With Brexit clock ticking, UK & EU still at odds over future relationship and Irish border

When British Prime Minister Theresa May informed Donald Tusk, the president of the European Council, on March 29, 2017, that the United Kingdom wished to withdraw from the European Union, by the terms of Article 50 of the Treaty on European Union March 29, 2019, became the date on which, in the absence of a formally approved withdrawal agreement, or some other date specified in the completed agreement, or a unanimous decision by the European Council to extend the negotiation, the UK would officially cease to be a member of the EU.

With that date in mind, and realizing that any withdrawal agreement, once negotiated, would have to be approved by the UK Parliament, the European Parliament, and a “qualified majority” of the Council (72 percent of the participating states comprising at least 65 percent of the population of those states), the EU and UK had hoped they could complete the negotiation of the agreement at last week’s October meeting of the European Council. They continued to believe that might happen even after last month’s informal meeting of the European Council at Salzburg at which it became apparent the negotiation was at an impasse. But it didn’t happen. And so, as the Brexit clock continues to tick toward March 29, 2019, and as British citizens take to the streets in unparalleled numbers to protest Brexit and call for a “People’s Vote” on whatever deal (if any) may emerge, the negotiation continues.

For the last year, the two most difficult issues in the negotiation have involved the Irish border—specifically, how the EU and UK will ensure that, in all future circumstances, the land border between Ireland and Northern Ireland remains open and frictionless—and the nature of the future relationship between the EU and UK. Going into the Salzburg meeting, May had anticipated the other leaders would welcome the British government’s proposal for the future relationship. The subject of an 11-hour meeting of the British government in July at Chequers, the prime minister’s country residence, and elaborated in a 100-page White Paper, the proposal made it clear the UK wanted to “cherry pick” its way to a soft Brexit—one that could be characterized as one-foot-out-but-the-other-one-still-in. Not surprisingly, it prompted the resignations of the two leading hard-line Brexiters in the government—Foreign Secretary Boris Johnson and the Secretary of State for Exiting the EU David Davis—as well as several lower-ranking members of the government. But also not surprisingly—except perhaps, judging by her reaction, to May—at Salzburg the other leaders emphatically rejected the Chequers plan. French President Emmanuel Macron said bluntly it was “not acceptable” and European Council President Donald Tusk said it “would not work.” As German Chancellor Angela Merkel put it, “No one can belong to the single market if they are not part of the single market.” The leaders also made it clear there will be no withdrawal agreement without a “solid, operational and legally binding Irish backstop” to ensure that the Irish border remains open in all circumstances in the future and urged the UK to put forward a “precise and clear” solution to the problem.

At Salzburg, the leaders of the EU27 said, “the moment of truth for Brexit negotiations will be the October European Council. In October we expect maximum progress and results in the Brexit talks.” Last Wednesday, they got neither maximum progress nor results. May gave a 15-minute presentation on the UK’s assessment of the negotiation that largely repeated her comments in the House of Commons earlier in the week and struck many leaders as unrealistically upbeat. The only move forward was her suggestion that the post-exit transition period agreed in March and scheduled to run through December 31, 2020, be extended for “a matter of months.” But that in fact was not a new idea; in June, the UK had proposed, as a partial solution to the Irish border issue, a “time-limited,” “temporary customs arrangement” between the EU and the UK until a future permanent customs arrangement could be introduced. Although it didn’t specify a termination date for the arrangement at the time, it said it expected it would be replaced by the permanent arrangement by the end of 2021.

After May spoke and left the meeting, the 27 leaders heard, over dinner, from Michel Barnier, the EU’s chief negotiator, who repeated what he had said earlier in the week—that while the two sides have agreed on many of the issues in the withdrawal agreement, there had not been “decisive progress” on the two most difficult issues: elaboration of the “backstop” that will ensure that, in all future circumstances, the land border between Ireland and Northern Ireland remains open; and an understanding about the future relationship between the EU and UK. Although Tusk had suggested at Salzburg that he might convene a November meeting of the European Council if it appeared the withdrawal agreement could be concluded with another few weeks of negotiation, the leaders decided not to schedule one; as Barnier told them, “we need time, much more time.” The target date for completing the agreement is now the European Council meeting scheduled for December 13-14, which is, realistically, the latest possible date that would allow a completed agreement to be approved by the UK parliament, the European Parliament, and the Council before March 29, 2019, (unless, of course, the European Council unanimously agrees to extend the negotiation).

Of the two most difficult issues, the easier one to resolve is agreement on an overall understanding of the framework for the future relationship that will be elaborated in a political declaration that will accompany and be referred to in the withdrawal agreement. At last December’s meeting of the European Council, Barnier demonstrated with a single PowerPoint slide that the UK’s frequently-reiterated “red lines”—its refusal after the transition period to make a financial contribution to the EU budget and accept the jurisdiction of the European Court of Justice, regulatory authority of the Commission and free movement of EU citizens into the UK—exclude every possible type of future relationship—membership in the European Economic Area (the Norway alternative), membership in the European Free Trade Association (the Switzerland alternative), a Deep and Comprehensive Free Trade Agreement (the Ukraine alternative), membership in the Customs Union (the Turkey alternative)—except a Free Trade Agreement such as the EU-Canada Comprehensive Economic and Trade Agreement (CETA).

At Mansion House in early March, May said the UK wouldn’t seek a free trade agreement similar to Canada’s because that would reduce the access of the EU and UK to each other’s markets. Instead, it wanted the “broadest and deepest possible partnership—covering more sectors and cooperating more fully than any Free Trade Agreement anywhere in the world.” Such an agreement, she said, would encompass not only goods but financial services, would include reciprocal binding commitments to ensure fair and open competition, and would create an independent arbitration mechanism, a process of dialogue and consultation in which EU and UK regulators would work together, and a comprehensive system of mutual recognition of regulatory standards for goods with a mechanism to oversee the arrangement. The agreement would, she said, allow the EU and UK access to each other’s financial markets based on a collaborative framework that is reciprocal, mutually agreed, permanent and maintains the same regulatory outcomes over time. There would be either a customs partnership with the EU or a highly-streamlined customs arrangement in which the EU and UK would agree on measures to minimize trade frictions.

After its March meeting, the European Council issued its guidelines for the negotiation of the framework of the future relationship. It confirmed its readiness to work toward a “balanced, ambitious and wide-ranging free trade agreement (FTA)” that would be concluded once the UK is no longer a member state. According to the guidelines, the FTA would address trade in goods with the aim of covering all sectors and maintaining zero tariffs and no quantitative restrictions; there would be appropriate customs cooperation while preserving the regulatory and jurisdictional autonomy of the parties and the integrity of the EU Customs Union; and it would address trade in services with the aim of allowing market access to provide services under host state rules, including in regard to the right of establishment for providers, consistent with the fact that the UK would be a third country and would no longer share a common regulatory, supervisory, enforcement and judiciary framework with the EU.

In its July White Paper on the future relationship, the British government proposed that the UK and EU maintain, after the transition period, a “common rulebook” for all goods, with the UK committing by treaty to ongoing harmonization with EU rules on goods that cross the border to ensure frictionless trade, while agreeing to different arrangements for services that would allow regulatory flexibility; that they incorporate “strong reciprocal commitments related to open and fair trade” into the legal agreements that define the future relationship; that they apply a “common rulebook” on state aid, establish “cooperative arrangements” between regulators on competition, and maintain the current regulatory standards for the environment, climate change, employment and consumer protection; that they establish a “joint institutional framework” to provide for the “consistent interpretation and application of UK–EU agreements by both parties,” with that done in the UK by UK courts but with due regard paid to EU case law in areas where the UK continued to apply a common rulebook; that the “joint institutional framework” include “robust and appropriate means for the resolution of disputes,” including through a “Joint Committee” and, in many areas, “binding independent arbitration” that, “through a joint reference procedure,” would “accommodate” the role of the ECJ as the interpreter of EU rules; and that they work together on the phased introduction of a new “facilitated customs arrangement” that would remove the need for customs checks and controls between the UK and the EU “as if a combined customs territory.” It’s no wonder, given the proposals for a “common rulebook,” “harmonization with EU rules,” “strong reciprocal commitments,” “joint institutional framework,” etc., that the hard-line Brexiters quit the government. And it’s also not surprising that the leaders of the EU summarily dismissed the proposal as a transparently self-serving proposal that would create, in effect, an alternative EU that would provide the UK with all the advantages of the single market without any of the obligations of membership in the EU. As Angela Merkel said at Salzburg, “No one can belong to the single market if they are not part of the single market.”

Notwithstanding the furor provoked by Chequers, it should nevertheless be possible, after all the back-and-forth about the future relationship since last December, for the EU and UK to agree, in a few paragraphs of artfully-crafted and suitably-general prose, on a framework for the future relationship suitable for inclusion in the political declaration that will accompany the withdrawal agreement. After all, there is no need, in such a framework, to anticipate, as “Chequers” tried to do in great detail, the outcome of a negotiation that will only begin once the UK leaves the EU, will last several years, and can’t possibly be known at this time.

The more difficult issue, and one that can’t be as easily finessed, involves the Irish border. In April 2017, soon after May informed the EU of the UK’s intention to withdraw, the European Council issued its guidelines for the negotiation and identified three issues that would have to be addressed in the first phase of the negotiation—the UK’s settlement of its financial obligations to the EU, the continuing rights of EU citizens living in the UK and UK citizens living in the EU after Brexit, and the UK’s  continued support of the Good Friday or Belfast Agreement of 1998 and the peace process on the island of Ireland.

In the December 2017 Joint Report of the negotiators, the UK agreed, in paragraph 49, that any future arrangement with the EU must be compatible with the overarching requirements of protecting North-South cooperation and avoiding a hard border, that it intends to achieve those objectives through the overall EU-UK relationship; and that, should that not be possible, it will propose specific solutions to address the unique circumstances of the island. And in what has come to be known as the “backstop,” it agreed that, in the absence of agreed solutions, it “will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement.”

In March, the negotiators prepared a draft Protocol on Ireland/Northern Ireland the terms of which will be annexed to the withdrawal agreement and will apply unless a future agreement between the EU and UK addresses the unique circumstances on the island. But they did not agree on language for chapter 3 of the draft Protocol dealing with the “common regulatory area”—defined as an area without internal borders in which the free movement of goods is ensured and North-South cooperation is protected. May explicitly rejected the concept of a “common regulatory area” composed of Ireland and Northern Ireland for an obvious reason; it would cross a “red line” for the Democratic Unionist Party which, since the June 2017 election in which the Conservatives lost their majority in the House of Commons, has provided the government with its narrow working majority in the House and is strongly opposed to any measure that would create a barrier between Northern Ireland and the rest of the UK. Nevertheless, the EU has made it clear that a “legally operative version” of the “backstop” must be agreed as part of the text of the withdrawal agreement and must apply unless and until another solution is found.

There is an obvious way to maintain the “common regulatory area” that now exists between Ireland and Northern Ireland while also maintaining the full integration of Northern Ireland in the UK internal market: continued membership of the UK, even after the transition period ends on December 31, 2020, in the EU’s Single Market and Customs Union as a member of the European Economic Area. But that, of course, would require the UK to accept, as it does now and will during the transition period, the jurisdiction of the European Court of Justice, the regulatory and oversight functions of the EU institutions, the free movement of EU citizens into the UK, continued payment of its full budgetary contribution, and acceptance of EU responsibility for all matters pertaining to trade with third countries. In short, it would require the UK to dispense with all of its “red lines.” 

A second-best alternative that would at least ensure that the border between Ireland and Northern Ireland will remain open and trade between the two will continue to be frictionless would involve creation of a customs arrangement between the UK and the EU. In June, the UK proposed a “time-limited” “temporary customs arrangement” between the EU and the whole of the UK until a future permanent customs arrangement could be introduced. In such an arrangement, all tariffs, quotas, rules of origin and customs processes, including declarations, on UK-EU trade would be eliminated and the UK would apply the EU’s common external tariff at its border. Although the UK didn’t specify a termination date for the temporary arrangement, it said it expected the permanent arrangement would be in place by the end of 2021.

After Salzburg, the UK renewed this proposal and May put it forward again last week in the House of Commons. But the problem, of course, is that the hard-line Brexiters insist that it not only be “time-limited” and “temporary” but that there be a specific termination date, while the EU, on the other hand, insists that it must remain in effect until the permanent customs arrangement that meets the requirements specified in Paragraph 49 takes effect. And even if the temporary customs arrangement were to remain in effect until a permanent arrangement took effect, that would not provide the full regulatory alignment of Northern Ireland with the rules of the EU’s internal market required by the UK’s commitment to establish a “common regulatory area.” And if the UK were to agree to such a regulatory alignment, that would create the regulatory divergence of Northern Ireland from the rest of the UK that Arlene Foster, the DUP leader, so vigorously opposed in the run-up to last December’s European Council meeting and would in all likelihood lead the DUP to withdraw its parliamentary support for the government.

Whether Theresa May and her government can succeed, between now and the next European Council meeting, in charting a course that simultaneously addresses the concerns of the EU in regard to the future relationship and the Irish border, mollifies the hard-line Brexiters on the Conservative back benches, and retains the parliamentary support of the DUP remains to be seen. Meanwhile, the Brexit clock keeps ticking.

David R. Cameron is a professor of political science and the director of the MacMillan Center’s Program in European Union Studies.