EU-UK trade talks resume under Brexit bill cloud

Negotiators for the EU and Britain are hoping for a breakthrough in trade talks this week, despite feuding over a controversial UK bill that threatens to scupper a post-Brexit deal.

Scores of officials will assemble in Brussels from Monday in efforts to forge a compromise on negotiating positions that have not budged on key areas since the talks on future relations began six months ago.

Both London and Brussels say a deal on a free trade agreement must be struck by mid-October to allow time for it to be ratified before coming into force from January 1 next year.

Failure to do so would see trade conducted on World Trade Organization rules, with higher tariffs and quotas and almost certain economic chaos for Britain and Europe.

Chief negotiators Michel Barnier and the UK's David Frost met last week to prepare the round of talks, in meetings that London characterised as "constructive".

European diplomats remained cautious that a breakthrough was possible, seeing this round of meetings as laying the necessary groundwork for a final push later in October.

"Next week, a path to a deal should be identified," an EU source said. "If we have zero movement, the process will be in big trouble."

Also on Monday senior EU and UK officials will meet in Brussels to try to find an understanding on the highly contentious issue of the withdrawal bill.

EU Commission vice-president Maros Sefcovic will meet his British counterpart Michel Gove as joint chair of an EU-UK coordination committee overseeing the implementation of the divorce agreement.

Irish Foreign Minister Simon Coveney, whose country has more to lose than most if talks break down, said Brussels will not rubberstamp a trade agreement if London keeps threatening to breach its divorce.

EU capitals were incensed by Johnson's decision to push an Internal Markets Bill in his own parliament that his own government admits would break international law by overwriting the withdrawal treaty.

Brussels intends to launch legal action against the measure, but decided to continue talks on a trade deal as the bill passes through the Commons and House of Lords.

"When you have a family member who is going through a bit of a rough patch and loses it a bit, you can't cut him off from the rest of your life," an EU source said.

The two sides are still divided on rules for a "level-playing field" of fair competition between companies, on state aid or subsidies for EU and UK firms and on access for EU boats to British fishing waters.

Diplomats are hoping for significant progress in time for a summit of EU leaders later in the month, though expectations are that the wrangling could slip into November.