The UK government is facing the prospect of failing to secure trade deals with the European Union and the US this year – according to reports in the national media.
The UK, having formally left the EU earlier the year, is currently trading with the trade bloc under its rules during a transition period which finishes on 31 December 2020.
Throughout the transition, the UK and EU have been negotiating a future trading relationship, with the UK pursuing a free trade agreement similar to that which the bloc agreed with Canada in 2014.
However, talks with the US and EU – the UK’s two largest trading partners – have faltered during the summer.
UK-EU: WTO rules likely
According to the Daily Telegraph, the government is now working under the assumption that the UK will trade with the EU under WTO rules from the start of next year, having failed to reach a deal.
Though the talks continue to be ‘constructive’, there have been divisions over fishing rights, governance, level playing field rules and, more recently, City of London access to European financial markets.
The EU continues to push a hard line to maintain the integrity of its single market while the UK is looking to ensure it retains sovereignty, including the right to diverge on standards and regulation.
A senior government source told the Telegraph that the UK has made it clear that “no deal” preparations are ongoing and called on the EU to compromise.
However, should the EU budge on key issues, the same source says a deal is possible in the autumn, though it is now likely to be a “basic deal” rather than a “phenomenal deal”.
“We wanted to see an agreement this month,” they said. “It's clear from the EU side that's not going to happen. No trade deal has to be the working assumption, because that's what we have to prepare for.”
UK-US: Unrealistic timescale
The UK government is abandoning hopes of securing a deal with the US before this autumn’s presidential election, report the FT.
The government had pinned hopes on a quick US deal being the early feather in an independent UK’s post-Brexit hat, but British officials have blamed the Covid-19 pandemic for the slow progress.
The two countries are grappling with a wide range of issues, having previously traded using WTO rules as the EU does not have an overarching trade agreement with the EU.
Market access for US agricultural products in the UK is thought to be a major sticking point in the talks, with agricultural bodies in the UK – including the National Farmers Union – wary that the UK could be flooded with cheaper US imports.