A breakthrough seems as far away as ever with the customs union problem still not solved

Hopes of a Brexit breakthrough surged after Leo Varadkar and Boris Johnson went for a walk in the Wirral and declared “a pathway to a possible deal”. Four days later it is increasingly obvious that the pathway is steep and strewn with rocks.

After a weekend of Brexit talks, the EU’s chief negotiator, Michel Barnier, gave EU diplomats a bleak account of progress on Sunday night. At the heart of the problem is the same old Brexit conundrum: how can the UK quit the EU customs union and single market while maintaining an open border with Ireland to protect peace on the island.

Last Thursday at Thornton Manor, Johnson made a major concession: he agreed there should be no customs border on the island of Ireland. That was the key to triggering the current round of intensified talks in Brussels. But dashing EU hopes, it is clear the UK is not seeking to return to a lightly retouched version of Barnier’s original plan, the Northern Ireland-only backstop. Instead, the UK hopes to devise an unprecedented bespoke customs deal for Northern Ireland.

While the British have not disclosed the plan, EU sources have outlined the main details. Northern Ireland would be legally part of the UK customs area, but practically in the EU customs union, following European rules on tariffs and quotas. It would be simultaneously in and out – a model quickly called Schrödinger’s customs union, in mock homage to the physicist’s theoretical cat that was simultaneously dead and alive.

Partly based on a cast-off Theresa May plan, it would allow Johnson to claim the whole of the UK has left the EU. Yet just as May discovered with her customs partnership, problems are plentiful. Brussels is worried about fraud and undermining EU customs rules. Business fears a bureaucratic nightmare. If a Northern Irish fizzy drinks company buys sugar from a non-EU country, what is the legal status of the sugar in the sugar-laden drinks destined for EU consumers? In talks on Monday and Tuesday, the EU are demanding answers to this sickly sweet problem.

Barnier was unsparing about the risks for the EU, warning it could unravel the European customs code and poses a serious risk of fraud that could tarnish the single market. While the single market sounds abstract, at heart are concerns about consumer health and safety, and the reputation of European goods and produce. EU officials remember the BSE crisis as a vivid example of how a food scandal can destroy lives and farmers’ reputations.

With the customs problem unresolved, the two sides have made little progress on the other stumbling block, how to ensure greater democratic buy-in for Northern Ireland. In another significant concession, Johnson has dropped his insistence that the DUP should be able to veto the creation of an all-Ireland regulatory zone for goods – a key part of the jigsaw in avoiding a hard border. But the two sides have not agreed an alternative consent mechanism, with EU diplomats adamant there can be no unilateral right of exit.

Johnson is rapidly discovering the Brexit constraints that May eventually knew so well: EU red lines, strong opposition in the House of Commons – and time.

The EU will not take a risky gamble on an untested customs partnership to get a deal over the line on 31 October. If the prime minister wants to stick to his “do or die” pledge, his best hope is a rebranded, retouched version of the EU’s original Northern Ireland only backstop – rejected by May, as something no British prime minister could ever accept.

Returning to the original backstop risks failing in the House of Commons. But so does Johnson’s preferred “double customs” plan. The DUP appears to be toughening its opposition, a stance that might sway Conservative hardliners, although Jacob Rees-Mogg, a weather vane for Brexit hardliners, sounds emollient so far. On the other side of the house, many Labour MPs will oppose a Johnson deal that is forecast to hit the economy harder than May’s plan. At the start of a(nother) crucial week, the end of the Brexit path is still shrouded in fog.



