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  With less than three months left before the end of the "Brexit" transition period at the end of the year, the EU and the UK have recently stepped up negotiations on future relations. The analysis believes that the two sides have already clarified the bottom line of each other in key areas such as a level playing field and fisheries. If they hope to reach an agreement by then, both parties must make compromises.

  From October 7th to 9th local time, the EU and the UK once again started a three-day negotiation on the future relationship between the two parties. This is also the last round of formal negotiations before the EU summit in the middle of this month, which has attracted much attention from the outside world.

  The negotiation atmosphere has improved

  Judging from the statement issued after the meeting, the progress of the negotiations is limited, but the atmosphere is good, and both sides expressed that they will still be committed to the negotiation of a free trade agreement. Public opinion generally believes that the current major differences between Europe and Britain are difficult to resolve. The risk of "no-deal Brexit" is still high. In addition, many European countries are facing the challenge of a rebound of the epidemic, and the European and British economies may be negatively affected.

  European Commission President Von der Lein recently spoke with British Prime Minister Johnson to assess the situation of negotiations on the future relationship between Europe and Britain. Both sides agreed on the importance of reaching an agreement and called for intensified negotiations to bridge "significant" differences.

  The negotiations on the future relations between Europe and Britain have been ups and downs since they started in early March. The British government announced the Internal Market Act on September 9, which aims to set rules for the circulation of domestic trade in four regions next year. The provisions involving Northern Ireland are considered to override the previous "Brexit" agreement with the European Union. The EU reacted strongly to this and requested the UK to delete the disputed clause. The European Union formally wrote to the British government on October 1 to initiate judicial proceedings for breach of contract. The outside world once believed that negotiations between the two sides were on the verge of breakdown.

  The atmosphere of the latest round of negotiations has improved. Both Frost and Barnier, the chief negotiator of Britain's "Brexit" negotiations, told the media that the negotiations between the two sides were "constructive." Frost said that the outline of the agreement has been "clearly visible", especially in the areas of trade in goods and services, transportation, energy, social security and participation in EU plans. He hopes that the EU will show further flexibility.

  Judging from the latest developments, the EU and Britain are close to reaching an agreement on mutual social security negotiations for residents of both sides. People familiar with the matter described this as "the most positive signal so far." In terms of government subsidies, Frost said that the UK is willing to discuss government subsidies policies with the EU, and the compromise reached between the two parties in this regard is "further than the general free trade agreement." This means that both parties have room for compromise on this issue.

  Barnier said recently that it is possible to reach an agreement with the United Kingdom, and it is expected that the two sides will continue negotiations after mid-October. Frost said that there are still many pragmatic issues that need to be negotiated. In any case, there are opportunities to reach an agreement.

  Disagreements in key areas are difficult to resolve

  Level playing field and fisheries issues have always been the core differences in the negotiations between the two sides.

  Currently, there is a huge gap between the positions of the two sides in the allocation of fishery resources. According to media analysis, the British government links fisheries with sovereignty issues, and regards the right to divide fishery rights as one of the landmark rights to gain independence after Brexit. It has promised its fishermen to increase its fishing output, so it is unwilling to do so. concession.

  The EU has been implementing the "Common Fishery Policy" and the current share allocation was divided many years ago. At present, about 178,000 people in the European Union are engaged in fisheries and are highly dependent on British waters. According to data provided by the European Fisheries Union, 42% of EU seafood is caught in British waters. The EU seeks to continue to share fishery resources with the United Kingdom and proposes to allocate fishery resources on a fixed quota and country-by-country basis. Britain hopes to divide based on the location of fishery resources. In terms of time division, the EU hopes to have a long-term solution, while the UK hopes to negotiate once a year.

  Igg Sakith, an analyst at the Brussels-based consultancy "First Policy", believes that the UK has greater initiative in the negotiation of fishery resources. If no agreement is reached, the UK can theoretically ban EU fishing vessels from fishing in British waters, and EU fishermen will lose half of their net income and at least 6000 people will lose their jobs. However, this is not beneficial to British fishermen. Even if the fishing output of British fishermen increases, it will be difficult for them to enter the EU market or be subject to tariffs. Britain’s strategy may be to strive for trade compromises in the EU.

  According to EU sources, the UK has put forward a series of principles for controlling government subsidies in terms of the level playing field, but has failed to propose appropriate governance initiatives. Michelle, President of the European Council, said that the EU hopes to reach an agreement, but this does not mean that the EU is willing to pay any price. Now it is time for the UK to "play".

  At present, both the EU and the UK have made it clear that the transitional period for Britain’s “Brexit” will end on December 31, which means that there is not much time left for negotiations between the two parties. Barnier suggested that a more realistic deadline for reaching an agreement is the end of October, so that the European Parliament has enough time to approve the agreement. Some experts also believe that, except for the time required to perform legal procedures, the deadline for the EU and Britain to reach an agreement can actually reach mid-November, and there is still time for the two sides to bridge their differences.

  Negative effects gradually appear

  Recently, analysis reports issued by many institutions show that the negative impact of the UK’s “Brexit” on both sides is gradually showing, and the impact on the UK is particularly serious. Take the financial services industry as an example. As one of the pillar industries in the UK, the financial industry is not within the scope of bilateral trade negotiations. British media reported that regardless of whether the UK and Europe can reach a trade agreement, the impact on the UK financial industry is inevitable. Many financial companies have already made emergency plans for this. A 2019 survey by Ernst & Young revealed that financial services companies are transferring assets worth about £1 trillion and transferring about 7,000 jobs from London to other European cities due to Britain’s “Brexit”. Bloomberg commented that “Brexit” would threaten London's status as the European financial center. Half of the London stock trading volume comes from European companies. These companies may choose to list on other exchanges in the future. This is bad news for investors in the UK and the EU.

  A research report by Baker McKenzie International Law Firm shows that if the two parties fail to reach a trade agreement, coupled with the impact of the epidemic, the UK will lose 134 billion pounds every year in the next 10 years. According to the report, compared with the UK staying in the EU, even if an agreement can be reached, in the long run, “Brexit” will drag down the UK’s economic growth by 3.1% and reduce exports by 6.3%. Even if British companies can adjust the supply chain and other measures to meet the challenges, the impact of "Brexit" on British exports is still great.

  The EU's losses are also inevitable. A report by the Halle Institute for Economic Research in Germany believes that if a future relationship agreement is not reached, EU-UK trade relations will return to the framework of the World Trade Organization, and EU companies will lose more than 700,000 jobs. Among them, Germany is the most affected, 176,000 jobs will be lost. France, Poland and Italy will lose 80,000, 78,000 and 72,000 jobs respectively. British companies that provide services for EU companies' exports to the UK will also lose 22,000 jobs.

  Oscar Guinea, a senior economist at the European Center for International Political and Economic Research, told our reporter that the impact of Brexit on the European Union and the United Kingdom is comprehensive, from economic and trade to industrial policies, and from personnel to regulatory policies. This also illustrates the importance of the transition period negotiations. The best option for both parties is to reach an agreement to achieve an "orderly Brexit." At present, this is still a huge challenge for both parties.