Diplomats claim Britain is attempting to 'nationalise' EU fishing boats ahead of Brexit crunch talks

Fishing boats must be majority British owned to benefit from the larger catch in UK waters after Brexit, the UK has told European Commission negotiators.

Britain is attempting to “nationalise” EU fishing boats with the “last-minute” demand made late on Sunday, diplomatic sources in Brussels have claimed.

British negotiators told the European Commission that only fishing boats that were majority owned by UK companies could benefit from increased quota after the end of the transition period, if a deal is reached. 

Michel Barnier, the EU chief negotiator, told MEPs that Britain had caved to Brussels' demand that it dropped its key demand for annual fishing negotiations, Bloomberg reported. But the UK had rejected the EU proposal for talks every ten years, raising the possibility of fishing talks every three years, he said.

Many boats operating in Britain under a UK flag are owned by Danish, Dutch and Spanish companies. More than £160 million worth of the English quota, 55 per cent of the quota's annual value in 2019, are based in Spain, the Netherlands and non-EU member Iceland, according to research by the BBC's Reality Check.

It is understood that Britain previously made it clear that vessels should have genuine economic ties to their flagged countries. The detail of the demand had not been clear because legal texts have only just begun to be discussed. 

A UK Government source said that the claim that the UK had given up on annual negotiations wasn't true. 

The Telegraph understands yearly talks would not be needed for stocks that are covered in any transition period, because the changes in quota would be agreed in advance, but would still be needed on other fish stocks shared between the UK, EU and Norway, a non-EU member. 

Mr Barnier told EU ambassadors about the demand at a meeting in Brussels on Monday morning, before Boris Johnson holds crunch talks with Ursula von der Leyen, the president of the European Commission Monday evening. 

“It caused quite a stir among the ambassadors, especially the Dutch and Spanish,” one source said

Mr Barnier said that he “could not guarantee” a trade deal before Thursday’s summit of EU leaders in Brussels and said he was “neither optimistic nor pessimistic” about avoiding no deal. 

A second diplomatic source claimed the British demand was akin to nationalising EU boats, which are currently able to fish in UK waters to quotas set by the bloc. Britain insists it must be able to control access to its waters as an independent coastal state. 

“This morning made it clear the UK has now tabled both more granular and new demands so the landing zone is slowly moving out of sight again,” an EU diplomat said. 

The diplomat added: “An heir to Margaret Thatcher is acting more like Venezuela’s Nicolas Maduro.”

A third source said the talks had been plunged into “disarray” by the demand made during ten hours of negotiations, during which the teams ordered in burgers. 

Current UK rules only insist on foreign-owned boats having an “economic link” to Britain, and must meet conditions including having majority British crews and landing more than half the catch at UK ports. 

Much of the British quota was sold by English fishermen in the 1990s after fishing opportunities were cut by Brussels. Foreign companies bought them up as a long-term investment. 

Senior Government figures admit that Britain currently does not have enough boats to catch the significantly increased quota it hopes to secure in the talks. That is why Britain has suggested a transition period with UK quota increasing over time. 

Mr Barnier told ambassadors that the two sides agreed on the necessity for a fishing transition period but said they were not close to an agreement on how long it would be or how it would work. 

The EU has signalled it is prepared to compromise on its demand for a ten-year transition period with 18 per cent of the value of the fish caught in UK waters to be repatriated. 

Britain has called for a three-year transition period with 60 per cent of the value of fish returning to UK fishermen. Sources said they expected a compromise agreement of five to seven years with about 50 per cent returned.  

The UK continues to rebuff EU demands to keep historic fishing rights, granted before Britain joined the EU, six to 12 nautical miles off the coast.

Negotiations are continuing on Monday in the hopes of reaching a deal. Emmanuel Macron, the French President who has threatened to veto a trade deal over fish and the level playing field guarantees, and Angela Merkel, the German Chancellor, are also holding talks on Monday.

Trade negotiations are also deadlocked over a system for ensuring fair competition between UK and EU businesses from January 1. 

Brussels insists the level playing field guarantees are its price for the zero tariff, zero quota trade deal but the UK is adamant it will not agree to anything that ties its ability to diverge from EU rules. 

Mr Barnier said he respected UK sovereignty but the difficulty was agreeing a system to cover how standards would evolve over time and preserve the level playing field. 

Brexit trade talks risk being derailed by an EU demand for an opt-out from any subsidy agreement for its €750 billion coronavirus economic recovery package, Brussels sources confirmed on Monday. 

The EU proposal goes further than just the coronavirus recovery fund but would cover all aid from the bloc’s Budget, which stands at a further 1.1 trillion euros over the next seven years. 

British negotiators are resisting the carve-out, which would exempt any EU-level funding from Brussels to European governments and businesses from a deal on bailouts and mergers, because it would give them an unfair competitive advantage. 

Sources close to the negotiations said that Britain had rejected the offer because the UK had no equivalent supra-national sources of funding and the money was, like British coronavirus bailouts, paid for by taxpayers. 

The EU is also gearing up for a new push for “strategic autonomy”, a plan to increase self-sufficiency and boost its industrial policy. 

The UK fears the plan, aimed at bolstering the EU from competition from the US and China, heralds an era of greater state intervention and more relaxed merger rules for companies in a bid to create “European champions”. 

“If the talks fail now, the two sides didn’t manage to agree what constitutes foul play and what to do about it,'' the EU diplomat said.

"Subsidy arrangements tied to the recovery from coronavirus on both sides of the pond are part of this equation. Expectations are low.”

A third diplomatic source said: “Despite intensive negotiations until late last night, the gaps on level playing field, governance and fisheries are still not bridged. The outcome is still uncertain, it can still go both ways.

“The EU is ready to go the extra mile to agree on a fair, sustainable and balanced deal for citizens in the EU and UK. It is for the UK to choose between such a positive outcome or a no deal outcome.”

“Having heard from Michel Barnier this morning, really the news is very downbeat. I would say he is very gloomy, and obviously very cautious about the ability to make progress today,” said Simon Coveney, Ireland’s foreign minister.