The landing zone is finally coming into view. In a little more than a month, the European Council meets to, among other things, take stock of the Brexit negotiations. With October pencilled in as the deadline for a finished withdrawal agreement to leave enough time for ratification, the talks had better have settled a number of outstanding issues by the time of the June council.
That has put pressure on the UK’s Conservative government to make up its mind what to push for in the talks. Since March, the focus has been on two things. The first, subject to highly publicised conflicts within the cabinet, is which customs arrangement the UK should aim for in its future trade deal with the EU. This has been a theatre of the absurd inasmuch as the EU has already rejected both options under consideration: a “customs partnership” where the UK levies the EU’s tariffs on imports from third countries, and technologies to make customs checks as quick and light as possible (but not to eliminate them).
At the same time, the UK parliament looks perfectly capable of imposing on the government a policy of staying in a customs union with the EU outright. That would be the best outcome. But at least if the UK makes its mind up one way or another it can get beyond phoney negotiations.
(The EU has good reasons to reject both customs options, but politically at least it matters that only the partnership model accepts the December commitment, as the technological option would require physical infrastructure of some sort. That is why the Irish prime minister has hinted that perhaps the customs partnership model could be developed into something workable.)
The other urgent question has until a few days ago passed below the public radar. This is the need for a legal text setting out the “backstop option” on how to avoid a physical border on the island of Ireland if the future trade deal or technology do not make one unnecessary. The UK agreed to have such a backstop in December, but has since rejected the EU’s draft text for one. Everyone is waiting for the UK to propose its own.
The relative importance of these two issues is the reverse of the attention they have been given in the public debate. Because the UK government has so far refused to resolve the contradiction between its various cake-eating ambitions, the fallback should be seen as where the action really is. The Centre for European Reform’s Sam Lowe has been one of the few to make clear that whatever goes into the Irish backstop provisions in the withdrawal agreement is the most likely scenario for arrangements after the Brexit transition.
The less relevant dispute, however, gives an indication of where the prime minister will end up on the more relevant issue. After a period of studied neutrality, Theresa May has broken cover in favour of the partnership model, citing the risks to the Union if a physical border undermines peace in Northern Ireland. May has clearly identified that in a choice between a still-United Kingdom and a global Britain, she backs the former. This choice was actually made back in December, when the UK committed itself to avoiding “any physical infrastructure or related checks and controls” on the Irish border. As I pointed out then, this was a remarkably strong commitment that did a lot to tie the UK’s hands in terms of possible future options. By now it is abundantly clear May understands what this takes and means it seriously. The fact that opponents did not object then makes it harder for them to resist her on this issue now.
From this we should note two things: the prime minister’s substantive priorities and her form on moving the most relevant parts of the process forward while others are absorbed by something else.
On substance, all this means the prime minister will prioritise the absence of physical border infrastructure when negotiating the backstop as well. She has, partly as a successful consequence of her surreptitious method, got her cabinet to sign off on the idea of solution in which the UK as a whole remains in a customs union with the EU until a viable permanent solution is found.
There is a problem. A physical Irish border can only be avoided if not just customs, but goods (and some other) regulations and VAT are also harmonised on both sides of it. May knows this and might be planning to propose continued all-UK harmonisation with EU rules in these areas for the backstop. That would mean UK participation in the single market for goods on an indefinite basis. But the EU, in turn, wants to avoid this, because it is legally precarious and would give Britain something for free that it now pays for; it would be a “back door” into a trade deal. And of course hard Brexiters would oppose it at home.
Here is a possible third way. The UK and the EU could agree a backstop that keeps the whole UK inside the customs union, but only Northern Ireland within a regulatory union. Would this fall foul of the British requirement not to have an economic border in the Irish Sea, between Northern Ireland and the island of Great Britain? Perhaps not.
It would avoid a customs border — and any associated tariffs or rules of origins on intra-UK trade that would seem particularly offensive. Regulatory differences, in contrast, are of a lesser order of friction between two entities already separated by a body of water. They could take the form of Northern Ireland having particularly stringent product regulations (relative to the rest of the UK) and associated bans on what may be shipped into its ports and marketed in the region’s territory — something that already exists today on so-called sanitary and phytosanitary issues. The December agreement even specifically provides for barriers from the rest of the UK into Northern Ireland (but not the other direction) with Northern Irish politicians’ approval.
This, then, is the landing zone: customs union (and perhaps VAT collaboration) with the EU for the entire UK; regulatory union between Northern Ireland only and the EU. (Or in the jargon: the “Jersey model” for Northern Ireland only, customs and VAT for the whole UK.) This could be described as no “border” either on the island of Ireland on in the Irish Sea, but with Northern Ireland having its own regime of goods regulation. It would still face formidable political hurdles on both sides, but it could be made to fit the commitments made by all parties in December and since. There is little else that might.