UPDATE 3-Britain and EU agree to more talks in final push for Brexit deal
* Talks to resume on Sunday - joint statement
* Chief negotiators paused trade talks on Friday
* Transition period ends on Dec. 31, deal or no deal (Adds further comment)
LONDON/BRUSSELS, Dec 5 (Reuters) - British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen instructed their negotiators to resume trade talks on Sunday in a last ditch attempt to bridge significant differences.
Acknowledging the distance in their positions, the leaders' decision to resume talks that had stalled over three of the thorniest issues suggests both sides still believe they can secure a deal governing almost $1 trillion of trade a year.
But it was not clear whether either had changed their positions to allow a breakthrough that has proved elusive since Britain left the EU on Jan. 31 and entered a transition period with most rules unchanged that runs until the end of the year.
In a joint statement, the two leaders said that while recognizing the seriousness of their differences, "we agreed that a further effort should be undertaken by our negotiating teams to assess whether they can be resolved."
"No agreement is feasible if these issues are not resolved," they said after speaking for more than an hour on Saturday. "We are therefore instructing our chief negotiators to reconvene tomorrow in Brussels. We will speak again on Monday evening."
The talks were paused on Friday in the latest stumble in months of negotiations which have barely moved on three areas of disagreement - fisheries, ensuring fair competition guarantees and ways to solve future disputes.
Sources from both sides said that French demands over fishing rights in British waters remained a key issue, and some in Johnson's Conservative Party suggested that EU officials had to convince French President Emmanuel Macron to back a deal.
An EU official said the pause in talks was about theatrics rather than substance. "Each side needs a bit of drama to be able to sell this."
Johnson, a figurehead for Britain's campaign to leave the EU, must be able to convince Brexit supporters that he has secured a clean break, reclaiming what he called during last year's election campaign the country's sovereignty.
Von der Leyen does not want to offer too much to London for fear of encouraging other member states to leave and must also deliver a deal that does not alienate any of the 27.
Irish Prime Minister Micheal Martin welcomed the decision to resume talks, saying on Twitter: "Every effort should be made to reach a deal."
If the two sides fail to reach a deal, the five-year Brexit divorce will end messily just as Britain and Europe grapple with the vast economic cost of the COVID-19 outbreak.
British and EU negotiators paused trade talks on Friday to call in their leaders to try to narrow the gaps and get an agreement after a week of negotiations failed to bridge significant divergences between the two sides. (Reporting by Alistair Smout and Elizabeth Piper in London and Gabriela Baczynska and John Chalmers in Brussels; Editing by David Clarke)
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