E.U. and U.K. close to post-Brexit trade deal

BRUSSELS — European Union and British negotiators closed in on a trade deal Wednesday with only a disagreement over fishing remaining, raising hopes a chaotic economic break between the two sides on New Year’s Day could be averted even as soon as before midnight, officials said.

After resolving a few remaining fair competition issues, negotiators were dealing with EU fisheries rights in U.K. waters as they worked to secure a deal for a post-Brexit relationship after nine months of talks.

Two EU sources said the negotiations were in a final phase now, with one saying: “I expect to see some white smoke tonight.” The official asked not to be identified because the talks were still ongoing.

Customs checks and some other barriers will be imposed under whatever circumstances on Jan. 1, but a trade deal would avert the imposition of tariffs and duties that could cost both sides hundreds of thousands of jobs. Britain withdrew from the EU on Jan. 31, and an economic transition period expires on Dec. 31.

British Prime Minister Boris Johnson has always insisted the U.K. would “prosper mightily” even if no deal were reached and the U.K. had to trade with the EU on World Trade Organization terms.

But his government has acknowledged that a chaotic exit is likely to bring gridlock at Britain’s ports, temporary shortages of some goods and price increases for staple foods. Tariffs will be applied to many U.K. exports, including 10% on cars and more than 40% on lamb, battering the U.K. economy as it struggles to rebound from the impact of the coronavirus pandemic.

Rumors of a pre-Christmas trade deal surfaced in recent days based on progress on the outstanding issues beyond fishing. However, some EU nations insisted that upon close scrutiny, Britain’s latest proposals on quotas for EU vessels in U.K. waters were far less conciliatory than first met the eye.

On Wednesday, the brokering on quotas and transition times for EU vessels to continue fishing in U.K. waters were in full swing, with progress reported from several sides.

In London, U.K. Cabinet minister Robert Jenrick said, “We will need to get those final issues resolved, and there’s some way further to go on that.” He said he nonetheless felt optimistic.

The EU has long feared that Britain would undercut the bloc’s social, environmental and state aid rules to be able to gain an unfair edge with its exports to the EU. Britain has said that having to meet EU rules would undercut its sovereignty. On those issues, a compromise had been reached, a diplomat from an EU country said.

If both sides fail to meet the Jan. 1 deadline, it’s unclear under what conditions trade would take place before a deal would eventually be approved.