Angela Merkel said on Wednesday that Britain and the EU must find a way to minimize the risk of unfair competition between their markets, warning that Brussels will accept a no-deal outcome in trade talks if this cannot be achieved.
The German Chancellor made a difficult choice to Boris Johnson Wednesday, as the British Prime Minister prepares to travel to Brussels for landmark talks, saying any deal with Britain must not undermine the EU’s single market.
The veteran leader told German MPs that finding a system to deal with the differences that might develop in areas such as environmental law and labor standards was “the very big issue on which we need a satisfactory response ”.
“We have to understand how each party will react when the legal situation in the EU or the UK changes,” she said. “We can’t just say – let’s not talk about this.”
The German Chancellor’s comments frame the terms of the debate for Mr Johnson’s dinner tonight with European Commission President Ursula von der Leyen. Ms Merkel has made it clear that the EU would accept the UK forging its own regulatory path, but a way must be found to preserve fair competition when it does.
The question of how to maintain a “level playing field” for business is one of the main sticking points that hampered the negotiations as well as the thorny issue of EU fishing rights in UK waters.
Ms Merkel warned that the dinner may not provide the clarity she is looking for ahead of a summit of EU leaders due to start in the Belgian capital in the early afternoon.
“There is still the possibility of an agreement. I don’t think we will know tomorrow whether it will be successful or not, I cannot promise that, ”said Merkel. “But… If there are any conditions on the UK side that we cannot agree to, we are prepared to go down the road without a trade deal.
Earlier on Wednesday, a senior British minister insisted it was “not fair” to say that Brexit talks were tipping towards no deal before tonight’s high-level dinner.
Michael Gove, Cabinet Office minister, said Wednesday’s talks were aimed at “finding a solution”.
Mr Gove issued a conciliatory note on the prospects for progress, but said the EU would need to act to reach a deal.
Barely three weeks before the end of Britain’s Brexit transition period, leading to the UK’s exit from the EU’s single market, negotiations remain at an impasse.
Ms Merkel said: “We need a level playing field, not only for today, but also for tomorrow and the day after.
“For that, we need to come to an arrangement on how the other party should react when the other party changes legal position. Otherwise, we get an unfair competition.
“This is the big and difficult question hanging over us, alongside the question of fishing quotas as well.”
One idea on the negotiating table is that of an “evolutionary mechanism” that would allow each party to reduce access to its markets if rules in areas such as labor rights and environmental standards diverge with the market. time. But the UK dismissed the idea as being too restrictive for its freedom of regulation.
Mr Gove said Britain could accept a “non-regression clause” in any deal, committing the UK to maintaining current regulatory levels in areas such as the environment, workers’ rights and state aid. He said it was common in trade agreements.
But he said the UK could not agree to what it claimed was a last minute demand from the EU that “if the EU passed new laws, the UK should either do the same or l ‘EU would strike back “.
Mr Gove also admitted that there would need to be a ‘step-by-step process’ for the gradual reduction in the access of EU fishing vessels to UK waters after the end of the transition period on 1 January.
A senior UK official said a deal might not be possible but that Mr Johnson hoped the discussion with Ms von der Leyen “would provide a political impetus that would allow negotiators to try to finish the job”.
The official added: “If we can make progress at the political level, it could allow Lord Frost and his team to resume negotiations in the days to come.” David Frost, UK chief negotiator, and Michel Barnier, his European counterpart, are expected to join the dinner.
Earlier Wednesday, Mr Barnier is due to address the EU’s Committee of the Regions at 2.30 p.m. Brussels time.