Brexit Process Enters Pivotal Phase As Leaders Debate Options for "Backstop"

18 October 2018

The past week has seen a flurry of activity and headlines on the Brexit negotiations, ahead of a pivotal meeting on the evening of Wednesday 17 October among EU leaders to weigh the negotiating state of play and prepare for the final months of 2018. While no major breakthroughs were announced, leaders pledged to continue their discussions, in a bid to make further headway in the weeks to come. 

Just days before the summit, the EU’s chief Brexit negotiator, Michel Barnier, and UK Secretary of State for Exiting the European Union, Dominic Raab, met to discuss the state of the Brexit talks, initially fuelling speculation that a tentative compromise had been reached, though subsequent reports indicated that negotiations were still ongoing.

After the meeting, Barnier commented on social media site Twitter  that, “despite intense efforts, some key issues are still open, including the backstop for IE/NI to avoid a hard border. I will debrief the EU27 and the European Parliament on the Brexit negotiations.” IE/NI refers to the Republic of Ireland, an EU member state, and Northern Ireland, a part of the United Kingdom. EU27 refers to all European Union member states, minus the United Kingdom.

British officials have warned that, depending on the terms, a deal could run the risk of being blocked domestically, including on how the subject of Northern Ireland and the EU customs union is broached. Speaking on Monday in anticipation of the Wednesday night summit, UK Prime Minister Theresa May said that she still had confidence in a deal being reached.

"I continue to believe a negotiated deal is the best outcome for the UK and the EU and that such a deal is achievable, and that is the spirit in which I will continue to work with our European partners," she told the House of Commons.

Meanwhile, European Council President Donald Tusk cautioned leaders from the EU’s 27 other member states that the bloc “must prepare the EU for a no-deal scenario, which is more likely than ever before.” Those comments were made in an invitation letter circulated to the members of the European Council ahead of their meetings on 17-18 October.

“The fact that we are preparing for a no-deal scenario must not, under any circumstances, lead us away from making every effort to reach the best agreement possible, for all sides. This is what our state of mind should be at this stage. As someone rightly said: 'It always seems impossible until it's done.' Let us not give up,” he added.

Complexities of Irish border

Disputes over how to address the special situation of the Irish isle and avert a hard, physical border have played a dominant role in recent talks, amid concerns that different formulations could either be unfeasible in practice, complicate the UK’s ability to determine its own international trade policy with third countries, or draw pushback from “Brexiteers” in the UK’s Conservative Party and the DUP in Northern Ireland.

The EU and the UK previously said that a legal “backstop” would be in place should talks on finding an alternative approach to the Irish situation fail, with the backstop keeping Northern Ireland in the EU’s single market and customs union and thus averting a hard border that many fear could threaten decades of peace on the island.

Subsequently, the UK government deemed that these provisional backstop terms would not be sufficient, and negotiators have since been testing out alternative proposals and formulations. (See Bridges Weekly, 22 March 2018 and 4 October 2018)

For example, the Democratic Unionist Party (DUP) in Northern Ireland has maintained that a deal which sets Northern Ireland in a different system from the overall United Kingdom would be untenable.

Following a week of meetings with EU officials in Brussels, DUP leader Arlene Foster said in an article published by the Belfast Telegraph that “I would not tolerate a trade barrier between England and Wales any more than I would tolerate one between Northern Ireland and Great Britain.” She said that she “fully appreciate[s] the risks of a ‘no deal’ but the dangers of a bad deal are worse. If true to her principles Mrs. May would not and should not choose the path to effectively cut Northern Ireland adrift.”

Last week, EU chief negotiator Michel Barnier laid out a potential approach to the customs union issue, laying out how a system of customs checks could be designed. Speaking at the European Parliament of Enterprises on 10 October, Barnier said that negotiators are working with the goal of having "an agreement be within reach” in time for this week’s Council summit and that the EU may be open to different customs union options, depending on what these entail.

“The EU is committed to respecting the territorial integrity and constitutional order of the UK,” he added. “The UK wants to leave and will leave the single market and the customs union, this means that there must be checks on goods traveling between the EU and the UK and that checks do not exist today.” 

He pointed out that “these checks cannot be performed at the border between Northern Ireland and Ireland. A crucial question is therefore where they will take place.”

Therefore, he suggested, regarding most goods, “companies in the rest of the UK would fill in their customs declarations online and in advance when shipping goods to Northern Ireland. The only visible systematic checks between Northern Ireland and the rest of the UK would involve scanning the bar codes of the lorries or containers, which could be done on ferries or in transit ports.”

However, he reiterated that separate terms would have to apply for livestock, given that these involve specific types of checks due to “food safety and animal health reasons,” and would therefore need to happen at the Belfast and Larne ports, with all live animals and products derived from them checked, as opposed to the 10 percent checked now.

Governments prepare for range of outcomes

Given the challenging nature of the talks, the European Commission has published over 70 Brexit “preparedness notices” covering a host of sectors, which it says could make it easier for companies and individuals to prepare for when Brexit takes place.

Meanwhile, the UK Government recently issued proposed guidance for a “no deal’” scenario, including an overarching framing notice of the UK approach to prepare for this outcome. “It is part of the government’s ongoing programme of planning for all possible outcomes. We expect to negotiate a successful deal with the EU,” the conclusion notes.

The guidance includes a reference to the existing trade accords that the EU has in place, noting that the UK government is “currently working with partner countries to prepare for a range of possible scenarios to maintain existing trading relationships.” The document warns, though, that if there is a “no deal” scenario, and therefore no “implementation period” for a Brexit deal, the UK government will have to take steps “to bring into force bilateral UK-third country agreements from exit day, or as soon as possible thereafter.”

“These new agreements will replicate existing EU agreements and the same preferential effects with third countries as far as possible, whilst making the technical changes needed to ensure the agreements operate in a bilateral context. Ministers and officials are engaging regularly with partner countries to complete this work,” the document says, noting that should final arrangements not be ready in time for Brexit, then trade with those countries would revert to WTO terms, specifically on a “most favoured nation” basis.

Coming up

The next potential milestone would be an upcoming special summit to close the deal. While November had been floated as a possible date, that timeframe is now considered too tight following Wednesday night’s discussions. The summit, when it occurs, would allow leaders in the European Council to endorse a deal and allow it to move to the ratification stage.

However, this will still depend on UK Prime Minister Theresa May resolving diverging views among lawmakers back home to make sure such a deal would pass her country’s legislature, while the remaining EU member states would also need to be on board with the final outcome and be able to defend it domestically.

ICTSD reporting; “Brexit divorce agreement collapses after Raab and Barnier meet,” POLITICO, 14 October 2018; “Arlene Foster: ‘EU spin on offer suggested NI would have best of both worlds. That was a lie. We would not’,” BELFAST TELEGRAPH, 13 October 2018; “Michel Barnier’s zen Brexit,” POLITICO, 11 October 2018.

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