Ireland optimistic on Brexit trade deal, fishing still a big obstacle

DUBLIN (Reuters) - Ireland's Foreign Minister said he believed a trade deal can be done between Britain and the European Union, citing growing optimism, but warned that fishing rights remained a big obstacle that London should not underestimate.

Britain formally left the EU in January and is seeking to negotiate a new free trade accord by the end of 2020, when a transition period expires. Two diplomatic sources told Reuters on Tuesday that the two sides were moving closer to a deal.

"I think there is some more optimism now than there was a few weeks ago," Simon Coveney, who played a major role in the talks that led to the initial divorce agreement, told an Irish parliamentary committee on Wednesday.

A recent phone call between European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson "was helpful in terms of reinforcing the message that a deal can be done and I would reinforce that message again here today", he said.

While the prospects of a deal looked much brighter after last week's negotiating round, there was no breakthrough on the three most contentious issues - fair competition guarantees, fishing and ways to settle disputes in the future.

Coveney warned that it was hard to see the parameters of agreement on fisheries "for now" as the current British position "creates a very difficult negotiation and a landing zone that is quite hard to envisage.

"This is a big obstacle and I don't think the British government should underestimate the strength of feeling on fishing of many of the Atlantic member states," he said.

"I think the negotiators have a really difficult job here."

(Reporting by Conor Humphries and Padraic Halpin; Editing by Alison Williams and Toby Chopra)