Boris Johnson has dropped plans which would have allowed ministers to break international law, after the UK and EU reached an agreement on the implementation of the divorce deal.
Cabinet Office minister Michael Gove and his counterpart Maros Sefcovic have been holding talks on the Withdrawal Agreement (WA) to resolve issues relating primarily to the Northern Ireland protocol.
Their discussions are separate from the post-Brexit trade deal talks which remain deadlocked, but the agreement could improve relations between the two negotiating teams.
The WA – or divorce deal – came into force in February when the UK left the EU, but the protocol is set to be enacted on January 1 2021, when the transition period ends and the UK leaves the single market and customs union.
Ministers came under fire for providing powers to override the WA, thereby breaching international law, in the UK Internal Market Bill, in a bid to protect the trading relationship between Great Britain and Northern Ireland.
But Mr Gove and Mr Sefcovic, co-chairs of the EU-UK Joint Committee, said in a statement that “an agreement in principle” had been reached on all issues and that the Government would withdraw the controversial clauses of the Bill.
They said: “Following intensive and constructive work over the past weeks by the EU and the UK, the two co-chairs can now announce their agreement in principle on all issues, in particular with regard to the Protocol on Ireland and Northern Ireland.”
The agreement covers issues including border checks on animal and plant products, the supply of medicines and deliveries of chilled meats and other food products to supermarkets.
There was also “clarification” on the application of rules on state subsidies.
Mr Sefcovic said he hoped the agreement would provide “positive momentum” for the trade talks, although he acknowledged the two sides were still “very far apart”.
It comes after the Prime Minister said on Tuesday that trade talks with the bloc were proving “very tricky” and that it was “very, very difficult” to make progress, but that he was hopeful about reaching a deal.
Later this week Mr Johnson will head to Brussels for face-to-face talks with European Commission chief Ursula von der Leyen in an attempt to salvage a deal, with time running out before the current trading arrangements expire at the end of the month.
It is seen as a make-or-break moment for the process after months of talks led by Lord Frost and the EU’s Michel Barnier.
Lord Frost will return to London later on Tuesday to discuss the remaining differences in reaching a free trade deal with Mr Johnson, Downing Street said.
Then “over the course of the coming days” the Prime Minister will go to Brussels, though no meetings are planned with the leaders of either France or Germany.
Mr Johnson said he hoped the “power of sweet reason” would triumph but Brussels had to accept there were limits to what terms the UK would be prepared to accept.
Talks have faltered on the issues of fishing rights, the “level playing field” measures aimed at preventing the UK undercutting the EU on standards and state subsidies, and the way that any deal would be governed.
In a message to Brussels, the Prime Minister said: “Our friends have just got to understand the UK has left the EU in order to be able to exercise democratic control over the way we do things.
“There is also the issue of fisheries where we are a long way apart still. But hope springs eternal, I will do my best to sort it out if we can.”
Mr Johnson acknowledged that there may be a point where it is “time to draw stumps” and accept that a deal is impossible.
“There are just limits beyond which no sensible, independent government or country could go and people have got to understand that.”
He again insisted the UK will “prosper mightily” with or without a trade deal with the European Union, despite grim warnings from the budget watchdog and the governor of the Bank of England about the impact.
The Office for Budget Responsibility has suggested that a no-deal situation could wipe 2% off gross domestic product, a measure of the size of the economy, in 2021.
Bank governor Andrew Bailey has warned that the long-term damage caused by a no-deal situation would be worse than the economic hit from coronavirus.
But Mr Johnson urged people to “be in good cheer” as there were “great options ahead” for the country.
Germany’s European affairs minister, Michael Roth, said “political will in London” was needed to get a deal.
No day has yet been fixed for Mr Johnson’s meeting with Mrs von der Leyen, but it is expected later this week and follows a lengthy telephone call on Monday.
The Times reported that fisheries negotiations have continued to stall over how long any transition period would be for European trawlermen to adjust to agreed changes to fishing rights.
The newspaper said the EU wants a 10-year grace period, while the UK wants that pegged back to three.
Leaders of the EU’s 27 member states are due to gather in Brussels on Thursday for a two-day summit, potentially giving political impetus for a deal.
Mr Barnier reportedly told MEPs the deadline for the talks succeeding is Wednesday, but Downing Street said it was prepared to continue talks for “as long as we have time available” – keeping the door open for an agreement to be reached at or after Thursday’s EU Council gathering.
However, Number 10 insisted on Tuesday that trade deal talks will not continue next year.