Why the EU’s hopes of a Brexit deal by the weekend are fading fast

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EU hopes that a new Brexit deal will be struck by the end of the week are fading fast as negotiators warn the UK’s revised proposals to avoid a hard border in Ireland fall far short of EU demands.

The stand-off is once again taking Europe towards the brink as both sides seek to avoid a no-deal Brexit by the UK’s scheduled departure date of October 31. However, whereas UK prime minister Boris Johnson was openly courting a no-deal exit early in his premiership, he is now manoeuvring to avoid one.

Officials are bracing for frantic diplomacy to continue this week in the lead-up to a summit of EU leaders on Thursday and Friday, with the potential for an extra European Council summit to be called before the end of the month. They are also preparing for difficult discussions over a possible extension to the UK’s membership.

Why are the sides so far apart?

The EU says Britain is yet to propose workable proposals for operating customs in Ireland. Under a UK blueprint presented over the weekend, Northern Ireland would become a dual customs zone – applying both EU and UK customs rules. This would mean tracking goods that enter Northern Ireland and applying differentiated treatment through tariff rebates depending on where those goods ended up – either in Northern Ireland or in the EU’s single market.

The EU is far from convinced by the British proposals, which it worries would be highly complex and prone to fraud. On top of this, the two sides have yet to thrash out a revised way of ensuring Northern Irish citizens have a say on the new arrangements.

What is the problem with the UK customs proposals?

Michel Barnier, the EU’s chief Brexit negotiator, on Sunday pointed to the example of sugar to explain the difficulties. He gave the example that post-Brexit Britain could strike a trade deal with a major sugar-producing country (such as India or Brazil) and warned that the EU would find it very difficult to avoid the product sneaking into the union’s internal market without proper levies.

He noted that under the UK proposal the sugar could potentially be imported into Northern Ireland, avoiding EU tariffs, then be turned into soft drinks and sold in the 27 nation bloc. EU officials instead want Britain to charge EU tariffs on goods bound for Northern Ireland in the Irish Sea and are demanding extra details on how this might work.

Is a deal on Thursday possible?

The EU has insisted that to get a deal in the European Council, there would already need to be an agreed legal text before Thursday’s talks. Mr Johnson’s notion that details of a deal could be hammered out between leaders over the summit table has been dismissed by EU officials.

Given how far apart the two sides are, it would be nigh-on impossible for them to thrash out a fully worked legal text for leaders to sign off on by Thursday night.

The more complex the proposals that emerge from negotiations, the more time national capitals will want to pore over the details with their experts before giving them a sign-off at leaders’ level. And EU officials have warned that the UK plans are fiendishly complex.

Does this mean a no-deal Brexit on October 31?

Not necessarily. The EU has not ruled out negotiations continuing after this week’s summit.

Brussels also has the possibility of calling another summit of EU leaders later this month, most likely for October 29-30, to approve a deal or a further delay to Brexit.

Most crucially, Mr Johnson is obliged by the Benn Act, the piece of legislation passed in the UK parliament on September 9, to ask EU leaders for a Brexit extension if he does not have a deal with Brussels by October 19.

The question then becomes: what extension will EU leaders be prepared to grant? This is unclear for the moment, and capitals have not yet nailed down their positions. But commission president Jean-Claude Juncker said this week that a British extension request should be granted.

Where is the ‘landing zone’ for the two sides?

The EU’s goal in the negotiations over the coming days is to steer the UK customs proposals away from the dual system Britain is proposing for Northern Ireland.

Brussels wants Northern Ireland to be, de facto, in the EU’s customs union even if legally it remains inside the UK’s, meaning a reliable EU customs border is needed for products crossing the Irish Sea from mainland Britain.

Options being looked at by the UK include a system of rebates for goods that are subject to EU tariffs but that remain in Northern Ireland, although Brussels says it still has concerns about smuggling and fraud.

Is a deal realistic, even at a later date?

EU diplomats have not lost hope that a solution can be found where a strong customs border can be married with Northern Ireland technically remaining in the UK’s customs territory.

“Let’s not kill the bird that is still alive. It may still fly,” one diplomat said.

There is also a recognition in Brussels that Mr Johnson has moved significantly in recent weeks to bring his negotiating position closer to that of the EU – conceding a regulatory border in the Irish Sea and agreeing that there can be no customs border in Ireland.

But Mr Barnier has warned that the UK will have to move further for a deal to come into reach. One EU official pointed out that customs fraud was not just a risk for the EU’s single market, but could also be used to finance criminal gangs and even terrorism.

This article has been amended to reflect the way EU tariffs might be collected by the UK in the Irish Sea under the dual customs plan