Boris Johnson and European Commission president Ursula von der Leyen are to hold emergency talks today to attempt to break the deadlock as time runs out on a Brexit deal.
As the UK edges closer to leaving the EU without a deal – a move that experts claim would be a disaster for the motor industry – negotiators ‘paused’ talks yesterday and passed it back up the chain.
In a joint statement following face to face talks in London, Lord Frost and the EU’s Michel Barnier said the conditions for an agreement had still not been met.
The two sides are still be circling around the same issues and say ‘significant divergences’ remained over fisheries, the ‘level playing field’ rules on fair competition and the enforcement mechanism for any deal.
Imported cars would become 10 per cent more expensive overnight from January 1 if the UK was forced to leave under World Trade Organisation rules.
And this week it was reported that manufacturers have already started bringing in more cars and parts to stockpile in the UK in case of a hard Brexit.
With time for an agreement rapidly running out, the two sides’ chief negotiators announced yesterday they were putting the talks on ‘pause’ to allow political leaders to take stock.
Johnson and von der Leyen are expected to speak by telephone on this afternoon.
EU leaders are due to meet on Thursday for a two-day summit in Brussels when they could sign-off on any agreement.
Time then has to be found for both Houses of Parliament in the UK and the European parliament to ratify it before the transition period expires.
If there is no agreement the UK will leave the European single market and customs union on December 31 and begin trading with the bloc on World Trade Organisation terms, with the imposition of tariffs and quotas.
The SMMT told The Guardian that 60 per cent of its members are spending significantly on stockpiling while more than half had employed customs agents to prepare for new paperwork.
The automotive industry has already spent £235m on Brexit preparations this year and are fearful of tariffs that would add around £1,900 on average to the cost of imported cars.
Mike Hawes, SMMT chief executive, has long been highlighting the devastating impact no deal would have on the automotive sector.
Recently, he said: ‘Make no mistake, the automotive industry will not prosper from no deal.
‘It would have a devastating impact on the sector, on the economy and on jobs in every region of Britain.
‘Businesses have been battling coronavirus at the same time as investing heavily in decarbonisation, all while preparing as best they can for a seismic change in trading conditions come year end.
‘But to avoid permanent damage, we urge both sides to keep talking, to remain calm but work with renewed vigour on a deal that supports automotive, a sector that is Britain’s biggest exporter of goods and one of the UK and Europe’s most valuable economic assets.’
In their statement, Lord Frost and Barnier said: ‘After one week of intense negotiation in London, the two chief negotiators agreed today that the conditions for an agreement are not met, due to significant divergences on level playing field, governance and fisheries.
‘On this basis, they agreed to pause the talks in order to brief their principals on the state of play of the negotiations.’
So, what are the main sticking points?
The EU wants to continue to maximise access to UK waters for its fishing fleets after December 31.
The British argue the UK is now an independent coastal state and should be able to prioritise its own boats.
However, most fish caught by UK fishermen are sold in Europe and Britain needs to maintain access to EU markets.
The level playing field
The so-called ‘level playing field’ rules are intended to ensure businesses on one side do not gain an unfair advantage over those on the other side.
In return for continuing access to the single market, the EU is seeking a high degree of alignment by the UK with its standards on workers rights, the environment and particularly state aid for businesses.
The British deny they want to undercut EU measures, but say the point of leaving is for the UK to be able to set its own standards.
The two sides are still at odds over the mechanisms for enforcing any agreement and resolving disputes.
The British have been adamant that the UK is an independent sovereign state and cannot accept the jurisdiction of the European Court of Justice.