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Britain's Prime Minister Boris Johnson as he exits a car on return to 10 Downing Street in central London on Dec. 9, 2020.TOLGA AKMEN/AFP/Getty Images

U.K.-EU negotiators will resume talks on a Brexit trade deal after a dinner summit Wednesday night between Prime Minister Boris Johnson and European Commission President Ursula von der Leyen – but Britain said “very large gaps” remain between the two sides.

Mr. Johnson’s office said the two leaders set Sunday as the deadline to decide whether there will be an agreement, or a tumultuous no-deal split at the end of the month.

Mr. Johnson flew to Brussels in hopes that top-level political talks could put new momentum into negotiations that are stuck on issues including fishing rights and competition rules.

But there was no breakthrough at the three-hour meeting, which Downing Street described as “frank.”

Britain left the EU on Jan. 31 but remains in its economic structures until the end of the year. That means a serious economic rupture on Jan. 1 that could be chaotic if there is no trade agreement.

The two leaders had hoped to inject political momentum into trade talks that have become hopelessly deadlocked on fishing and other key aspects of the future relationship. But Britain and the EU gave ominously opposing views of the main sticking points – and each insisted the other must move to reach agreement.

“A good deal is still there to be done,” Mr. Johnson insisted. But he told lawmakers in the House of Commons that the bloc’s demands that the U.K. continue to adhere to its standards or face retaliation were not “terms that any prime minister of this country should accept.”

German Chancellor Angela Merkel said “there is still the chance of an agreement,” but stressed that the EU would not compromise on its core principles. Ms. Merkel told the German parliament that the bloc would “take a path without an agreement if there are conditions from the British side that we can’t accept.”

The U.K. left the EU on Jan. 31 after 47 years of membership, but remains within the bloc’s tariff-free single market and customs union until the end of the year. Reaching a trade deal by then would ensure there are no tariffs or quotas on trade in goods on Jan. 1, although there would still be new costs and red tape for businesses.

When Mr. Johnson was crossing over the English Channel to Brussels, down below the impact of Brexit was already visible with extra long tailbacks in France’s Calais where truckers were trying to meet the demands of U.K. companies, which want to lay in extra stock ahead of potential disruption on Jan. 1.

“For about the last three weeks we’ve seen an increase in the flow of traffic toward Great Britain due to stockpiling. The platforms, whether it’s the port and the [Euro] tunnel, don’t have capacity to absorb this increase in traffic,” said Sebastien Rivera, secretary-general of France’s National Federation of Road Transport.

“Right now, it takes [truckers] easily three or four more hours to cross the English Channel. So it is easily 240 or 300 euros of financial costs to the company, that’s for nothing more than the additional time it takes,” Mr. Rivera told the Associated Press.

Failure to secure a trade deal would cause much greater disruption, bringing tariffs and other barriers that would hurt both sides, although most economists think the British economy would take a greater hit because the U.K. does almost half of its trade with the bloc.

Months of trade talks have failed to bridge the gaps on three issues – fishing rights, fair-competition rules and the governance of future disputes.

While both sides want a deal, they have fundamentally different views of what it entails. The EU fears Britain will slash social and environmental standards and pump state money into U.K. industries, becoming a low-regulation economic rival on the bloc’s doorstep – hence the demand for strict “level playing field” guarantees in exchange for access to its markets.

Ms. Merkel said “the integrity of the single market must be preserved.”

“We must have a level playing field not just for today, but we must have one for tomorrow or the day after, and to do this we must have agreements on how one can react if the other changes their legal situation,” Ms. Merkel said.

The U.K. government sees Brexit as about sovereignty and “taking back control” of the country’s laws, borders and waters. It claims the EU is trying to bind Britain to the bloc’s rules indefinitely.

Amid the gloom, one area of tension has been resolved. The British government has dropped plans to break international law after reaching an agreement with the EU on rules governing trade with Northern Ireland, the only part of the U.K. that shares a land border with the bloc.

The Brexit divorce agreement struck by the two sides last year promised there would be no customs checks or other trade barriers along Northern Ireland’s border with EU member Ireland. As the two sides tried to hammer out the details, British government introduced legislation in September giving itself powers to breach the legally binding withdrawal agreement in order to keep goods flowing to Northern Ireland in the event of a “no-deal” Brexit.

Britain claimed the bill was needed as a safety net, but the move infuriated the EU, which saw it as an act of bad faith that could imperil Northern Ireland’s peace settlement.

U.K. cabinet minister Michael Gove said resolving the Northern Ireland issue provided a “smoother glide path” towards a broader trade deal with the EU, though the bad feeling generated by the lawbreaking move still lingers.

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