EU, UK head into final round of Brexit trade deal talks; fishing rights largest bone of contention

The European Union and the United Kingdom are heading into the weekend on a "last attempt" to clinch a post-Brexit trade deal, with EU fishing rights in British waters the most notable remaining obstacle to avoid a chaotic and costly changeover in the new year.

British Prime Minister Boris Johnson said Friday that the only way to get a deal is for the 27-nation bloc to compromise since "the UK has done a lot to try and help, and we hope that our EU friends will see sense and come to the table with something themselves."

"That's really where we are," Johnson said, adding "no sensible government" could agree to the EU demands as they stand.

EU chief negotiator Michel Barnier told the EU parliament both sides were in the "home straight of the negotiations", which have already come a long way in nine months of talks but are still short of a final compromise.

Barnier called it "a very serious and somber situation" if a deal falls through, with the jobs of hundreds of thousands of people at stake.

The European Parliament has set a Sunday night deadline for the talks since it still will have to approve any deal before December 31, when a transition period following Britain's Jan. 31 withdrawal from the EU will expire.

"It's the moment of truth," Barnier said. "We have very little time remaining — just a few hours." Fishing remained the stumbling bloc on Friday, several diplomats said, with the two sides in wide disagreement over the phase-out period during which the U.K. would progressively bar EU boats from its waters and how big a catch EU trawlers would be able to hang on to.

"We are still totally stuck on some issues," said a diplomat from an EU coastal nation, echoing others who saw any decisive breakthrough taking place Friday night as very unlikely.

A failure to reach a post-Brexit deal would lead to more chaos on the borders at the start of 2021 as new tariffs would add to other impediments to trade enacted by both sides. The talks have bogged down on two main issues over the past days — the EU's access to UK fishing waters and assurances of fair competition between businesses.

"We have reached the hard nuts to crack," Barnier said.

Johnson has made fisheries and UK control over its waters a key demand in the long saga of Britain's departure from the EU.

Barmier said the EU understood and respected the UK's desire to rule its own waves, but said that "a credible period of adjustment" had to be given, if EU boats are to be kicked out of British waters despite centuries of tradition of sharing them.

On top of that, the more London denies access to its waters, the more the EU can impose duties and tariffs.

"The European Union also has to maintain its sovereign right to react or to compensate," Barnier said, highlighting that the UK seafood industry is extremely dependent on exports to the 27-nation bloc.

The European Parliament issued a three-day ultimatum to negotiators to strike a trade deal if it's to be in a position to ratify an agreement this year. European lawmakers said they will need to have the terms of any deal in front of them by late Sunday if they are to organize a special gathering before the end of the year.

If a deal comes later, it could only be ratified in 2021, as the parliament wouldn't have enough time to debate a proposed agreement before that.

A trade deal would ensure there are no tariffs and quotas on trade in goods between the two sides, but there would still be technical costs, partly associated with customs checks and non-tariff barriers on services.

Britain's Parliament must also approve any Brexit deal, and the Christmas break adds to the timing complications. Lawmakers are due to be on vacation from Friday until Jan. 5, but the government has said they could be called back on 48 hours' notice to approve an agreement if one is struck.

While both sides would suffer economically from a failure to secure a trade deal, most economists think the British economy would take a greater hit, at least in the near-term, as it is relatively more reliant on trade with the EU than vice versa.

Both sides have said they would try to mitigate the impact of a no-deal scenario, but most experts think that whatever short-term measures are put in place, the disruptions to trade will be immense.