Brexit Talks Make Progress But Leave Johnson’s Key Allies Uneasy

LAGOS (Capital Markets in Africa) – British and European Union officials will resume their efforts to nail down a Brexit deal on Wednesday after a late night of talks in Brussels that the U.K. described as constructive.

But even if British Prime Minister Boris Johnson can secure the divorce agreement he wants in time for a summit starting on Thursday, he faces a major hurdle convincing the U.K. Parliament to vote for it. The pound, which surged on Tuesday, edged lower on Wednesday.

After three years of tortured negotiations, which cost his predecessor Theresa May her job, Johnson has vowed to deliver Brexit “do or die” by the deadline of Oct. 31, even if that means leaving without an agreement to soften the impact. A no-deal Brexit would risk disruption to U.K. trade, financial services, and food supplies, as well as public disorder, according to British government assessments.

In a last-ditch attempt to secure an accord with the EU before time runs out, Johnson put forward revised plans for solving the contentious issue of future arrangements for the Irish border. Those new proposals unlocked the talks on Tuesday, and allowed for progress in negotiations that went on late into the night, officials said.

Yet the detail of Johnson’s blueprint will be vital to its chances of success. If he can get a legal text approved in Brussels, Johnson will then need to persuade Britain’s Parliament to vote for it.

To win that vote, Johnson is likely to need the backing of the Democratic Unionist Party, a small group of 10 politicians from Northern Ireland who prop up his minority Conservative administration. He will also need staunch Brexit supporters on his own side to back the plan for a deal, something they have never done.

A Brexit agreement has been struck before: Johnson’s predecessor Theresa May clinched an accord with the EU almost a year ago, only for it to be shot down three times in the House of Commons.

This time, EU officials say Johnson won’t give the green light to a deal unless he is sure the DUP will back it. Arlene Foster, leader of the DUP, spoke with Johnson for 90 minutes on Tuesday. Afterward, she issued a terse statement saying: “It would be fair to indicate gaps remain and further work is required.”

According to EU officials, Britain has made several big concessions in recent days to secure a deal, including on the critical issue of the Irish border. Both the U.K. and the EU want to ensure there are no customs checks on goods as they cross the land frontier between the Irish Republic and Northern Ireland.

European officials said Johnson now accepted that these customs checks will need to take place between Northern Ireland and the rest of the U.K. — something vehemently opposed by the DUP, and the British government in the past.

This would represent a major climb-down on the British side as it would involve effectively erecting a customs border between two parts of the U.K. As a “unionist” party, the DUP’s core political belief is that the ties between Northern Ireland and mainland Britain must not be weakened.

While Foster’s party accounts for only 10 members of Parliament, several MPs in Johnson’s Conservatives have indicated they would only back an agreement that has the DUP’s support. There were signs on Tuesday that they are falling into line after discussions with Johnson.

“I’m happy to say it was a very constructive conversation,” Steve Baker, chairman of the pro-Brexit European Research Group, told reporters as he left Downing Street. “I’m optimistic it is possible to reach a tolerable deal which I will be able to vote for.”

A deal would be a watershed moment after three years of political turmoil that has gripped the U.K. since it voted to leave the world’s biggest trading bloc. The journey has tested the U.K.’s relationship with its historic allies, soured and polarized British politics and pushed the country’s constitution to breaking point.

An explainer about why the Irish border has been the biggest sticking point.

“The initial indications are that we are making progress,” Irish Prime Minister Leo Varadkar told reporters in Dublin on Tuesday. “The negotiations are moving in the right direction.”

While there is optimism that the finishing line is approaching, officials remain cautious. Throughout the Brexit talks, which started in July 2017, negotiators have grown used to striking deals only for them to meet resistance in the U.K. cabinet or Parliament.

Johnson hopes to put a deal to a vote in a special sitting of the House of Commons on Saturday so he can meet his Oct. 31 deadline for leaving the bloc.

Securing the DUP’s support may not be easy because the emerging proposal looks similar to the Northern Ireland “backstop” — a measure that would keep the province in the EU customs union to avoid the need for border checks.

Red Lines
The party needs “a deal that respects Northern Ireland’s constitutional position as per the Belfast Agreement within the U.K. and indeed respects the economic integrity of the U.K. single market,” Foster, the DUP leader, said in an interview with Irish broadcaster RTE. She suggested that such a backstop would be unacceptable and that “things are very far off the mark in terms of all of that.”

Johnson’s plan focuses on keeping Northern Ireland in the U.K.’s customs union so that it can benefit from any trade deals Britain strikes after Brexit. But to avoid customs checks at the Irish border, the province would stick to EU customs rules. That means goods traveling from the rest of the U.K. to Northern Ireland would be subject to customs checks.

Negotiators have been looking at ways to reimburse Northern Irish businesses in case EU tariffs are higher than U.K. ones and how to avoid goods fraudulently traveling to the EU through Northern Ireland.

Source: Bloomberg Business News