Notes of optimism from London about the Brexit talks are treated cautiously in Brussels and Dublin. Whatever happens, Northern Ireland won’t be ready

Briefing on the Brexit negotiations is growing more intense.  From the British side, hopes of a breakthrough are reported by the political editor of the Spectator James Forsyth.  Inevitably  this translates into a British claim that the EU are at last bending on their hitherto implacable insistence on  full  UK compliance with the Withdrawal Agreement including the Protocol, and the withdrawal  of the offending parts of the Internal Market Bill. The EU side are briefing differently but not quite incompatibly; they are still requiring a detailed British position that keeps the UK  in compatibility  with the transition arrangements that will end on the New Year,  and a strong dispute resolution mechanism  if the British intend to diverge.  The resulting free trade agreement would then allow the frictions in GB to NI supply to be considerably eased.

From  Forsyth’s report in The Times

There is cautious but growing optimism in Whitehall that there will be a Brexit deal. At the beginning of this month the mood was grim. There was a feeling that the talks weren’t getting anywhere. This frustration contributed to the Internal Market Bill’s rash commitment to disapply parts of the withdrawal agreement. But there is now a more positive attitude, a sense that things are moving and that a deal is coming into view…

Boris Johnson tried to justify his threat to break international law by warning that without action by Britain the EU could impose an effective food blockade on Northern Ireland. The argument was that unless the EU granted the UK third-country status for agricultural exports, which it has not yet committed to do, it could prevent food being moved from Great Britain to Northern Ireland, which will stay within the rules of the EU single market. The threat not to list the UK was made by one EU figure but calmer heads have prevailed. The government is now confident that the EU will give it third-country status, meaning that food can continue to be moved freely between Great Britain and Northern Ireland, and between this country and the Continent, too.

The progress on Northern Ireland has been matched in the broader trade negotiations. The British side now view the remaining problems as being more about process than substance. One source close to the negotiations tells me: “There’s no doubt that the tone has improved but we really need to begin the intensive talks to resolve the final tricky issues. We’re keen to begin now, but at the moment the EU keeps blocking these talks and demanding more process. The real risk now isn’t that the talks fail over substance, it’s that they will be timed out.”

If this British interpretation of the situation is correct — and those close to the EU side are sounding more positive than they did a few weeks ago — then the injection of some political will could give the talks the momentum they need. 

But making an  issue of a delay in awarding the UK  “third country listing” was  probably tactical. The EU were never going to hold up food supplies to Northern Ireland, one of the alarmist  claims that led to the Internal Market Bill  Otherwise the  talking up of breakthrough is not reflected  in the briefing from Brussels, carefully monitored by Peter Foster of the FT

From an EU perspective, the door is still open to that trade deal: the only question in Brussels’ mind is whether Mr Johnson will walk through that door to avoid a heap of unnecessary additional trade disruption in January, overruling the most sovereignty-focused members of his own party in the process.
For Mr Johnson to grasp that prize, the EU still seeks the triple lock of a detailed “shared philosophy” on subsidies: a solid domestic regulator with enforcement powers and robust dispute resolution mechanism to resolve differences — something viewed as even more essential now that Mr Johnson has shown himself capable of treaty-breaking. The EU may have softened its original red lines on state aid, no longer requesting dynamic alignment and the oversight of the European Court of Justice. But it remains clear that the price of a “zero tariff, zero quota” FTA is still the UK offering level playing field guarantees that the EU views as commensurate with the “geographic proximity and economic interdependence” of the UK with the EU. This was the EU position in 2017 and remains so now, however you might now look to sugar the pill — and the basic problem might still be that Mr Johnson is simply not willing to swallow that pill. …

The UK has systematically stripped back its requests for market access to the EU since January to the point that the deal on offer is, arguably, already not worth any encumbrance with the EU’s regulatory regime. When it comes to state aid and subsidies, the UK is clear that it rejects a “shared philosophy” but seeks an entirely independent regime based on WTO principles of subsidy, with a UK regulator to manage its internal market issues and any disputes with the EU resolved after the fact through the imposition of tariffs. ..

There is talk in Europe of giving Mr Johnson a “ladder to climb down”, but the decision may already have been taken in Downing Street that slipping back into the warm embrace of the EU’s regulatory orbit for the sake of convenience is not worth it — either politically or, so skinny is the FTA deal on offer, economically.  The political declaration says level playing field commitments should be “commensurate with the scope and depth of the future relationship”, and the UK argument is that the “scope and depth” of its requests cannot justify the scale of commitments the EU is asking for. The EU disagrees, and going back on its level playing field philosophy would be as big a volte-face for Brussels as accepting a shared philosophy on subsidies would be for Mr Johnson and many Brexiters in his party. 

Tony Connelly of RTE  tweets s “some potentially conciliatory remarks by Irish foreign minister

@simoncoveney on the Internal Market Bill standoff, following  yesterday’s  General Affairs Council in Brussels:

“There’s likely to be a break of a number of weeks between the Commons consideration and the Lords consideration of this legislation. That’s a window that all of us should look to as an opportunity to make progress. Because if we can deal with the issues that the legislation proposes to deal with, in the absence of agreement, then it makes that legislation irrelevant… Coveney says two of the three issues the UK has issues with on the NI Protocol – ie, the state aid reach back and tariffs on goods going GB-NI – would be made “less contentious, if contentious at all” if an FTA was reached.

Diplomats say the third issue – exit summary declarations on goods going NI-GB – were already being explored by the Joint Committee. Progress was being made at seeing how such controls could be simplified. “This is the sort of thing the EU is very good at,” says one diplomat.

 As if we needed reminding, the price of No Deal is high, according to the latest estimate by the think tank UK in a Changing Europe.

Our modelling suggests a no deal could imply a reduction in UK GDP of some eight per cent over the next 10 years, larger than most estimates of the lasting impact of Covid-19.

No deal also means the prospect of increased prices for consumers, especially for food as both sides apply tariffs. There will also be less obvious but nevertheless important implications, for example on security co-operation.

Even with a benign result, NI will suffer unless the  timetable for implementing  a deal is extended.

New checking facilities for goods arriving in Northern Ireland from Great Britain will not be ready for the end of the Brexit transition period, a senior official has confirmed.

Contingency arrangements are being prepared, including the repurposing of old buildings and an interim paper-based checking system, when the requirement for additional regulatory checks at ports comes into effect on January 1.

Denis McMahon, the permanent secretary in the Department of Agriculture Environment and Rural Affairs, said he and his colleagues had been left in an “impossible position” as they worked on a project that was openly opposed by their minister, Edwin Poots.

He told his Assembly scrutiny committee: “My message to you today is, despite monumental efforts by the team, not everything will be place by the 1st of January 2021.”