U.K. and EU reveal opening gambits in post-Brexit talks

British Prime Minister Boris Johnson and European Union negotiator Michel Barnier set out opening positions for future trade negotiations on Monday morning. Both made it clear they would accept "no deal" before compromising on key issues.

Just 60 hours after Britain became the first country ever to leave the EU, Johnson dug in his heels about future relations. In a speech to business leaders and international diplomats in London, Johnson said "we want a free-trade agreement," but not at any cost.

"The choice is emphatically not 'deal or no-deal,'" Johnson said.

"The question is whether we agree [to] a trading relationship with the EU comparable to Canada's — or more like Australia's."

Australian-style trade would mean an array of new tariffs and other barriers between the U.K. and the EU, its near neighbour and biggest trading partner.

EU ties trade deal to fishing access

Across the English Channel, Barnier said the European Union will link any access to its market for British products directly to the access that EU boats will be given to U.K. waters.

Barnier underscored the difficulties of the trade negotiations with Britain when he highlighted the small but emblematic fisheries industry, which was a key issue in the U.K.'s protracted Brexit divorce deal.

Barnier told France Inter radio that "there will be no trade deal with the British if there is no reciprocal access deal for our fishermen." Barnier said the two topics will be negotiated at the same time.

In their divorce agreement, Britain and the EU agreed to strike an "ambitious, broad, deep and flexible partnership," including a free-trade deal and agreements for security and other areas. They gave themselves 11 months to do it.

A post-Brexit "transition period," in which relations stay essentially unchanged, runs until the end of 2020. For the rest of this year the U.K. will continue to follow EU rules, although it will no longer have a say in EU decision-making.

Britain says it wants a "Canada-style" free-trade agreement with the EU covering both goods and services. But it is adamant it won't agree to follow the EU's entire rule book in return for unfettered trade, because it wants to be free to diverge in order to strike other new deals around the world.

The bloc insists there can be no trade deal unless Britain agrees to a "level playing field" and does not undercut EU regulations, especially in areas of environmental protections, worker rights and health and safety standards.

"There is no such thing like a free ride to the (EU's) single market," EU Commission President Ursula von der Leyen said. "It is always rights and obligations in a good balance."

The prime minister chose to deliver his speech in the Painted Hall at the Old Royal Naval College in Greenwich on the River Thames, a spot steeped in Britain's past military glories. At the beginning of his speech, Johnson invoked the 18th century ceiling mural of James Thornhill as an example of "supreme national self-confidence."

"There is no need for a free-trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment, or anything similar, any more than the EU should be obliged to accept U.K. rules," he said. "The U.K. will maintain the highest standards in these areas — better, in many respects, than those of the EU — without the compulsion of a treaty."

No-deal exit still possible

Formal trade talks won't start until next month, once they have been approved by the remaining 27 EU nations.

EU leaders have repeatedly warned that the timetable is tight to strike any kind of deal. Free-trade agreements typically take years. The EU-Canada deal that the British government cites as a model took seven years to negotiate.

If there is no deal by the end of 2020, and the U.K. refuses to extend the negotiating period, Britain faces an abrupt, disruptive economic break from the bloc — with tariffs and other obstacles to trade imposed immediately between the U.K. and the EU.

That prospect alarms many businesses, especially in sectors such as the auto industry, which depend on the easy flow of parts across borders.