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Whispers of delaying break with EU circulate as Brexit deadline looms

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A borderline case. Source: Reuters

The deadline for settling Britain’s exit from the European Union is growing tight as negotiators lurch from one stalemate to the other. Knotty issues, like the border between Ireland and Northern Ireland and the relationship of Britain and the EU after Brexit, continue to stymie talks. It is growing likelier that the actual exit will be delayed, at least temporarily.

Sources in Brussels say the EU would be willing to extend the deadline, as provided by the treaty, because no one is willing to jeopardize the peace in Northern Ireland, which hinges on keeping the border open. Since Northern Ireland is part of the United Kingdom, a full-fledged, or “hard” Brexit would mean border and customs controls there.

For Germany, a reintroduction of custom controls in the case of a “hard” Brexit translates into higher costs. For example, companies would need to invest in certified customs software and hire foreign trade legistlation experts to keep trade open. Companies would also need to incorporate the cost of tariffs into their price calculations.

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EU negotiator Michel Barnier had suggested keeping Northern Ireland in the single market and customs union, meaning tariff-free trade of EU member states’ goods and free worker movement, so that the outer border of the EU would run between Northern Ireland and Scotland. British Prime Minister Theresa May at first reluctantly accepted the idea, but then reversed her position since it would split two integral parts of the nation. Brussels officials are upset about her reversal since such a solution will have to be part of the exit treaty.

Britain’s counteroffer to gain more time for solving the Irish dilemma by keeping the whole country in the customs union until 2021 was summarily rejected by Mr. Barnier. As it stands now, Britain is to remain in both the single market and the customs union until the end of 2020 for a brief transition period after the official exit in March 2019.

Dieter Kempf, president of the German industrial association BDI, told Handelsblatt German companies need London to finally provide a binding and clear response to EU proposals. “London needs to realize, for its own sake, that we Europeans can only be globally successful together – otherwise we’ll sink into insignificance together,” he continued.

No halfway house

With the March 2019 deadline looming ever closer, agreement on an exit treaty must be reached by November, participants agree, in order to get approval from the national parliaments and the European Parliament.

Ms. May is due to present her solution to the post-Brexit relationship in a white paper in mid-July. But Brussels officials fear she is going to propose continued membership in the customs union. Unlike other nations that enjoy this halfway house, such as Norway or Switzerland, Britain won’t want to accept the free movement of workers, the EU competition rules or the jurisdiction of the European Court of Justice.

At the same time, other difficulties in the future relationship have surfaced. Britain has pledged continued close cooperation in defense, which the EU favors as otherwise only Germany and France offer serious military capability. However, that cooperation is largely organized in NATO.

What’s proving much more difficult is cooperation on domestic security. Britain wants to keep its access to data banks at Europol and the Schengen System, but these are open only to EU members. Even the United States, which works closely with Europe on domestic security, doesn’t have access.

Other sticking points are the European arrest warrant with automatic extradition and, most galling of all to the British, exclusion from the security tools in the Galileo satellite navigation system.

Ruth Berschens and Till Hoppe are Handelsblatt correspondents in Brussels. Carsten Volkery is a London correspondent. Darrell Delamaide adapted this article into English for Handelsblatt Global. To contact the authors: berschens@handelsblatt.com, hoppe@handelsblatt.com, and volkery@handelsblatt.com.

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