Hopes have been raised that the EU and UK can reach an agreement in negotiations on the Northern Ireland Protocol before the deadline on January 19.
Experts believe Brussels should be ready to make concessions to obtain access to more UK trade data.
Further talks on the protocol, a trade agreement negotiated as the UK left the EU, collapsed in early 2022, but resumed when Rishi Sunak became Britain's Prime Minister in late October.
“There is better mood music on both sides. Everybody wants this sorted," an EU official said.
Brexit created a problem with moving goods between mainland Britain and Northern Ireland, which shares a land border with the Republic of Ireland, an EU member.
There are fears that a hard border between the countries would imperil the 1998 Good Friday Agreement, which ended the long-running conflict in Northern Ireland.
The EU has accused the UK of failing to carry out checks and controls on products, putting its internal market at risk, and launched several infringement procedures against the UK last year.
Under the current rules, the deadline for the UK’s Northern Ireland Secretary Chris Heaton-Harris to call elections in the country is January 19.
While the poll could be delayed to allow the EU and UK to strike a deal, the date is a “natural pressure point”, the EU official told The National.
Should the parties fail to reach an agreement in time, officials on both sides could aim for the 25th anniversary of the Good Friday Agreement on April 10.
US President Joe Biden could visit Europe to mark the anniversary, Politico Europe has reported.
“Everybody is very concerned with trying to reach a deal ahead of the anniversary, but that’s a loose deadline,” said David Henig, director of the UK trade policy project at the European Centre for International Political Economy.
Talks stalled because the UK wants to fundamentally alter the protocol, while the EU has refused to renegotiate it.
The UK "signed up for this" by voting for Brexit, the EU official said.
But the bloc has shown flexibility in the past. In October 2021, the European Commission made proposals to reduce official checks on a variety of retail goods moving from mainland Britain to Northern Ireland.
In April, the commission adopted a directive to ensure the supply of medicine to Northern Ireland.
In December, it extended arrangements for veterinary medicine to 2025, which allowed businesses in Northern Ireland to continue to buy products from the UK.
Yet flexibility has its limits and the EU wants to make sure that nothing dangerous enters its single market.
“We need safeguards,” the official said.
The protocol stipulates that the UK should share live customs data with the EU about trade between Northern Ireland and mainland Britain to ease concerns in Brussels that goods might be entering the EU without paying customs.
But the UK delayed building the necessary system, meaning tests were not carried out before late 2022.
"I think we've made some progress in recent weeks, but we're not quite there yet,” Ireland's foreign affairs minister at the time, Simon Coveney, said in early December.
He said the UK had “concerns about handing over data”.
A well-running live data sharing system would reduce bureaucracy and controls in ports and airports in Northern Ireland, the EU official said.
There has also been disagreement over the role of the European Court of Justice, which would act as adjudicator in a trade dispute between the UK and EU.
The UK wants British courts to have oversight, but Brussels says the ECJ is the only competent body to rule on the interpretation and application of EU laws under the protocol.
“I think that maybe the role of the ECJ could change, with an independent arbitration mechanism first before calling the ECJ,” Mr Henig said.
“That would be a more normal way to arbitrate trade disputes.”
The protocol is unlikely to be renegotiated completely, he said.
“The assumption is that the UK will have to back down, but the EU will have to give a little more for a compromise deal to be struck,” he said.
“For the EU, we are talking about tweaks. For the UK, it might be something more.”