The bloc’s chief negotiator told colleagues that the totemic issue is being used to demand concessions that could eventually boost British manufacturing. European sources said David Frost’s Taskforce Europe had suggested access to Britain’s waters could be traded off against so-called rules of origin and geographical indicators in any free-trade deal. Mr Barnier, the EU’s chief negotiator, this week vowed to be “vigilant” and not get tricked by his counterpart’s strategy.
Hardline EU member states have demanded the Frenchman secures the same level of access for European vessels to Britain’s fishing waters as the price of any agreement.
Downing Street is seeking a deal with Brussels that would allow manufacturers to benefit where both sides do a trade deal with the same country.
It would mean components sourced from a mutual partner wouldn’t count towards the limits of foreign materials that can be used on the production of a domestic product – known as rules of origin.
And No.10 also wanted fix a number of “defects” in the Withdrawal Agreement, including recognition for geographical indicators.
GIs are used to identify a product as originating in a particular country or region where its quality, reputation and other characteristics are linked to a place on the map, such as Scottish whisky or Melton Mowbray pork pies.
An EU diplomat said: “The UK is looking at its shared stocks and using that as a peace meal against rules of origin, diagonal cumulation and GIs.”
Mr Barnier told EU27 ambassadors the UK has “only shown minimal of fish and is willing to trade that against a serious rethink of rules of origin and flexibility on diagonal cumulation”, according to a diplomatic note from the meeting on Tuesday.
At least eight EU fisheries countries – including France and Germany – have maintained pressure on the Frenchman to win a good deal for their fishermen.
But other member states have warned securing access to Britain’s fishing waters shouldn’t come at any price.
“Percentage-wise, a small sector in GDP terms cannot be the sole reason for undermining the single market,” a source said.
Earlier this week, Mr Barnier accused Britain of trying to secure the best of both worlds on Brexit.
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Mr Barnier said he could not allow Britain to become a manufacturing hub for businesses seeking to export to the European market.
“Do we really want to take a risk with rules of origin, that would allow the UK to become a manufacturing hub for the EU,” he said.
He added: “Do we really want the UK to remain a centre for commercial litigation for the EU when we could attract these services here?”