Brexit trade deal: What are the sticking points?

The teams negotiating a deal on trade and other issues between the UK and the EU have been given more time to reach an agreement.

After a phone call between Boris Johnson and the European Commission President Ursula von der Leyen, a joint statement said "despite the exhaustion after almost a year of negotiations, despite the fact that deadlines have been missed over and over, we think it is responsible at this point to go the extra mile".

They are leaving it very late though - the UK/EU transition period (during which rules and trade have stayed the same) ends on 31 December.

So, what are the issues that still need to be resolved?

Even though fishing makes up only a tiny part of the economy on both sides, it was central to the Leave campaign that won the Brexit referendum in the UK in 2016.

It's also an important issue in several EU countries - such as France.

The EU is pushing for maximum access for its boats to continue operating in UK waters, where they currently catch about £600m worth of fish every year.

The UK wants most of that business back, and says it will prioritise its own boats after 1 January when it will become an independent coastal state, outside the EU's Common Fisheries Policy (CFP).

So, the dispute is not just about access, but also about a bigger share of the fishing quota for the UK fleet - not just where you can fish, but what you can catch.

There's also been disagreement about the length of a potential status quo period before new measures come into full force. The EU wants it to last for up to ten years, the UK says it should be considerably shorter.

But if there is no agreement on access to fishing waters, the UK won't get full access to the EU market, without tariffs or taxes, to sell its fish there.

Last year, around three quarters of UK fish exports went to the EU.

This is all about rules on fair competition for billions of pounds of business, now and in the future.

The idea of level playing field measures, which appear in most free trade agreements, is to ensure businesses on one side don't have an unfair advantage over their competitors on the other.

If you cut regulations it can be cheaper to produce things, making some companies more competitive than others, and the EU is worried that the UK could do that in the future.

That's why the EU wants the UK to stick particularly closely to EU rules on things like workers' rights, the environmental regulations that companies have to follow, and state aid (financial subsidies given by government to businesses).

The UK, on the other hand, says the whole point of Brexit was to break free from following EU rules.

The two sides have been trying to agree a common baseline of regulations on some issues, which neither of them would go below.

But the EU has also been calling for an evolution or 'ratchet' clause, which would mean if one side raised standards the other would have to follow suit or face potential penalties.

In addition the EU has tried but failed to persuade the UK to mirror its rules on subsidies. The UK says it is determined to assert and defend its sovereignty.

This is mainly about how the rules of the deal will be enforced in future and what happens if one side breaks them.

The EU has been pushing for powers to retaliate against the UK breaking the rules in one area, by hitting back in another - for example, imposing tariffs or taxes where it thinks they might hurt most. Such powers would of course cut both ways.

There's also the question of who might adjudicate disputes, and where precisely the European Court of Justice will fit in.

These are all hugely sensitive issues which will set the tone for the future relationship for years to come.

It's still possible that a basic trade deal can be done in the short time that remains. But both sides are going to have to make concessions quickly.

It's also worth remembering that the negotiations are not just about trade with the EU (which accounted for 43% of UK exports in 2019 and 51% of UK imports).

There is the important issue, for example, of police and security co-operation as well. The UK had wanted to maintain the same access to shared databases that it has now, but the EU says that isn't on offer to non-members.

A deal would provide better access, though, than no deal at all.

There has been progress on Northern Ireland - the subject of months of separate negotiations on how to implement the agreement already signed with the EU on keeping the land border as open as it is now.

On 8 December, the two sides announced "an agreement in principle" on issues including border control posts at Northern Irish ports (for trade with Great Britain), the supply of food and medicines, and state aid.

Some of the arrangements for Northern Ireland would be easier to implement if a trade deal was done, but either way trade between Northern Ireland and the EU will not face tariffs (or taxes) on goods crossing the border.

Without a deal, trade between Great Britain and the EU would be subject to tariffs in both directions.

Any deal would still need to be ratified by parliaments on both sides, but the time to scrutinise it properly has all but run out.

It's an important agreement that will form the basis of EU-UK relations for years if not decades to come.

EU law does allow agreements of this kind to be implemented provisionally if member states and the European parliament agree - but there would be opposition to taking that course of action.

And if the trade talks fall apart, don't expect much meaningful agreement on anything else.

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