Theresa May has finally given an indication of how she hopes to break the Brexit logjam caused by the Irish Border issue. Because it is the first thing that has actually happened for months, it is significant. But it will only lead to a breakthrough if it is the start of a bigger move from London. On its own, this latest move won't cut it in Brussels. But this bears close watching in the run-up to the June summit of EU leaders.
Inasmuch as we know, May’s proposal involves the UK remaining tied to the EU customs union for some time after Brexit, at least until some other solution to the Irish Border question is found.
Some tricky decisions could lie ahead for Irish negotiators if this idea gets traction. There is an opportunity for us, if the UK really is serious about remaining tied to the EU customs regime – which means tariff-free trade – particularly if there was a chance of this developing into a long-term solution. This would remove one of the threats facing Irish – and EU – trade with the UK post-Brexit.
But there are big questions here. As well as similar customs regimes, to avoid Border controls you also need the same rules and regulations to apply to trade in goods. The EU’s rules are set down as part of the single market regime, covering vital areas such as food safety, for example. It is not clear how May’s new strategy plans to deal with this. And crucially, the proposal is for some kind of time limit on the UK’s link to the customs union – to allow other solutions to be sorted. The EU will be suspicious of this. And for Ireland, what guarantees would be in place for the Border if a solution did not emerge?
Same trading regime
The Border “backstop” agreed last December – to apply if no other solution can be found via a future EU/UK trade deal – covered alignment of the North with both single market and customs unions rules. This would mean the same trading regime North and South. It is what is needed to ensure there are no Border controls.
But May's government did not like it and nor did her DUP backers, as it implied that the North would have some kind of special economic status. Hence the new proposal. Under May's latest plan, the UK would agree to apply the same tariffs as EU members, or imports taxes, on goods coming from outside the EU after Brexit. The UK would leave the customs union, but continue to apply some of its key rules. It is a kind of Hotel California solution, where the UK checks out of the customs union, but doesn't actually leave.
It is not clear that the British prime minster can get it over the line at home. If she does, Brussels will still press for more. EU negotiators will want assurances on the measures needed to ensure no Irish Border checks. They will also be cautious about time-limited arrangements and any suggestion of further fudge or delay.
Brussels will also be nervous of the proposal that the whole of the UK would remain linked to – but not a member of – the customs union for a period after Brexit. There is a strong attachment in Berlin – and Paris in particular – to the “integrity” of the single market and customs union. You are in either “in” or “out”.
Few member states have more incentive to try to keep the talks on the road than Ireland, but our Government will not want to take any risks with the future of the Border
The EU side could live with the North retaining membership of the EU trading bloc. But the whole of the UK staying half-in the EU trading bloc – like a “country” member of a golf club – would be another matter. If the UK is leaving, it can’t be seen to have the best of both worlds afterwards.
Crunch
There were always going to be risks for Ireland as this reached a crunch. The rest of the EU will not want May to kick the can down the road yet again. But they won’t want the talks to collapse either, and there is a real push now ahead of the June summit.
Few member states have more incentive to try to keep the talks on the road than Ireland, but our Government will not want to take any risks with the future of the Border. For the moment the existing backstop, agreed last December, remains the Brussels blueprint and one to whichthe UK signed up. Indications are that the other EU states remain behind this approach. The EU side, however, also wants this done and Irish negotiators may have to judge what exactly is their bottom line in translating the existing backstop into the legal withdrawal text, if the negotiations do indeed get to this point.
Perhaps May’s move is the first step in a long journey to a softer Brexit, with growing support in the House of Commons for this approach. Speculation is flying on all kinds of options, including a request for an extension of the transition agreement – the standstill due to apply until December 2020 – or even a more fundamental change in the UK’s exit plan.
Time will tell how UK politics moves. But the rest of the EU is getting impatient to get this done. Ireland is right in the centre of this Brexit story, hoping the talks stay on the rails, but also needing a solution on the Border. So far, the other EU members have "had our back" on the Border. Leo Varadkar and Simon Coveney will be hoping that they continue to do so – but also that the talks can be kept on track and that the customs union idea can be developed.
A delicate diplomatic line will have to be walked in the weeks ahead.