Michel Barnier says EU remains ‘open’ to transition period extension

Talks between London and Brussels stall with sides far apart on fisheries and regulatory alignment

Michel Barnier, the EU’s chief Brexit negotiator, has told opposition MPs at Westminster that Brussels remains “open” to extending the transition period by up to two years, as talks on a future trade deal continue to founder.

Mr Barnier’s letter, sent on Monday, came as David Frost, his British counterpart in talks on a future UK/EU relationship, admitted that both sides remained far apart on issues including fisheries and Brussels’ demands for a “level playing field” on state aid, tax, environmental and labour laws.

Mr Frost, giving evidence to MPs on the parliamentary committee on the future relationship with the EU on Wednesday, admitted that agreement on a post-Brexit fishing regime — viewed as crucial to unlocking a trade deal — was unlikely to be secured by the target date of June 30.

“It’s not an absolute requirement,” he told the MPs. “I’m beginning to think we might not make it by June 30 but we will keep on trying.”

Against the economic chaos caused by coronavirus, Mr Barnier again offered Britain the chance to avoid further business upheaval by extending the transition period, agreed as part of Boris Johnson’s Brexit deal last year, until the end of 2022.

In his letter to opposition leaders including Ian Blackford of the Scottish National party and Ed Davey of the Liberal Democrats, he said: “Such an extension of up to one or two years can be agreed jointly by the two parties. The European Union has always said that we remain open on this matter.”

But Mr Frost told MPs he was working under the “firm” instruction from Mr Johnson, the UK’s prime minister, that the transition period would not be extended beyond December 31.

Mr Frost was flanked by Michael Gove, cabinet office minister, who faced tough questioning on whether British business would be ready for a new customs and regulatory regime for trade with its biggest partner by the end of the year.

Hilary Benn, the Labour MP who chairs the committee, raised a Financial Times article in which freight industry leaders warned that Britain was likely to miss targets to hire and train the 50,000 new customs agents industry estimated would be required to handle the new bureaucracy.

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Mr Gove said the 50,000 estimate was a “sighting shot” and insisted the government was working with business to make sure it was ready for the new regime. He said that £31m out of £34m set aside by the government to train customs agents had been allocated.

Mr Gove also suggested that the Covid-19 crisis might make Britain less dependent on pan-European supply chains, noting the phenomenon of “reshoring” — moving overseas business operations back to the country where they originated — to make domestic supplies more resilient in future.

Meanwhile, Mr Frost said he hoped that the EU would reach an agreement soon on the treatment of the UK’s crucial financial services sector, based on the principle of “equivalence” of regulation, but that issue had become entangled in the row about fishing.

“I get the impression a final decision may not be that soon,” Mr Frost admitted. “We are completely in the hands of the EU on this.”

He said he could not understand why the EU would not readily agree to a stable equivalence regime with Britain — based on “dialogue between regulators” — when it had concluded a similar agreement in a trade deal with Japan.