If the UK and the European Union have not agreed a trade deal by the summer of 2020 that keeps the border between Northern Ireland and the Republic of Ireland open, a British prime minister will have to decide whether to buy more time or keep the UK aligned to EU rules for years to come.
European diplomats have been told for the first time that UK and EU negotiators are working on a mechanism to review in July 2020 whether the so-called backstop, an insurance policy to avoid a hard border between Northern Ireland and the Republic of Ireland under all circumstances, will need to be activated, according to a diplomatic note.
The note, seen by BuzzFeed News, states that under the proposed backstop architecture, there would be three possible options come the summer of 2020:
The backstop becomes superfluous because a hard border will have been avoided through an agreement on the future UK–EU relationship;
The transition period, currently planned to last until the end of that year, is extended, buying negotiators more time;
Or the backstop is activated, and the UK enters into a customs union with the EU.
The longer transition and backstop options presented to diplomats on Friday would require the UK to remain aligned to EU competition, state aid, and tax rules — a possibility likely to enrage some hardline Tory Brexiteers, who have demanded a clear break from them.
And, if the backstop is triggered, Northern Ireland would remain in the EU’s regulatory space for goods as a customs union alone would not guarantee frictionless trade. The permanence of special arrangements for Northern Ireland in the overall Brexit deal is likely to anger the DUP. On Friday, the party accused Theresa May of breaking her promises over plans to avoid a hard border after a letter from the prime minister to DUP leader Arlene Foster was leaked to the Times.
Negotiations have been stuck on the issue of the backstop for months. The solution the EU had proposed — to be used only if an alternative, and a future trade deal, was not agreed in time — would see the UK in a customs union, and Northern Ireland remaining, in effect, in the EU’s single market for goods.
Solving the backstop is crucial to securing a withdrawal agreement and a transition period. Without consensus on that issue, negotiations will not move on to discussions about a future trade deal — and there will be no deal.
EU and UK negotiators hope that by presenting the backstop as part of a package of options, they will be able to provide both the insurance that a hard border will be avoided at all costs, and Theresa May with the cover she needs to sell a deal back home.
According to the diplomatic note, the European Commission told ambassadors from the remaining 27 member states that as well as entering into a customs union, the UK would be obliged to stay aligned to EU competition and state aid rules, and the agreement would include a British commitment to set up enforcement mechanisms to ensure that this is the case.
The EU would also insist that the UK continues to sign up to the bloc’s anti-tax avoidance rules and its environmental standards.
Some member states, including France, had previously indicated that they’re not too keen on having a customs union within exit arrangements because it requires detailed negotiations, and there is little time to complete these.
But by agreeing to take stock of the situation in July 2020, negotiators are hoping to have enough time to agree in the interim a number of issues that remain open, including on taxation, quotas, and what sectors to include in a common external tariff system.
In the longer transition option, which would maintain the status quo for an agreed period beyond 2020, the two sides would need to come to an agreement on the UK’s continued financial contributions to cover the additional time, the note states.
Diplomats were told that the overall state of the withdrawal agreement was now solid, but there was still work to be done. And the final stages of the process involved many moving parts, not least due to the volatile political situation in the UK where May is trying to perform a balancing act between the DUP and hardline Brexiteers, who are not prepared to part ways with the EU without a fully autonomous trade policy.
Should negotiators reach an agreement, member states will be presented with the draft withdrawal text and a framework outlining the future UK–EU relationship. Member states would be given enough time to review the drafts, and if May can get the agreement through her Cabinet and parliament, the plan would be for EU leaders to endorse the deal at a European Council summit in December.
The European Commission declined to comment.