U.K. Said to Seek Brexit Progress This Week With Border Plan

(Bloomberg) -- Prime Minister Theresa May’s government is preparing to unveil its plan to keep the U.K. in the European Union customs regime for longer in an effort to break the Brexit deadlock, people familiar with the matter said.

British negotiators expect to give the EU side a document this week setting out how May imagines a time-limited extension to existing tariff rules would work, two people said, speaking on condition of anonymity.

U.K. Said to Seek Brexit Progress This Week With Border Plan

Brexit talks are stalled over the thorny question of how to avoid a hard border between the U.K. and Ireland. Negotiations are due to resume in Brussels on Tuesday, with the clock ticking down to a crunch summit of EU leaders starting on June 28.

Failure to make progress on the Irish border issue at the gathering will leave just four months to wrap up the divorce terms and finalize a blueprint for a new trade deal after Brexit. Both sides are targeting October’s EU summit as the moment they need to sign off the Brexit agreement in order for parliaments to ratify it before the U.K. leaves the bloc in March 2019.

British cabinet ministers are at odds over the kind of customs relationship to seek with the EU, and are working on two options to find a resolution that will enable smooth trade at the border and be acceptable to European negotiators. The EU has proposed its own so-called “backstop” idea for avoiding border checks on goods which it says should apply in case the overall trade deal doesn’t resolve the issue.


The problem is that May has already rejected the EU’s plan -- which is to keep Northern Ireland in the bloc’s customs territory forever. She says no British prime minister could ever agree to this, while other officials have privately accused the EU of trying to annex the province.

May’s alternative “backstop” plan would allow goods to cross the Irish border without checks by keeping the whole of the U.K. aligned with EU tariffs for a time-limited period, until the new trade regime is up and running.

The document setting out May’s proposal still needs to be signed off by senior U.K. government officials before it’s handed over to European negotiators, or formally published.

One person said the paper would emphasize the need for a strict cut-off date -- to be agreed later -- on any extension of the U.K.’s membership of the EU’s tariff regime. May’s inner Brexit cabinet backed the broad outline of the model last month.


EU officials have been dismissive of the British backstop plan during private discussions but the U.K. hopes that putting it on paper will convince the EU to engage more seriously with the idea, the people said.

Even if progress is possible during talks in Brussels this week, rival factions within May’s team in London remain at loggerheads over her Brexit policy and the two customs models being considered.

One option is a close partnership in which the U.K. would collect EU tariffs on goods entering the country from outside the bloc and then refunding businesses the difference in costs; the other is a streamlined model known as “maximum facilitation” using technology to track goods and giving businesses trusted trader status to exempt them from border checks.

Ministers are also working up a plan for a Brexit “white paper” spelling out in more detail how the U.K. sees its future relationship with the other 27 members of the bloc. The blueprint had been expected before the June 28 EU summit, but may now be delayed until later in the summer.

May’s spokesman, James Slack, told reporters Monday there’s no timetable for the white paper to be published, and played down the need to reach a deal on the Irish border at the June summit. “We are working towards agreement in October and the June council is a staging post towards that,” he said.

©2018 Bloomberg L.P.