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The Brexit commerce talks begin just a few weeks earlier than the tip of the contract

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British Prime Minister Boris Johnson will meet with the President of the European Commission, Ursula von der Leyen in London on January 8, 2020.

Xinhua News Agency | Xinhua News Agency | Getty Images

LONDON – Britain and the EU are in the "final phase of negotiations" on a post-Brexit trade agreement, according to the British Foreign Minister. Only a few weeks left to approve a possible deal.

The UK stopped being a member of the EU in January but agreed to comply with European rules by the end of 2020 so that both sides can formulate new trade deals. However, this has proven to be a difficult task as discussions have been ongoing on the same three subjects since the spring.

"I think this is a very important week, the last really big week," Dominic Raab told the BBC on Sunday.

Both sides have to reach new trade agreements before the end of the year and correct them in their respective parliaments. Otherwise, it could turn into a no-deal scenario – higher costs and barriers for exporters on both sides.

According to Raab, a breakthrough depends on overcoming differences in a "fairly narrow" number of problems. The main problems remain with fishing, competition policy and the management of future business. They have different views on how much access European fishing teams should have to UK waters and what kind of market competition rules should be applied to ensure that the UK withdrawal does not jeopardize the EU's internal market.

EU negotiator Michel Barnier told journalists in London on Sunday: "Let's work, let's work," Sky News said of the likelihood of a deal.

Before coming to London for further talks, Barnier said Friday that "the same significant differences remain".

Deal or no deal?

Earlier last week, European Commission President Ursula von der Leyen said "these are crucial days" but couldn't say if there would definitely be a deal. The message in London has been more positive since then.

UK chief negotiator David Frost said Friday: "It's late but a deal is still possible".

A European official who refused to be named because of the sensitivity of the talks told CNBC over the weekend that a breakthrough depends on a phone call between British Prime Minister Boris Johnson and von der Leyen.

However, there are no plans for a call between the two yet.

In the meantime, companies on both sides are waiting for the process to end. The UK Chambers of Commerce, a business trade organization, warned in late September of "major loopholes" in government guidelines for business if an agreement is not reached.

Many EU exporters have been members of the EU for more than 40 years and rely on raw materials or customers based in Europe and vice versa.

Automakers reportedly stockpiling cars and parts to avoid tariffs if the UK and EU fail to reach an agreement. Brands like Volkswagen and Honda have large manufacturing facilities in the UK and then export them to the rest of the EU.

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Katherine Clark