Brexit talks in "final hours" to hammer out trade deal

British and EU negotiators have plunged into the "final hours" of their scramble for a post-Brexit trade deal, deeply divided on the highly-charged issue of fishing rights.

The UK will leave the EU single market in less than two weeks and time has all but run out for any agreement to be approved in time to head off a severe economic shock.

The European Parliament has demanded that it see the text of any accord by Sunday at the latest, and the UK government says it will not allow talks to go beyond December 31.

Brussels' chief Brexit negotiator Michel Barnier told the MEPs before heading to talks with his UK counterpart David Frost that Friday marked a "moment of truth".

"We have very little time remaining, just a few hours to work through these negotiations... if you want this agreement to enter into force on January 1."

Britain left the European Union on January 31 and will leave the EU single market on December 31 at midnight, with or without a follow-on accord.

READ MORE: EU: Progress made in Brexit trade talks, 'next days decisive'

Last call

Without a trade deal, cross-Channel trade will be conducted on basic WTO rules and a market built over 47 years of economic integration will be disrupted by tariffs on goods.

Late on Thursday, Britain's Prime Minister Boris Johnson and EU chief Ursula von der Leyen held talks by phone that failed to break the logjam in the eight-month-old negotiation.

After the call, a Downing Street spokesperson said: "The prime minister underlined that the negotiations were now in a serious situation.

"Time was very short and it now looked very likely that agreement would not be reached unless the EU position changed substantially," the official warned.

Unlike previous encounters, which resulted in a joint EU-UK statement, von der Leyen gave her own account of the call.

"We welcomed substantial progress on many issues, yet big differences remain to be bridged, in particular on fisheries," she said.

"Bridging them will be very challenging. Negotiations will continue tomorrow."

READ MORE: Hopes dim as UK, EU see no deal on post-Brexit trade

The fishing issue

Barnier confirmed that fish remains the main sticking point, with both sides now moving closer on the broader rules for ensuring fair competition.

Barnier said the talks have now become "extremely difficult" over agreeing how the EU could retaliate if Britain backpedalled on production standards to win a competitive edge for its products, or if Britain cut European fishermen off from its fishing waters in the future.

And he stressed that the issue of fish could not be side-stepped: "Everything comes together as a whole. Nothing's agreed until everything is agreed."

Britain is adamant that it will decide who gets to fish it in its waters after January 1, but Brussels wants to secure a long-term agreement guaranteeing access for EU boats.

"On a personal note, I don't think it would be fair, nor acceptable, if European fishermen were not allowed... to have access to those waters," Barnier said.

If the deal passes, he said, British companies trading in other areas would "remain stable in their rights", but EU fishing crews could lose out.

"So that wouldn't be fair, that wouldn't be honest," he said.

Logjam

Many in Brussels see the doom-laden rhetoric coming from both sides as manoeuvring for advantage in the last moments before the deal – which is said to be 95 percent ready – is signed.

"It's like always in politics. It happens always at the end," veteran MEP and former Belgian premier Guy Verhofstadt told Sky News.

Nevertheless, as he prepared to head across Brussels to see Frost, Barnier sounded a pessimistic note.

"I think I've always been frank with you, and open and sincere," he told the MEPs.

"I cannot say what will come up during this last home straight of the negotiations. We have to be prepared for all eventualities."

Meanwhile, unprecedented numbers of heavy goods vehicles are seeking to cross from France to Britain as the post-Brexit transition period comes to a close.

Traders are rushing to stockpile goods before December 31, exacerbating delays caused by the pre-Christmas rush and disruption to shipping from the coronavirus crisis.

While Barnier said the sides were striving at an agreement, he said the 27-nation bloc would not sign a deal that would undercut its cherished single market of 450 million consumers.

He said the EU needed to be able to impose trade barriers should the UK change its regulations to offer substandard goods on the bloc's market.

For fisheries, he said the bloc also wanted to be free to retaliate by curbing EU market access to UK fish products should Britain squeeze the European ships out of its waters.

"That is where we get to one of the most difficult issues at the moment . Fisheries being part and parcel of the trade relationship," said Barnier, adding he did not know if the talks would yield a deal, or not. "We have to be prepared for all eventualities."

READ MORE: EU and UK give each other until Sunday to save Brexit talks