The U.K. and European Union are starting a key week of Brexit talks, with the bloc stiffening its demands over how any trade deal will be enforced after losing trust in Boris Johnson because of the prime minister’s attempt to rewrite last year’s divorce agreement.
The final round of scheduled discussions between the EU’s chief Brexit negotiator, Michel Barnier, and his British counterpart, David Frost, begins in Brussels on Tuesday with officials on both sides expressing cautious optimism a deal can be reached.
If the two sides make enough progress by Friday, they could embark on a two-week period of intense discussions — the so-called Brussels “tunnel” — to hammer out a compromise in time for a summit of EU leaders on Oct. 15, Johnson’s self-imposed deadline for striking a deal.
If they don’t, Britain would be almost certain to crash out of the EU’s single market at the end of the year without a trade accord, potentially poisoning relations for decades. Businesses and consumers would be left grappling with additional costs and disruption as quotas and tariffs return for the first time in a generation.
But doubts about Johnson’s willingness to abide by the pledges he has previously made in the Withdrawal Agreement have only added another layer of difficulty to striking a deal, two EU officials close to the talks said. Breaking the logjam will now depend not just on Johnson being prepared to compromise on the two big obstacles to a deal — state aid and fish — but on the EU persuading itself it can believe him.
With a deal still hanging in the balance, manufacturers are dusting off contingency plans they hoped they would never need and stocking up warehouses again. In London's financial center, JPMorgan is moving about 200 billion euros ($233 billion) of assets to Frankfurt, a shift that will make it one of the biggest banks in Germany.
The practical consequences of Brexit are also becoming clearer —particularly at the border. Avoiding chaos will depend on the government getting an app working in time. Police will fine drivers who enter Kent without the correct paperwork. If it all goes wrong, the government has warned of queues of 7,000 trucks, a line that would stretch from the Channel to Westminster.
To see just how complicated it will be, you can try our Brexit Border Game here.
— Ian Wishart in Brussels and Edward Evans in London
Charted Territory
The U.S. administration is maintaining pressure on Chancellor Angela Merkel to exclude Huawei from Germany’s fifth-generation wireless network, though a high-level American official received no guarantees the Chinese supplier would be shut out at meetings in Berlin last week.
Today’s Must Reads
- Force for multilateralism | The World Trade Organization must be “revitalized” so the U.S. and China can turn to the body to settle their bruising trade disputes, according to South Korea’s trade minister, who is seeking to be the first woman to lead the global group.
- Prime time | Amazon.com will host its first Prime Day shopping event in Brazil a year after launching its membership program in Latin America’s largest economy.
- Lost at sea | Norway’s Prime Minister Erna Solberg warned of a humanitarian and trade crisis if the roughly 800,000 seafarers stranded around the globe due to the coronavirus pandemic aren’t offered similar protections and rights to other essential workers.
- Wading in | The proposed takeover of U.K. chip designer ARM by the U.S. company Nvidia could weaken its access to foreign markets if it gets dragged into the trade war between the U.S. and China, lawmakers warned.
- Worker conditions | Boohoo ignored warnings about significant labor violations at U.K. garment suppliers, according to an independent review that cleared the fashion retailer of direct involvement in any abuses.
- Expansion phase | Aldi stores plans to create 4,000 new U.K. jobs next year as the growth of discounters boosts Britain’s otherwise shrinking retail sector.
- Introductory remarks | New Japanese Prime Minister Yoshihide Suga spoke by phone with President Xi Jinping of China, Japan's biggest trading partner, agreeing to work closely on bilateral and global issues, Kyodo reported.
On the Bloomberg Terminal
- Some reprieve | The U.S. government failed to convince a federal judge in Pennsylvania that the criminal sentences of two Chinese scientists should be increased because they stood to gain up to $2 billion from the trade secrets they stole from GlaxoSmithKline, according to Bloomberg Law.
- Railroad revolution | President Donald Trump and Democrat rival Joe Biden have made the dangerously overstretched U.S. infrastructure a priority of their campaigns. They strongly diverge, however, on their vision of how to fix and finance it, Bloomberg Intelligence writes.
- Use the AHOY function to track global commodities trade flows.
- Click HERE for automated stories about supply chains.
- See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
- Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.
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September 28, 2020 at 06:00PM
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Supply Chains Latest: Brexit Talks Enter Key Phase to Reach Deal. - Bloomberg
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