(Bloomberg) -- Brexit Secretary David Davis suggested the thorny question of how to avoid a hard border with Ireland might still not be resolved when the U.K. leaves the European Union next March.
He said a solution for the border won’t really be needed until the end of the Brexit transition period on Jan. 1, 2021 because the U.K. will effectively remain inside the customs union and single market during this interim phase.
But his comment -- to a panel of members of Parliament on Wednesday -- has dramatic implications for what Brexit might look like. It suggests that the U.K. accepts it may have to agree to an unpalatable backstop plan for keeping Northern Ireland -- and possibly the whole U.K. -- in many parts of the customs union and single market rules indefinitely.
If an alternative answer can’t be agreed, the U.K. will have to take a leap of faith, leave the EU next March and hope that it can reach a deal on the Irish border before the end of the following year.
Further complicating this picture is Prime Minister Theresa May’s stated refusal to accept the EU backstop plan as it currently stands. She said keeping Northern Ireland effectively in the customs union would create a new border between the province and mainland Britain.
This would be impossible for her minority government to accept because to hang on to power, she depends on the support of the 10 lawmakers in Northern Ireland’s Democratic Unionist Party. These staunch supporters of Northern Ireland’s place in the U.K. will never agree to any new border in the Irish Sea.
Davis called the backstop solution a “reserve parachute” and said, “nobody sees that as the most desirable outcome.” Supporters of it are those “who want to keep us in the single market at any price,” he said.
May and Davis say the way to resolve the Irish issue is by agreeing a comprehensive new trade agreement with the EU, resulting in no tariffs and a “frictionless” border.
Publicly the Irish government agrees with them -- the best solution would be through a broader trade deal. But some Brexit officials in Dublin and Brussels doubt this is realistic, and think the backstop won’t merely be Davis’s “reserve parachute,” but rather the system that ultimately comes into operation.
Davis also revealed that there’s an argument going on between negotiators over what the backstop plan should require. The EU wants “harmonization” of Northern Ireland’s trade rules with those of the EU -- meaning that the same rules should apply on both sides of the Irish border. In contrast, the U.K. wants alignment to mean only that the “outcomes” on both sides of the border are the same, even if the rules are different, he said.
Irish Prime Minister Leo Varadkar said “sufficient and substantial” progress on the border issue is needed by the time European leaders gather in June, though he declined to tip his negotiating hand by detailing what might happen if that deadline wasn’t met. In parliament on Wednesday, he again rejected the idea that technology could solve the border question, saying the solution to keeping the border open must be “political and legal.”
One option May’s officials favor as a backstop guarantee is to keep the entire U.K. inside those rules of the customs union and single market that make an open border with Ireland possible. But to euroskeptic Tories, this would defeat the entire point of Brexit.
©2018 Bloomberg L.P.