Brexit talks deadlocked on customs and economic relationship

The UK's Brexit White Paper received a polite but firm kiss of death from  Michel Barnier on Thursday. Talks on the future economic relationship between the union and the UK remain largely deadlocked. This was "no surprise", Barnier said.

The EU's chief negotiator was meeting the new Brexit secretary, Dominic Raab, in Brussels at the end of a week of detailed talks described by sources as workmanlike and reflecting a clear change of tempo.

The talks saw real “convergence” between the two sides on security and defence. On Ireland, and specifically the backstop, Raab, speaking at a press conference after the talks, reiterated longstanding UK positions, backing the idea of an all-UK customs area as a “practical” way of “preserving the economic and constitutional integrity of the UK”, and he insisted that any backstop would have to be time-limited.

The backstop agreed between the EU and UK last December provides for regulatory alignment between the Republic and the North in order to avoid customs checks. It would come into effect in the absence of a wider Brexit deal providing for a frictionless Border.

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“With pragmatism on both sides I am confident we can find a way to resolve it [the backstop] into a workable solution,” Raab said. “That will be easier to achieve if it is clear that the backstop, if it were to be exercised at all, could only be for a time-limited period before the permanent future arrangements would become operational.”

Contradiction in terms

But in reiterating the “time-limited” nature of the backstop guarantee, seen by EU diplomats as a contradiction in terms, Raab assumes that the permanent arrangements eventually agreed are bound to surpass the backstop’s protections of the integrity of the EU market. That is quite unlikely, and if they do not the EU will insist the backstop remains in place permanently. It cannot be time-limited.

Barnier said the EU had “no objection in principle” to the idea of a UK-wide customs area but he had doubts about how it could adequately protect the integrity of the customs union and live alongside the EU’s common commercial policy, its right to negotiate trade agreements.

He also returned to his attempts to “dedramatise” proposals to put customs and veterinary checks into the Irish Sea to allow the North remain part of the customs union. Such checks already existed, he pointed, out without undermining the North’s constitutional position.

Barnier said the talks between officials this week had been “constructive” but only limited breakthroughs had been possible.

But on security, defence and foreign policy co-operation there was a “real step forward”, according to Barnier, who cited agreements on issues ranging from exchanging DNA and fingerprints, flight passenger records and commitments to swift and effective extradition. That was made possible, he said, by commitments to personal data protection principles.

No polemics

Much of the focus had been on a detailed questioning of the UK government’s White Paper proposals on customs, what a source close to the talks said had been a “solid week’s work” by the two sides.

The source acknowledged a “good engagement” by the UK side on the detailed issues raised by the European Commission task force – no polemics, a productive dialogue, with the UK “recognising the challenges and getting down to coming up with real answers”.  But, the source warned, there was still “a mountain to climb”.

Both men were anxious to reiterate what has been achieved so far – 80 per cent of the Withdrawal Agreement, Barnier said, including the rights of respective citizens after Brexit, the transition arrangements , and the British “divorce bill”.

On the economic relationship, Barnier said “the UK wants to regain control of its money, law and borders. But the EU also wants to retain control of its money, law and borders. And the UK should respect that.” He said the EU could not subcontract its customs, VAT and excise collection to a non-member.

He welcomed the White Paper as a contribution to the discussion but said elements were clearly in breach of the guidelines given by ministers to the EU negotiating team.

The talks will resume in mid-August.