European Union's chief Brexit negotiator Michel Barnier warns talks with his British counterpart this week will be tricky as Britain wants "the best of two worlds" in the divorce deal.
The EU and Britain are back to haggling over Brexit with Britain giving ultimatums over a free-trade deal and the bloc warning the Brits to respect the original terms of the divorce.
The recent crisis was triggered after Britain warned the European Union that it could effectively override the divorce deal it signed unless the bloc agrees to a free-trade deal by October 15.
British Prime Minister Boris Johnson has brushed off fears about "no-deal" chaos if talks fail.
To further complicate things, in one of the most startling turns of the four-year Brexit saga, Britain has been reportedly planning new legislation that will override key parts of the Brexit Withdrawal Agreement – a step that, if implemented, could jeopardise a treaty signed in January and stoke tension in Northern Ireland.
EU's chief negotiator Michel Barnier warned on Monday that withdrawal terms that Britain agreed to before formally exiting the European Union "must be respected".
Sections of the internal market bill, due to be published on Wednesday, are expected to "eliminate the legal force of parts of the withdrawal agreement" in areas including state aid and Northern Ireland customs, the Financial Times said, citing three people familiar with the plans.
No-deal? No fears, says Boris
Britain left the now 27-nation EU on January 31, three-and-a-half years after the country narrowly voted to end more than four decades of membership.
That political departure will be followed by an economic break when an 11-month transition period ends on December 31 and the UK leaves the EU’s single market and customs union.
Johnson said an agreement would only be possible if EU negotiators are prepared to “rethink their current positions”.
"If we can't agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on", he will say, according to comments released by his office on Sunday.
Without a deal, the New Year will bring tariffs and other economic barriers between the UK and the bloc, its biggest trading partner.
Key sticking points
The key sticking points are European boats’ access to UK fishing waters and state aid to industries. The EU is determined to ensure a “level playing field” for competition so British firms can’t undercut the bloc’s environmental or workplace standards or pump public money into UK industries.
Britain accuses the bloc of making demands that it has not imposed on other countries it has free trade deals with, such as Canada.
Johnson has said the country would “prosper mightily” even if Britain had “a trading arrangement with the EU like Australia’s” — the UK government's preferred description of a no-deal Brexit.
READ MORE: Brexit implications for Britain and the EU
"I remain worried ... the negotiations are difficult, because the British want the best of both worlds," Barnier said on France Inter radio on Monday.
He added that he believed it was possible to find a deal on fisheries.
The reported plan to undermine the Withdrawal Agreement – disclosed on the eve of the eighth round of talks in London – was condemned by parties on both sides of the Irish border and elicited surprise in Brussels.
"If the UK chose not to respect its international obligations, it would undermine its international standing," said one EU diplomat on Monday.
"Who would want to agree trade deals with a country that doesn't implement international treaties? It would be a desperate and ultimately self-defeating strategy."
"Without correct implementation of the Withdrawal Agreement, I cannot imagine the EU would conclude a treaty with a country that does not abide by its treaty commitments," said another EU diplomat.
Irish Foreign Minister Simon Coveney, who played a key role in negotiating the withdrawal agreement and Northern Ireland protocol, said on Twitter that the reported move "would be a very unwise way to proceed".
Senior members of Northern Ireland's Sinn Fein and SDLP parties, the region's two largest Irish nationalist groups, also criticised the British government's plan, as reported by the newspaper.
'Our laws, our fishing waters'
Asked about the report in the Financial Times, British Environment Secretary George Eustice said there might be some minor "legal ambiguities" that needed to be tidied up over the Northern Irish protocol.
"We are not moving the goal posts," he told Sky News.
"As a government we are preparing, at our borders and at our ports, to be ready for it," he will say.
"We will have full control over our laws, our rules and our fishing waters."
In that case, Britain would be ready to find sensible accommodation with the bloc on practical issues such as flights, lorry transport or scientific cooperation, according to the excerpts.