June 7, 2018 / 4:54 PM / 4 months ago

Breakingviews - UK’s Brexit backstop only a partial step forward

LONDON (Reuters Breakingviews) - Britain has unearthed a small nugget of Brexit-related good news. Cabinet ministers on Thursday managed to stop squabbling long enough to agree on how to avoid a hard border in Ireland when the UK leaves the European Union. The bad news is that the backstop position is itself confusing, and could well soon be shot down by European negotiators anyway.

Britain's Secretary of State for Departing the EU David Davis and Secretary of State for International Trade Liam Fox leave 10 Downing Street in London, June 7, 2018. REUTERS/Toby Melville

Both Brussels and Westminster already agree that customs checks on the border between Northern Ireland and Eire are undesirable. Yet that is what the UK’s decision to leave the EU’s customs union implies. To avoid an economic pile-up, Brussels had therefore already proposed a backstop that would transpire in the likely event that the UK and Europe are unable to agree on a trade deal that would keep the border open. Yet this involved Northern Ireland effectively remaining in the customs union, which UK Prime Minister Theresa May deems unacceptable.

Britain’s workaround reflects that May is negotiating with the pro-Brexit elements of her own cabinet as much as with Brussels. To avoid a dismembering of the UK, her preferred backstop solution involves the whole of the UK being in the so-called “temporary customs arrangement” earmarked for Northern Ireland. It also implies that this state of affairs only lasts until the end of 2021, though falls short of making this a rigid cut-off point. The hope is that by then Britain and Brussels will have sorted out their long-term trade deal.

That sounds neat, but there are roadblocks ahead. The most obvious is that member states gathering at the European Council meeting in three weeks just reject May’s proposal, given that they only wanted Northern Ireland to stay in the customs union, not the whole of the UK. Another is that Thursday’s document says little about the extent to which Britain would have to comply with existing EU regulations in a backstop scenario. Finally, May’s own ministers could rebel if the EU demands that the backstop be rendered more permanent. Given that the 2021 “deadline” has been worded as an aspiration, this could well happen.

The pound yo-yoed against the dollar on Thursday as investors tried to figure out what it all means, before returning to only marginally above where it started. That’s a reasonable summary of how much progress May’s latest Brexit gambit makes.

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