Brexit Trade Talks Are Said to Be Slowed by Irish Border Fight

(Bloomberg) -- The U.K. and European Union will formally discuss their post-Brexit relationship for the first time next week, but EU officials don’t expect serious talks about trade to start until June.

The problem of how to avoid a hard border on the island of Ireland when it becomes the U.K.’s border with the EU is far from being solved. The European side wants it sorted before talks on trade get going in earnest, according to three officials in the process. That and other outstanding divorce issues will take up most of the negotiating time over the next two months, they said.

The U.K. sees things differently. British officials point out that chief EU negotiator Michel Barnier and Brexit Secretary David Davis agreed last month to move on to discussing the future relationship as soon as possible.

A round of talks is scheduled for next week, according to an EU official. As well as the future relationship, negotiators will look at the Irish border and other outstanding divorce issues such as treaty disputes and intellectual property.

Those matters have been under negotiation since last summer, but “zilch progress” has been made, according to another EU official. That means there will probably be no intensive work on the future until a summit at the end of June. At that meeting leaders will revise their negotiating guidelines if there’s been any change in the U.K.’s negotiating position.

Brexit Trade Talks Are Said to Be Slowed by Irish Border Fight

The next round of talks in Brussels runs from Monday to Wednesday. The first two days will cover withdrawal issues, and on Wednesday there’s a meeting on the Irish border, followed by one on the future relationship.

While the EU isn’t making solving the Irish border problem an explicit condition for engaging fully on the future agreement, several EU governments have signaled that it is a priority. They also say that talks on the future won’t make much progress until the U.K. puts forward a clear and realistic position on how it sees future ties. So far, the EU has rejected Prime Minister Theresa May’s proposals as unacceptable cherry-picking.

As far as the U.K. is concerned, the EU agreed in December that “sufficient progress” had been made on issues such as the border for talks to move on to the future relationship. It’s already taken longer than the U.K. wanted to move on to trade, and the U.K. says the Irish border issue can only be solved once the future relationship is clear.

Davis is in a rush to get an agreement on trade in the next few months, even though in private some U.K. officials are less ambitious. However well talks go this year, the EU says line-by-line formal trade negotiations won’t start until after the U.K. has left and the aim for this year is just to get an outline agreement on what kind of relationship the two sides want. That outline will be set out in a non-binding political statement that will accompany the divorce treaty.

As is stands, the only plan on the table for keeping the Irish border invisible after Brexit is the EU’s “backstop” option, which would keep Northern Ireland in the bloc’s customs union and parts of the single market. That amounts to erecting a border between Northern Ireland and mainland Britain, which May considers unacceptable.

The problem would disappear if the government decided to keep all of the U.K. in the customs union. While May has repeatedly said the U.K. will leave the trading bloc as it’s a key demand of Brexit supporters in her government, some in her government think she may be willing to change tack.

©2018 Bloomberg L.P.