With May’s border plan rebuffed already, is the UK edging towards the single market as well as a customs union?

The gloves are off  with weeks to go before  the terms of  the UK’s withdrawal are supposed  to be presented  to EU leaders. In the most scathing briefing of its kind that  I can recall, a “senior EU official” has dismissed  Theresa May’s plan for  a British backstop  for remaining aligned  to the customs union as “fantasy” even before it’s  tabled. In turn the British complain of being insulted. To cap it all the  two sides are locked in a furious row over British future participation in Galileo, the EU’s satellite navigation system

Bruno Waterfield the Times Brussels correspondent who broke the story recaps what  May’s “a big U-turn” entailed.

I’ve been told that, from 2021 until 2023 at least, Britain will ask for a customs and regulatory alignment implementation period to avoid border infrastructure or checks between Northern Ireland and the Republic of Ireland.

This is not a “backstop” but will aim to be the bridge to a permanent solution for the border issue with the implementation of a Brexit “end-state”.

Of course, the bridging period itself gives some strong hints as to what that destination will look like.

Under the new plan Britain would collect the EU’s external tariffs, follow the union’s customs code and implement regulatory alignment on industrial goods.

This will mean, if the EU’s backstop proposal that sets out similar arrangements is followed, that the “Court of Justice of the European Union shall have jurisdiction”.

On industrial goods British regulators would be stripped of any control over “risk assessments, examinations, approvals and authorisation procedures”. This would have major implications for industries such as car manufacturers, which would have to rely on European authorities to, for example, define their vehicles as European under customs “rules of origin” procedures.

On agriculture, government officials predict, there will have to be a separate all-Ireland agreement covering Northern Ireland but not mainland Britain, meaning checks on British farm products heading west.

For mainland British agricultural products, checks would take place on the British side of the Irish Sea, at ports such as Holyhead. The reasoning behind this is that there is already a high level of north-south cooperation on agriculture. The DUP may not see it like that.

The rationale behind the new proposal is that by 2024 at the latest new “hybrid” customs arrangements, including a dusted off partnership and maximum facilitation technology, combined with a working future trading relationship between Britain and Europe, will satisfy the EU that a hard border will not emerge in Ireland.

The EU will be alarmed at elements of the proposal and will push hard for righted regulatory alignment binding Britain into the single market.

As reported here, Brussels diplomatic notes observe that such a halfway house “does not solve problems related to necessary alignment with the whole EU acquis [body of single market law]”.

Many goods have a considerable services component. The EU will complain that key elements of the single market trade involve products, such as Rolls-Royce jet engines or other high-value products, that are bound up with service contracts.

For the new proposal to work for the EU, Britain’s end state is looking more and more like a form of quasi single market membership plus a customs union.

The government seems to have largely resigned itself to this prospect at least until 2024. The big question over the summer and in political debate in Britain will be on free movement, a condition of single market membership. Will the EU accept restrictions and to what extent can Britain live with it?

There are going to some difficult moments and so far the government’s track record on honestly taking on debate or showing leadership leaves much to be desired.

If alignment  with the single market as well as the  customs union could be agreed, it should surely suit all parties except the Conservative Brexiteers.

The big snag is the prompt rebuff from that EU senior official and the war  of  words that followed

UK ‘chasing a fantasy’ in Brexit talks, top EU official warns

It remains the issue of the Irish border that could derail the talks before the European council summit in June, by which time Dublin and Brussels are demanding progress.

In a blow to Theresa May, the EU has formally rejected suggestions that the entire UK could remain half-inside the EU’s single market, while benefiting from a special customs deal to avoid a hard border.

The EU also poured cold water on suggestions from some influential Conservatives that the backstop could be time limited to allow the UK to find another answer. “We were not keen to have a discussion on the backstop to the backstop,” the official said.

The EU official warned that progress on the Irish border – “let alone substantive progress” – was proving “elusive”.

“We need to have the recognition that the backstop has to be Northern Ireland specific,” the official said. “We have to do away with the fantasy that there is an all-UK solution to that.”

UK officials described those remarks as “laughable” and warned against “trying to insult us”.

The UK says the EU should repay £1bn if it is excluded from the Galileo satellite navigation system.

Senior sources at the Brexit department rejected the suggestion that Brussels had dismissed the UK’s new backstop plan for the Irish border, suggesting that it was “simply a negotiating position” and that they believed the EU was open to the idea. “It’s a public stance for them to take during the negotiation,” one said.

A No 10 source said: “This is what they do every time. As usual we’ve heard it all before. There’s nothing they’ve said which concerns us.”

A government source added: “We presented seven papers this week … so the claim we aren’t providing enough detail is laughable.

“The risk is that if they follow down this track, putting conditions on our unconditional offers and trying to insult us, the EU will end up with a relationship with its third biggest economy and largest security partner that lets down millions of citizens in the EU and UK.”

However, in a forthright point-by-point deconstruction of the UK’s negotiating positions, the EU official:

  • Warned that it would not allow the UK the access it wants post-Brexit to the Galileo satellite programme as it would give Downing Street the ability to “switch off the signal for the EU”.
  • Ruled out the UK retaining use of the European arrest warrant, as it could put in jeopardy “the lives and liberty of citizens”.
  • Responded to UK complaints that the EU’s proposed free-trade deal was insufficient by pointing out that the UK was asking for a more trusted position than that enjoyed by the member states, which are held accountable by the ECJ and the EU institutions, which the official described as “a big ask” and “not where the European council is at”.
  • Noted that the UK had suggested it could try to change the EU’s rules from inside before it leaves to gain access to its programmes post-Brexit, ominously warning that the commission’s negotiators would report back to the member states on the development.

In Dublin, Ireland’s taoiseach, Leo Varadkar, confirmed that he had not seen any firm proposals on the Irish border backstop since his meeting with May 10 days ago in Sofia.

“We are still waiting for them,” he said. “We’re not that far away from the deadline for the withdrawal agreement, we’re very much in the space where we need legal text,” he said.

In a  devastating analysis that deserves to be read in full,  Sir Ivan Rogers,  the former British senior official in Brussels who resigned shortly after Article  50   insists  that the EU will reject not only a customs partnership and max fac  but Mrs May’s proposal  for the whole  UK to remain  in the customs union for an extra three or so years  to give more time to solve the border problem. What might work would be for the whole UK forming a  customs union with the EU  provided it is bracketed with  quasi single market membership. ( Short Guardian  version here).

The so-called maximum facilitation model will never be accepted by the 27 side of the table. Not now. Not in five years. Not in 105 years. Because, consistent with what I said earlier about what the Customs Union actually is, no technological solution, current or future, ever solves the problem. You can have the most facilitated border in the world, but it’s still a facilitated border. And, as an external border of the EU, rather than the internal border we have now, it cannot look the same.

It’s good that the truck drivers are now explaining this to British Ministers. The Freight Trade Association said this week:

A haulier could lift a full trailer in Birmingham but it could contain 40 different consignments from 40 different producers. Then it comes to Northern Ireland and is broken down with mixed loads on different trucks going to different places, so a tracking device telling you the original truck had crossed the border does not tell you anything… Customs is only the tip of the iceberg and the biggest problem is sanitary and phytosanitary checks on agrifood. Twenty per cent of meat has to be checked and 50 per cent of chicken.”

I could go into much more detail on this. But the central point is that once the UK leaves and what used to be an internal border becomes an external border, the full EU regime will apply automatically as to all other external borders, and that necessitates a hard border. Unless the UK accepts the special status for Northern Ireland – which is politically impossible.

One can, for the reasons I gave earlier – international legal obligations on the UK beyond the EU – forget all the endless repetition of “on the EU and Dublin’s head be it: we won’t erect a hard border; it would be their choice”.

Firstly, that’s simply legally untrue, at WTO and WCO level. Secondly, the EU simply won’t agree a max fac deal as solving the problem. It was dead well before arrival.

Options one sees touted, like the whole of the UK staying in a Customs Union, but Northern Ireland alone remaining in the Single Market for goods, also do not fly. That is just another way of ending with a GB/Northern Ireland internal border.

Come what may, one can guarantee that the EU side will assuredly not agree now to a date certain for the end of the Irish backstop and whatever transitional arrangement inside a Customs Union there might be, and it will ensure that, if, unilaterally, the UK were simply then to decide – given that it might be a different PM or Government deciding – to exit the transitional arrangement, we would, in so doing, pull down much of whatever trade edifice we were building.

But the other question or challenge is more for the EU side now. If the reality is that no option which dissolves the need for a backstop guarantee is in sight even in five years, and the political reality is that no solution which demarcates Northern Ireland radically from the rest of Great Britain is viable, then the entire UK staying in a Customs Union – which, as I have said, may differ from the current Customs Union – becomes perhaps the only way through. Of course, as I have explained, a Customs Union alone does not solve either the Irish issue or the regulated goods sectors issues for the UK Its only ongoing deep regulatory alignment which solves that.

Which brings the question of the Single Market acquis, and indeed of ongoing budget contributions back in play. If the option now exists of the UK aligning itself more permanently regulatorily on goods, and staying in both a Customs Union and having quasi Single Market membership, paying something for it, living under ECJ jurisprudence and jurisdiction in goods, but disapplying the fourth fundamental freedom, free movement of people, the EU faces the decision as to whether this is an unacceptable option sundering indivisible freedoms and offering something too close to membership advantages to a non member. Or whether it’s rather a good deal for the EU with a major strategic partner. With the added advantage of providing far more continuity in the sectors in which you have a surplus with the UK than those in which you have a deficit – notably key services sectors.

The doctrine in parts of Brussels is of course that one cannot use the negotiation over Ireland for the Withdrawal Treaty to pre-empt and prenegotiate the outline of the future relationship. And that nor can the solution which might work for the special case of Northern Ireland be the template for a broader post Brexit resolution. To be clear, in my view, that was a genuine attempt to treat this issue as a special case. It was not about the Berlaymont seeking to annex Northern Ireland, before it rolled on to Scotland and broke up the UK…

But we are now at a point where reality starts to bite on all sides. And it’s time soon to decide what are feasible outlines of solutions even if it then takes years, as it will, to fill in all the substance.

And if that isn’t enough for you, Lord (John) Kerr, the man who drafted Article 50 and is a strong opponent of Brexit, claims  a second referendum is now viable.

If we were to ask for an Article 50 extension in order to conduct a referendum, there is absolutely no doubt that we would get it,” he said, adding that legally under Article 50 the UK would be able to remain a member on its current terms.

Lord Kerr denounced the UK government for what he said was a breach of the principle of devolution in attempting to take control of some policy areas repatriated from Brussels that have been formally devolved to Scotland since 1999.