The UK and EU have restarted talks on post-Brexit trade, with a minister telling the BBC there is “still a deal to be done” despite time running short.
But Environment Secretary George Eustice said “sticking points” on fishing and business rules remained.
UK chief negotiator Lord Frost is taking part in discussions with EU counterpart Michel Barnier in Brussels.
Ireland’s foreign minister has said it is “in everybody’s interest” to reach an agreement soon.
Border checks and taxes will be introduced for goods travelling between the UK and the EU if a trade deal is not reached and ratified by the end of the year.
But the two sides still disagree over access to UK waters by the EU’s fishing fleets – an issue which erupted last week, with the UK accusing the EU of making extra “last-minute” demands.
They are also in dispute over what measures there should be to ensure a “level playing field” for businesses on both sides.
Mr Eustice told BBC One’s Andrew Marr Show: “There’s still a deal to be done, but there’s no denying that the end of last week was quite a setback.”
He added: “The sticking points remain – quite fundamental ones. We’ve been clear all along that we can only do an agreement if it respects our sovereignty.”
Mr Eustice also said: “I think we probably are now in the final few days in terms of deciding whether there can be an agreement.”
The EU wants this deal. A no-deal scenario would be costly for EU businesses – a nightmare for European fishing communities, largely dependent on access to UK waters.
So the German car industry and others must be lobbying EU governments hard to use these two extra days of talks to finally seal the deal, right?
The UK government isn’t the only one briefing that no deal “is better than a bad deal”. EU countries that do most trade with the UK, like France, the Netherlands and Belgium, say that too.
This week they piled the pressure on those representing them in negotiations not to give “too much” away. France threatens to use its veto, while Germany speaks softly of red lines and compromise.
The tone is different; the message the same. The EU priority is to protect its single market in a deal with the UK.
It insists the government must sign up to “fair competition rules” and an agreed method to enforce them, before it gets better access to the single market than any other non-EU country not closely aligned to the bloc.
During this last-minute negotiating push, EU governments say they’re mindful not to sign up to a deal in a panicked rush.
If push comes to shove, they say, they prefer the short-term pain of no deal, in order to protect their longer-term interests: not exposing their businesses to what they view as unfair competition in their own single market.
But EU fingers are tightly crossed a compromise can still be found.
Arriving in Brussels, Lord Frost said: “We’re working very hard to try and get a deal. We’re going to see what happens in negotiations today.”
Sunday’s meeting follows talks between Prime Minister Boris Johnson and European Commission President Ursula von der Leyen on Saturday.
In a joint statement afterwards they said fishing rights, competition rules and how any deal would be enforced were still causing problems, and that “no agreement is feasible if these issues are not resolved”.
They have agreed to talk again on Monday evening.
Brexit – The basics
- Brexit happened but rules didn’t change at once: The UK left the European Union on 31 January but leaders needed time to negotiate a deal for life afterwards – they got 11 months
- Talks are on again: The UK and the EU have until 31 December to agree a trade deal as well as other things, such as fishing rights
- If there is no deal: Border checks and taxes will be introduced for goods travelling between the UK and the EU. But deal or no deal, we will still see changes
Speaking to Ireland’s Sunday Independent newspaper, Irish Foreign Minister Simon Coveney said: “We are more likely to get a deal than not because I think it’s in everybody’s interest.”
He added that reports the EU had hardened its negotiating stance at France’s behest were inaccurate.
But Mr Eustice said revised demands from the bloc on fishing rights last week meant talks had “gone backwards”.
He added the UK was “asking for a normal type of trade agreement such as the one [the EU] put together with Canada” and that this was “really not too much to ask”.
It’s not over, not yet.
The two sides in this complicated and drawn out process have agreed that it is worth trying one last time to find a way through their profound differences.
But the statements from the prime minister and the EU chief, Ursula von der Leyen, signal clearly that a trade deal is out of reach right now – spelling out that if no-one budges in the next few days, it’s simply not going to happen.
A feature of Brexit negotiations has often been the last-minute stand-off, the political emergency, before suddenly, lo and behold, a deal emerges from the wreckage.
By Monday night, that tradition may have been proven again.
Yet it seems there is a lot more to be done than ironing out a few last minute glitches.
Mr Barnier tweeted after Saturday’s statement was published, saying: “We will see if there is a way forward.”
But, even if the two sides agree a deal, there are still obstacles to overcome.
Any agreement will need to be turned into legal text and translated into all EU languages, then ratified by the European Parliament.
The UK government is likely to introduce legislation implementing parts of any deal reached, which MPs will be able to vote on.
For Labour, shadow Cabinet Office minister Rachel Reeves told the Andrew Marr Show the government “has to deliver” a deal but her party would “have to see the content” before backing or rejecting it.
The 27 EU national parliaments could also need to ratify an agreement – depending on the actual contents of the deal.
The week to come
And on Monday, the UK Internal Market Bill will return to the House of Commons.
Certain clauses could allow the government to break international law, by overriding elements of the original treaty with the EU for Brexit – the withdrawal agreement.
The EU is unhappy with it, as is the House of Lords, which voted to scrap those clauses of the bill.
But the government is still backing its measures, which could cause tensions in the trade talks, and it is expected to push them through the Commons on Monday night.
The Taxation (Post-Transition Period) Bill – which contains more powers to break the legal requirements of the withdrawal agreement – will also return to the Commons this week.