Hopes of agreeing a Brexit transition deal by March are fading, with many now predicting a full-blown breakdown in negotiations. “We are approaching a crisis point”, said a senior EU official involved in the Brexit talks.
Despite EU diplomats this week softening language on sanctions, the bloc’s overall stance on transition has hardened.
Senior EU officials insist they never agreed to the March deadline, calling it “self-imposed”. More worryingly for the UK, the European Commission is now linking a transition deal explicitly to commitments on money, citizens and Ireland made by the UK in December. The Commission intends to table a draft withdrawal treaty, covering both transition and the December deal, on 28 February, without first discussing it with the UK.
By folding the transition period into the overall withdrawal treaty, the European Commission effectively gives negotiators until October to agree on both, which companies say is too late to allow them to plan for the following financial year.
The UK, meanwhile, is insisting on changing the rules for EU citizens arriving after March 2019, and wants to have a say in EU law-making during the 21-month transition period and while there might be room for compromise on the cut-off date, the EU says it is not willing to budge on its other red lines. “The Commission will be very tough with the UK on a transition period”, said an EU diplomat with direct involvement in the talks. “If they want to have other concessions, it’s not going to happen”.
Diplomats are advising the UK to focus its energies on working out how to cooperate on fisheries, aviation, foreign affairs and security policy during the transition, and stop “wasting time” on red lines they say the EU is willing to consider.
The pressure is also on the UK to provide more clarity on what it wants out of a future trade deal, with the Irish border remaining a major flashpoint.
The Commission’s draft withdrawal treaty will include a fallback option where the UK would maintain full alignment with the EU single market and customs rules in Northern Ireland if no Brexit deal is struck. This would be problematic for the Conservative government, which has also promised that Northern Ireland will not diverge from the rest of the UK.
So far, neither side has come up with a solution, with the EU increasingly worried about how to prevent the UK from using Brexit to undercut its continental competitors. “We don’t trust what they will do after 2019”, said one EU source. “We don’t know which way the UK will start regulating”.
The London-based Institute of Directors called this week for a “bespoke, and partial customs union” with the EU after Brexit, along the lines of the bloc’s arrangement with Turkey, which it said would solve the problem. The deal would cover industrial goods and processed food, eliminating ‘rules of origin’ restrictions and allowing the UK to do free trade deals with other countries, and in other sectors. However, the UK government has ruled out participation either in “a” or “the” customs union with the EU. (Sarah Collins)