* Talks to resume Thursday afternoon
* 'Time is short,' says European Council president
* Barnier says deal is still 'within reach'
* Three sticking points remain
(Adds Downing Street statement)
By Gabriela Baczynska and Elizabeth Piper
BRUSSELS/LONDON, Oct 21 (Reuters) - Britain will resume
talks with the European Union on Thursday, marking a new push by
the two sides to protect billions of dollars worth of trade from
the beginning of next year.
Prime Minister Boris Johnson walked away from the
negotiations late last week after British officials criticised
conclusions from an EU summit which they said suggested only
London should compromise to try to secure a new trade deal.
With just 10 weeks until a status quo Brexit transition
period is due to end, both sides have traded blame and called on
each other to offer more concessions in the talks, which have
been all but deadlocked since the summer.
But while markets welcomed the resumption, it is unclear
whether the two sides can bridge gaps on fair competition
guarantees -- especially state aid rules -- and fisheries, a
sector laden with symbolism for Brexit supporters in Britain.
A spokeswoman for Johnson's Downing Street office said
Britain's chief negotiator David Frost had spoken to EU
counterpart Michel Barnier and welcomed his comments from
earlier in the day.
"On the basis of that conversation we are ready to welcome
the EU team to London to resume negotiations later this week. We
have jointly agreed a set of principles for handling this
intensified phase of talks," the spokeswoman said.
"It is clear that significant gaps remain between our
positions in the most difficult areas, but we are ready, with
the EU, to see if it is possible to bridge them in intensive
talks," she said in a statement.
The British side was keen to play up that "as both sides
have made clear, it takes two to reach an agreement".
The initial phase of negotiations will take place in London
from Oct. 22 until Oct. 25, with talks after that taking place
by agreement.
GAPS REMAIN
Earlier, European Council President Charles Michel told the
European Parliament that time was very short.
"We stand ready to negotiate 24/7, on all subjects, on legal
texts. The UK has a bit of a decision to make and it's their
free and sovereign choice," Michel said.
He said Britain's answer would determine its level of access
to the EU's internal market of 450 million consumers. Barnier
told the parliament an agreement was still "within reach".
Keen to avoid any blame, the bloc is ready to negotiate
until mid-November but must then ratify any deal in the European
Parliament before time is up.
There has been some movement on both sides over the
so-called level playing field, fisheries and how to settle
disputes, but not enough to find agreement.
Johnson's main red line is the return of sovereignty, cast
as "taking back control", while the EU argues Britain's
proximity to the bloc means it cannot be treated in the same way
as Canada, upon which London has modelled its trade demands.
A no-deal finale to Britain's five-year Brexit drama would
disrupt the operations of manufacturers, retailers, farmers and
nearly every other sector just as the economic hit from the
coronavirus pandemic worsens.
Michel stressed the 27 EU members were ready for an abrupt
split without a new agreement to avoid tariffs or quotas.
"We don't need words, we need guarantees," he said of fair
competition safeguards, also calling for "binding, independent
arbitration" to redress market distortions swiftly.
London's draft Internal Market Bill -- which would undermine
Britain's earlier divorce deal with the EU -- only strengthened
the bloc's resolve to ensure tight policing of any new deal,
Michel said.
(Additional reporting by William James, Costas Pitas and
Michael Holden in London, Robin Emmott, Kate Abnett and Franceso
Guarascio in Brussels, Writing by Gabriela Baczynska and
Elizabeth Piper, Editing by Gareth Jones, Giles Elgood and
Catherine Evans)