LONDON: Britain and the European Union on Tuesday solved one thorny problem in their divorce, the status of Northern Ireland, but warned that the chances of a post-Brexit trade deal by a year-end deadline is slipping away.

Britain is due to leave the EU’s economic structures on Jan 1, a rupture that could cause upheaval for businesses on both sides of the English Channel if there is no trade agreement.

With negotiators deadlocked on key issues, Prime Minister Boris Johnson and European Commission President Ursula von der Leyen will meet in Brussels in the next few days to seek a way forward. But both sides downplayed the chances of a breakthrough.

Johnson said the situation at the moment is very tricky.

But hope springs eternal. I will do my best to sort it out if we can, he said.

German European Affairs Minister Michael Roth said we are really in a very difficult situation.” Were talking about negotiations on the future relationship between the UK and the European Union. Its not a comedy, its not a tragedy, these are negotiations about people and about future relationships, and we take them extremely seriously,” said Roth, whose country currently holds the EUs rotating presidency.

The UK left the EU on Jan 31 after 47 years of membership, but remains within the blocs tariff-free single market and customs union until the end of the year. Reaching a trade deal by then would ensure there are no tariffs and quotas on trade in goods on Jan 1, although there would still be new costs and red tape for businesses.

Failure to secure a trade deal would mean tariffs and other barriers that would hurt both sides, although most economists think the British economy would take a greater hit because the UK does almost half of its trade with the bloc.

There was a breakthrough in one area, as the two sides announced they had reached agreement on how trade will work with Northern Ireland, the only part of the UK that shares a land border with the EU.

The Brexit divorce agreement struck by the two sides last year contains specific provisions for Northern Ireland to ensure there are no customs checks or other trade barriers along the border with EU member state Ireland.

Not all the details were hammered out before the UK left the bloc in January, and as trade talks foundered the British government introduced legislation in September giving itself powers to breach the legally binding withdrawal agreement.

Britain claimed its Internal Market Bill was needed as an insurance policy to protect the flow of goods within the UK in the event of a no-deal Brexit. But the move infuriated the EU, which saw it as an act of bad faith that could imperil Northern Irelands peace settlement.

On Tuesday, British Cabinet Minister Michael Gove and European Commission Vice President Maros Sefcovic said they had reached an agreement on how trade to and from Northern Ireland would work, whether or not there is an overarching UK-EU trade deal.

Britain said as a result it would scrap its law-breaking measures, and Sefcovic said he hoped the accord would create a positive momentum for the free trade agreement.

Johnson and von der Leyen, head of the EUs executive arm, spoke by phone Monday and said afterwards that significant differences remained on three key issues fishing rights, fair-competition rules and the governance of future disputes.

The two leaders said they planned to discuss the remaining differences face-to-face in Brussels in the coming days.

No date was given for the meeting. The leaders of the EUs 27 nations are holding a two-day summit in Brussels starting Thursday and are not keen for it to be overshadowed by Brexit.

EU officials suggested negotiations could continue past Jan 1, even as the two sides tumbled into a no-deal trading relationship. But the UK insists the talks must finish this year.

Published in Dawn, December 9th, 2020