der Leyen, will dine together in Brussels at 7pm GMT. Merkel said she did not expect a deal to be reached before the EU summit on Thursday, but that hope remains.
Should the luncheon at the European Commission headquarters in Berlaymont be a success, negotiators from both sides hope to resume talks on Friday, and the leaders will simply receive an update on progress when they meet in Brussels.
Speaking in the Bundestag in her traditional speech ahead of a summit of the 27 EU heads of state and government, Merkel said there was a chance for a deal remaining. She said: “I don’t think we will know by tomorrow if this will happen or not, at least I can’t promise, but we are still working on it.
“But we are also prepared for conditions that we cannot accept. So if there are conditions coming from the British side that we cannot accept, we will go our own way without an exit agreement. Because one thing is for sure: the integrity of the single market must be maintained. “
Merkel said the main obstacle in the negotiations in Brussels was the EU’s request for an “evolution clause” or “ratchet clause” as Downing Street has described it. Such a clause would establish a mechanism to ensure that while one party raises its environmental, labor, and social standards, the other cannot sit back and enjoy a competitive advantage.
UK chief negotiator David Frost agreed not to back down from a common baseline of standards at the end of the transition period, but Brussels is concerned that these will soon become outdated as the bloc develops its regulations.
EU negotiators want a forum for discussion when the current minimum standards are outdated due to developments on one side. Then there would be arbitration and the possibility that one party would counterattack with tariffs or other corrective measures if the other was slow to agree on a new “level playing field” of minimum standards.
Downing Street fears this means a back door alignment of standards, and is rejecting anything that would hamper policymaking in Westminster.
Merkel said: “There are a number of tough questions, mostly coming down to how to deal with the dynamics. We currently have more or less the same legal system, a harmonized legal system, but over the years the legal systems will diverge in terms of environmental law, labor law, health law, everywhere.
And how will the other respective party react to this, when the legal situation changes in the European Union or in Great Britain? And we can’t just say that we won’t talk about this, but we need not only a level playing field for today, but for the next few days as well. To do this, we need to find agreements on how each party can react when the other changes their legal situation. Otherwise, there will be conditions of unfair competition, which we cannot do with our companies.
“This is the big and difficult issue that is still on the table, along with the questions about fishing quotas and the like. But this problem of fair competition between two divergent legal systems is the real big problem for which we need satisfactory solutions. “
Ireland’s Deputy Prime Minister Leo Varadkar, who as a taoiseach in 2019 worked with Johnson to find a compromise on the Irish border prior to ratification of the withdrawal agreement, said he believed Johnson would seek another compromise. He said there was a 50% chance of a successful outcome.
Varadkar said: “Both parties have more to gain, and certainly more to save from a deal in the coming days than we have to lose. Ultimately, a bit of politics is needed at the end, and both sides move a bit at the end, but I think it is possible.
“Is Boris Johnson willing to compromise in those areas? I think it probably is. I think his natural instincts are much closer to the more liberal Mayor of London than he is to the more conservative Brexiteer. I think he wants Britain to be part of the world. I think he wants Britain to be seen as a country that is a first player, one with high standards.
“However, it will be very strong on the point of sovereignty and I think that any set of common minimum standards, any set of level playing field rules, should be something that the UK does not feel imposed on them. And that is, I think, where the piece of sovereignty comes in, and that will be a circle that will be difficult to square. “
