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5/ What the sides are now trying to thrash out is how unfair competition would be defined, the process for triggering rebalancing measures, and how extensive they'd be. The EU originally wanted the Commission to have the unilateral right to apply them - hence 'lightning tariffs'.
6/ That demand angered the UK, and has now been diluted by Brussels which accepts there needs to be due process based on evidence. One EU proposal is for a 'distortion test' that could be triggered by either side. They're also open to setting up an independent arbitrage system.
7/ The EU stresses this would only apply in cases of 'significant divergences' in standards - it wouldn't be used to scrutinise the minutiae of every British law. 'At a certain stage the competitive advantage might become so big you have to do something. How do you manage that?'
8/ Key for the EU is speed of response. UK is open to these ideas but is concerned about the size and scope of rebalancing measures. It wants unfair competition in specific sectors to be addressed with tariffs in those sectors. On LPF, the EU has been wedded to cross-retaliation.
9/ But cross-retaliation is for *breaches*. So could a middle-ground be found here? Some don't think it's worth sacrificing a deal over. 'Is either side going to collapse an entire trade deal over what would be a very sectoral issue, over which you could impose sectoral tariffs?'
10/ It's not impossible to see a way through that ticks UK red line on sovereignty & EU one on protecting the Single Market. That's what negotiators have been hammering away at. Risk of No Deal is still 'very high'. But if so it'll be over 'a very minimal subset of open points'.
