At the end of another turbulent week an uncertain choreography will now unfold. The EU summit on 15-16 October will be an important, if not pivotal, staging post.

By the middle of the month, 27 leaders will have to decide if a future relationship deal with the UK is within reach.

Although this week was the final scheduled round of negotiations, in reality both sides have been in continuous talking mode since 17 August. Entering the final round, Downing Street had briefed that things were improving.

However, there was an optimism gap. The UK's chief negotiator David Frost had pressed his counterpart Michel Barnier last week to move quickly to the tunnel - the sealed-off, leak-free negotiating space that might precede a deal. Barnier refused. There was no point entering the tunnel if the UK was not signalling its intent to compromise. 

Michel Barnier

"Everyone seems convinced we’re in for a tunnel any time soon," one well-placed source said on Monday. "I can’t say we won’t be [ready] eventually, but the conditions are not there yet."

As UK negotiators gathered in Brussels on Tuesday, the EU side was looking for subtle changes of tone and temperature. Was London prepared to move?

"This week has been more of a barometer of what may come or may not come in the weeks that follow," said a senior EU diplomat.  

"It has been important to sense whether more can come from the UK in the weeks before the European Council.

"That will clearly determine whether the Council can give a positive steer to the negotiator [Michel Barnier] and say, OK, wrap it up, we have confidence that you can do it along the lines that you describe. Or, that the Council says, now we have to be serious about No Deal planning."

Another diplomat, from a large member state, said: "We’ve never seen this [October] Council as make or break. But I can imagine the Council taking stock and looking to Barnier to continue. [EU leaders could say] 'We’d like to have an ambitious deal so we urge negotiators to do everything they can and we’d like to see a clear gesture from the UK that it’s serious in committing itself to a constructive discussion on the three main issues'."

The overwhelming view in Brussels is, not surprisingly, that the UK has to make significant steps on the three big stumbling blocks: the level playing field, especially state aid, fisheries and governance (how to settle disputes in the future).

UK officials take another view: London has moved more than the EU is prepared to acknowledge, and unless that changes, there will be no agreement. But in Brussels the feeling is that, given the perilous nature of British politics and the ongoing disarray over the Covid-19 pandemic, Prime Minister Boris Johnson needs a deal.

That, at least, is the rational perspective.

"We are very often too rational in Europe," said one senior EU figure. "If you look at the political scene in the UK obviously you would say he desperately needs a deal. But as you know, in Brexit, things are not always very rational."

Over last weekend the UK negotiating team had tabled five papers, covering the level-playing field, fisheries, governance, police and judicial cooperation, as well as nuclear cooperation.

On Tuesday member states were briefed on the UK offering. Diplomats said there was little, if anything, new. 

"The papers on fisheries and the level-playing field basically contained the same elements we already knew, with more of a sketching out of what they’ve done in this area," said one diplomat briefed on the documents.

Time and again, fisheries have bedevilled the negotiations. Both sides had agreed through the Political Declaration that a free trade agreement could not be concluded without a deal on fish. 

Michel Barnier’s negotiating mandate was toughened by member states right before the negotiations began in March. European fleets should more or less get the same access to UK waters that they enjoy under the Common Fisheries Policy (CFP) and which coastal states say they have enjoyed for centuries, long before the EEC came along.

The UK insisted that, while EU fleets would still gain access, their share of fish quotas would be greatly reduced in favour of the UK, and on the basis of an annual set of negotiations based on an allocation criterion known as "zonal attachment".

The issue has shunted back and forth. In recent weeks, the focus has settled on a technical exercise where both teams were asked to prioritise which of the 100 species they share across their waters. 

Needless to say, both sides found it extremely difficult to produce "short lists" of their favourite stocks, and when they did it did not move things forward much.

"The technical groundwork has been laid," said one diplomat from a coastal member state, "looking at what are our shared priority stocks, what are yours. But that hasn’t translated into a specific discussion on the quota sharing arrangements, on access to waters, or on the multi-annual negotiations".

It remains a complicated subject. As one negotiator ruefully remarks, fish spawn here, swim there, cross boundaries and there are many different ways to catch them. "But in the end it boils down to, how much can I catch, how much can you catch?" he said.

The UK paper on fish had proposed a three-year phasing in period during which the European share of UK stocks would be gradually reduced. However, it was not clear if the current system would continue until 1 January 2024 and then change overnight, or if European quota sizes would gradually go down over that period.

Alongside this week’s negotiations has been the simmering dispute over the UK’s Internal Market Bill.

On Monday the issue was raised during the third scheduled meeting of the EU-UK Joint Committee, with the EU’s representative Maroš Šefčovič repeating to his UK counterpart Michael Gove that Britain would have to remove the offending parts of the Internal Market Bill. Michael Gove said the clauses would remain as a "safety net".

Michael Gove

Afterwards Šefčovič said the EU would not be shy of taking legal action if Britain did not remove the clauses. However, the deadline of 30 September came and went on Wednesday with no sign of legal action.  

Some in Brussels believed the deadline was a mistake, falling as it did during a week where the UK was expected to signal some compromises, and the EU signaling it was keen to listen.

The deadline was also the day before EU leaders arrived for a two-day summit. "If you put down a date and an ultimatum, what do you do the next day?" asked one EU diplomat.

"Unfortunately the next day is a European Council meeting. You don’t want to wreck the Council with the launch of an infringement procedure."

However, it turned out the Commission was unperturbed about launching legal action on the eve of a summit. Indeed, the groundwork for legal action had been quietly laid the previous week. It was tightly coordinated between the respective cabinets of President Ursula von der Leyen and Maroš Šefčovič. 

The Commission had already prepared several drafts of a letter of formal notice, the first step in the legal process. By Wednesday night a final version was ready to go.

The letter claimed that by introducing the Internal Market Bill, the UK was in breach of Articles 4 and 5 of the Withdrawal Agreement (the so-called "good faith" clauses) and that if the government continued to bring the Bill into law and to invoke the powers that would disapply aspects of the Protocol, then that too would be a breach of international and EU law.

A senior source told RTÉ News on Wednesday that the letter would be sent "soon", possibly this week. The prospect of the letter going the next day, as EU leaders began arriving, could not be excluded.  

On Thursday morning the European Commission issued an email to accredited journalists that President von der Leyen would make a statement on Brexit at 11am Brussels time. Dublin was unaware of the move until 40 minutes before the President stepped up to the live podium to announce the news.

The Internal Market Bill, said President von der Leyen, was "by its very nature a breach of the obligation of good faith laid down in the Withdrawal Agreement. Moreover, if adopted as is, it will be in full contradiction to the Northern Ireland Protocol".

Ursula Von der Leyen

The announcement took some officials in Brussels by surprise. No one believed that a strong response to the Internal Market Bill was unwarranted, and having announced the threat of legal action the Commission would have left itself open to charges of weakness - especially when it is trying to hold member states to account on the rule of law - had it not followed through.

But the Commission did have discretion over the timing.

"Some member states have been taken aback," said one official. "It was done without consultation, or at best they were told about it at the last minute."

Other officials countered that, not only had the UK introduced a bill in breach of the treaty, but they had waved it in front of the EU’s nose, admitting they were breaking international law in advance.  

"It had zero impact on the talks in the rooms, and I don’t think it will have had any impact on the way either side envisages the negotiations right now," said one source.

There were hopes on Thursday night that, nonetheless, the legal process could be overtaken by a successful outcome to the trade negotiations.

According to this narrative, the Internal Market Bill would continue its slow journey through the House of Lords until November. In the meantime, both sides could, given a fair wind, conclude a free trade deal, and the issues the Bill purported to deal with would wither on the vine.

Concerns about tariffs on goods going from GB to Northern Ireland would be irrelevant as it would be a tariff-free agreement. Likewise, a legally binding and robust dispute settlement mechanism on state aid would neutralise concerns about the so-called "reach back" effect of EU state aid rules "catching" any subsidies of UK companies via the Northern Ireland Protocol.

In the meantime, the Joint Committee - the forum where such issues were always meant to be discussed - would be continuing its work. Following Monday’s meeting it was agreed that the technical subcommittee, which does the spadework on the Protocol, would meet next week and then report back to the more high level Joint Committee in the week of the October summit.

"These issues of concern should have been resolved in the Joint Committee and in the technical talks." said one senior EU figure.

"Then the UK can have a face-saving excuse to withdraw [the clauses]. It should solve itself, especially if we go towards a [free trade] agreement."

There is also a jaundiced view - after four years of Brexit - of how things would unfold if the Internal Market Bill gets resolved. 

"There will be some big theatre at the beginning of December, where [Boris] Johnson will say, 'I’ve put a gun on the table, they’re all trembling in fear, and you see what happened, we got an agreement, so I can take the gun off the table'. That’s the kind of theatre we expect."

What is to stop the UK declining to fully and explicitly expunge the clauses in the Internal Market Bill which overturn elements of the Protocol?

This remains a theoretical risk. If a FTA is concluded by 31 October, and London attempts to keep some vestige of the clauses, even as a deterrent, then only the European Parliament can prevent the treaty coming into effect. With only two weeks between the ratification in Strasbourg and the end of the transition, that would be one momentous vote.

Diplomats are adamant, however, that it will be made crystal clear to London that entering the famous tunnel and concluding an agreement are entirely contingent on the withdrawal of clauses 42-45 of the Bill.

"The idea that the bill would somehow remain on the books as a deterrent or insurance policy when the UK is signing a second international agreement with its closest partner isn’t plausible," said one diplomat. 

"Why would you have an insurance policy that threatens to override an agreement that you’ve just signed?"

That sentiment is reflected in a determination among member states to demand tougher safeguards in dealing with future disputes, the negotiating strand known as "governance".  

"The governance system has to be robust and it has to apply across the board," said an official from a large member state.

"There is no way we can accept a system where arbitration is only binding for the goods and services part. The UK doesn’t want a robust dispute settlement on the level-playing field, for instance. They want only political consultation. This is not possible."

This applies no more so than for state aid.

Both sides agree that neither side should enjoy an unfair advantage by subsidising certain industries, but how to provide legal certainty about it has been a fundamental sticking point. 

The EU’s opening bid was for the UK to follow EU state aid rules over time as the simplest way to proceed and in return it would be treated the same as any other member state. Boris Johnson made it clear that was unacceptable.

Boris Johnson

So far London has proposed a loose arrangement based on the WTO state aid provisions, which member states have dismissed outright.

"That would mean," said one diplomat, "that one side provides subsidies, and if the other is not happy then they complain to the WTO, then wait years for redress". 

While finding a middle ground has been impossible so far, officials say there should be a "conceptual" landing zone. Although EU officials were not entirely overwhelmed by the UK’s offering on state aid last weekend, it’s understood the paper did talk about "shared principles".

"If that’s true it does go beyond their current position," said Paul McGrade, a former Foreign Office and European Commission official and currently senior counsel with the London-based Lexington consultancy.

"[David] Frost has almost been aggressive so far on state aid, saying basically it’s none of your business. If they’re prepared to put forward an idea that there is a shared, common approach, then the real question then is around enforcement, both domestically in the UK and through trade dispute mechanisms. That does feel like a bit of a move."

One EU diplomat agrees that if both sides signed up to "strong principles" about state aid that could be a starting point. He suggests that to provide reassurance to the EU, the UK would create a "robust, independent authority" that would regulate state aid in the same way the European Commission does for the EU. There would have to be some kind of regular, if not mandatory, liaising between both authorities.

Could this be the shape of an understanding on state aid? 

Officials on the EU side are cautious, saying that while welcome, the UK overture on "shared principles" lacked detail, particularly on how a dispute between both sides might be resolved.

"They’re not really operational," said one source of the "principles". "The whole point of principles is they have to be broad enough and precise enough when you have an issue and you need to activate the dispute settlement mechanism." 

"This is untested ground," said another senior EU source. "The Brits have never indicated they would jump on this - the big principles, the agreement, the independent authority, the dispute settlement mechanism and so on."

Brexit

By Friday evening, when Michel Barnier briefed member state officials, it was clear there had been no big breakthrough and the tunnel was still some way off. 

One diplomat present said there had been "good progress" on police and judicial cooperation, but the major issues still weren’t solved - fish, level-playing field, governance. 

It was clear that the Internal Market Bill has stiffened the resolve of member states on the dispute resolution issue.

"We don’t want to use such mechanisms, but now we know what to expect from the current government," said the diplomat.

David Frost’s own view was similarly lukewarm. 

"On the level-playing field, including subsidy policy, we continue to seek an agreement that ensures our ability to set our own laws in the UK without constraints that go beyond those appropriate to a free trade agreement. There has been some limited progress here but the EU need to move further before an understanding can be reached," he said in a statement. 

"These issues are fundamental to our future status as an independent country."

Ahead of her phone call today with Boris Johnson, Ursula von der Leyen reportedly told EU leaders that the level-playing field remained a fundamental problem, and that a no deal might even be better than a lopsided deal, with half-baked state aid and level-playing field provisions.

The clock is now truly ticking.