BERLIN, March 2 (Xinhua) -- The British government's unrealistic and vague expectations pose a threat to the successful conclusion of Brexit negotiations with the European Union (EU), the Federation of German Industries (BDI) said Friday.
From a business perspective, the BDI's concern is that both sides could dig in their heels, which would not yield any concrete results, a statement by BDI president Dieter Kempf read.
Kempf argued that a comprehensive trade agreement would be needed to limit the economic harm caused by Britain's departure from the EU in March 2019.
Given the limited amount of time until Britain leaves the block without a proper deal, the BDI director proposed making use of the EU's existing relationships with neighboring countries as a template.
"The CETA agreement with Canada is considered by many to be one of the best trade and investment agreements signed by states. This could offer a sensible foundation for talks," Kempf said, before citing the EU's close relationship with Norway and Switzerland as other potential models.
Whereas CETA allows for signatories to engage in independent trade policy and make use of migration controls, the agreement explicitly excludes trade in services which are responsible for the bulk of British gross domestic product (GDP).
By contrast, Norway and Switzerland are both members of the EU Schengen travel area and customs union; abide by its four freedoms of goods, services, capital and people; and are subject to the jurisdiction of the European Court of Justice (CJEU).
So far, London has rejected all of these propositions and instead called for developing a "bespoke" agreement with the EU. However, the European Commission and European heads of state are increasingly skeptical about the feasibility and desirability of such an outcome.
A key sticking point in negotiations remains the land border between the Republic of Ireland, which will remain in the EU after Brexit, and the United Kingdom.
British Prime Minister Theresa May already conceded in earlier talks that Britain would remain in the customs union in the event of a failure to reach a free trade agreement with the EU.
She did this to prevent the necessary erection of a border between Northern Ireland the Republic of Ireland, but recently appeared to be backtracking on this promise again.
According to Kempf, Britain would be well advised to re-assess its hardline stance as it is already experiencing negative economic effects from Brexit.
"Trade volumes (between Britain and the EU) have declined significantly despite overall growth in global trade," Kempf noted. He also pointed to falling rents in London which were indicative that financial services were "not entirely unaffected" by the decision to leave either.