European Commission President Ursula von der Leyen said negotiations with the UK on a post-Brexit trade agreement are in their "decisive days" and large gaps remain that could "make the difference between a deal or no deal."  

"Frankly, I cannot tell you today if in the end there will be a deal," Von der Leyen told the European Parliament on Wednesday.  

The three major issues that have dogged the entire 10-month long negotiations – the so-called level playing field, governance, and access to UK fishing waters – appear as intractable as ever. Von der Leyen said "serious issues" remain around state aid, particularly around enforcement. 

"We are willing to be creative, but not to put into jeopardy the integrity of the single market, the main safeguard for EU prosperity and wealth," she said.  

Brussels fears the UK could undercut competition by relaxing standards around labor, climate protection and taxes. London has made clear that it does not want to adhere to EU rules once it leaves the Union and that regaining its sovereignty was one of the main thrusts behind Brexit in the first place. 

"We want to know what remedies are available in case one side will deviate in the future because trust is good, but law is better," she said.  

Trust has been in short supply since UK Prime Minister Boris Johnson's administration tabled legislation in September that would override key parts of the Brexit withdrawal agreement, which both sides signed last year. Downing Street said the Internal Market Bill is only there as a back-up in case talks on a trade deal fall through.  

On the issue of fisheries, Von der Leyen said no one questioned UK sovereignty in its own waters, but asked for "predictability and guarantees for our fishermen and fisherwomen who have been sailing in these waters for decades, if not centuries."  

On a more positive note, Von der Leyen told members of the European Parliament (MEPs) that the "outline of a possible final text" on law enforcement, judicial cooperation, goods, services, and transport was in sight and that, despite a few outstanding issues, an agreement "should be manageable." 

Face-to-face talks could resume

Intense negotiations have been ongoing for the past few weeks as both sides try to clinch a deal before the end of the transition period on December 31. 

Talks reverted to a digital format last week after a member of the EU's negotiating team tested positive for COVID-19, forcing the EU's chief negotiator Michel Barnier into self-isolation. He will be tested again on Thursday and if he's clear of the virus, face-to-face talks are expected to resume later this week.

A deal needs to be struck in the next few weeks if it is to be ratified by both parliaments and in place for the end of the year. Some MEPs have made it clear they will not rubber-stamp a deal that hits their desk too late.  

Some EU members, led by France, asked Brussels to step up preparations for a no-deal outcome. If that happens, trade between the former partners would revert to World Trade Organization rules. 

"The EU is well prepared for a no-deal, but we prefer an agreement," Von der Leyen said on Wednesday. "Whatever the outcome, there has to be and there will be a clear difference between being a full member of the Union and being just a valued partner."