A Brexit deal is “within reach” next week, the European Commission’s chief Brexit negotiator Michel Barnier asserted on Wednesday.
That is an ambitious statement that could stumble on the Irish border.
By Thursday evening, the Financial Times was citing diplomatic sources in Brussels, suggesting the Irish border issue was close to being settled. That is a tall order.
Striking a less ambitious tone, the British minister of finance Philip Hammond said on Friday that the UK will need a longer transition period.
“… There needs to be a period — probably following the transition period that we’ve negotiated and before we enter into our long-term partnership — just because of the time it will take to implement the systems required,” he said.
In other terms, Mr Hammond wants to build a “transition annexe” since it is not politically acceptable to extend the transition period.
Soft borders are still borders
EU leaders will meet on Wednesday, October 17 in Brussels to hopefully seal a deal with the UK. Barnier says this agreement is 85% ready.
Northern Ireland is the soar point.
The choice is between reinstating a physical border on the island or moving the border to the Irish Sea.
If Northern Ireland does not remain in the Customs Union, then the physical border is reinstated.
The European Commission has accepted maximum facilitation solutions. Checking goods at factories of origin and monitoring by means of barcodes in ports of transit, the EU promises “light-touch” arrangements whenever possible.
However, for veterinary and food security controls, as well as customs and VAT compliance, checks will take place at the border. That would divide the island. Unless London and Brussels revert to the backstop agreement.
The backstop arrangement is an insurance policy to avoid a hard border in Northern Ireland. Signed between Theresa May and Brussels in December 2017, the agreement envisages Northern Ireland remaining in the Customs Union and the Single Market beyond the transition period in December 2020. That is, if all else fails.
That would divide the UK, moving the border from Ireland to the Irish Sea.
An open-ended transition
That is a red line for the Democratic Unionist Party (DUP). And on Thursday the DUP made clear they would not be “supplying” their vote in domestic affairs while the backstop is on the table. The government will fall.
The DUP agreed to a “confidence and supply” deal to support Mrs May following the June 2017 elections that stripped her government of a majority. Since they have a veto over the Brexit deal.
“We could not support any arrangement which could give rise to either customs or regulatory barriers within the UK internal market,” the DUP leader Arlene Foster said on Wednesday.
The only other option is an open-ended transition period for the whole of the UK in the Customs Union for either a defined or a more open-ended transition period. That will topple the government. The BBC reports that Liam Fox, Michael Gove, Dominic Raab and Jeremy Hunt will not support remaining in the Customs Union.
A Conservative revolt
There is no majority for an open-ended transition or for a Customs Union. There is no majority for “no deal” either, but this may be imposed by default. The clock is ticking and time is on the side of those who may look favourably to the new order of a disorderly Brexit.
A border in Northern Ireland is unacceptable; keeping the UK in the Customs Union is also unacceptable.
Addressing the House of Commons on Thursday, the former foreign secretary, Boris Johnson, said that a backstop arrangement for Northern Ireland would turn the UK into a “permanent colony,” echoing the unionist sentiment.
Hardline Brexiteers are pushing for a Canada style trade agreement with the EU. Their position on Northern Ireland is combative. The UK will not build a border, moving the onus to construct a physical border to the Republic. It is the EU that will be seen erecting a wall, not the UK.
The baseline scenario for hardliners is a Canada plus agreement; their proposition was endorsed by the President of the European Council, Donald Tusk, on October 4.
The argument for a clean break with the Customs Union was bolstered this week, when Japan’s prime minister, Shinzo Abe, told the Financial Times on Tuesday that he would welcome the UK in the trans-pacific partnership (TPP) with “open arms.”
Membership of the TPP would be impossible while the UK remains a member of the Customs Union.
Earlier this week, the former Brexit Secretary Steve Baker said that up to 80 Tory MPs were ready to vote down any agreement that entails a common rulebook and membership of the Customs Union.
Mrs May argues that a Canada-style deal is unviable as it does not provide a solution to the Irish border. That is the problem that hardline Brexiteers claim does not exist, or the onus is not on the UK to address.