How to unlock Brexit negotiations? EU leaders search for a solution

FAN Editor

European leaders are set to gather Wednesday afternoon in Brussels in what’s seen as a key summit to understand the next steps in the Brexit process.

Brexit negotiators crashed high expectations that a deal over the Irish backstop was imminent during the weekend. Technical teams seemed to have reached a deal, but a meeting between the two chief negotiators, Michel Barnier and Dominic Raab, on Sunday evening ended up without any agreement over the Irish issue – postponing any real progress over Brexit and increasing the chances of a no-deal. CNBC looks at the next steps in the Brexit process:

EU leaders will hear from Prime Minister Theresa May on Wednesday and then decide what to do next. If they believe that there’s been enough progress and they are close to a deal, the heads of state could call an emergency meeting in November to sign-off the Withdrawal Agreement.

However, because there is no agreement between the U.K. and the EU over how to solve the Irish question, the most likely scenario is negotiations continuing over the coming weeks.

If in that time, a solution is found for the Irish border, the leaders could call for a summit.

It is because both sides want to prevent a hard border between both Ireland and Northern Ireland.

The U.K. asked to leave the EU’s single market and the customs union, meaning that there needs to be checks on goods moving from the EU to the U.K. and vice-versa. This poses the question of where the checks take place.

The EU proposed that the checks happen at the Irish sea and are carried out in the least intrusive way possible. However, the DUP, the Northern Irish party that support Prime Minister Theresa May in parliament, does not believe the EU’s solution is good. The DUP argues it divides Northern Ireland from the rest of the U.K. and forces Belfast to follow EU rules.

Theresa May proposed to have a customs union with the EU, temporarily. But the EU rejected her idea. The 27 EU countries want a permanent solution that will always avoid a hard border between Northern Ireland and Ireland. May’s proposal was also not well-received by her party members. Some of them believe that a customs union, even if temporary, will restrict the U.K.’s ability to strike new trade deals.

The EU’s chief negotiation, Michel Barnier, is reportedly open to extending the transition period. Both sides have said that there should be a period of 21 months, until 2020, that will allow businesses and citizens to prepare for the U.K.’s departure from the EU. Extending that period could help the EU and the UK reaching a trade deal and thus avoiding using the Irish backstop that is currently dividing both sides.

However, U.K. lawmakers might not enjoy that idea either, because during the transition, the U.K. does not have any voting rights in EU policy and is still forced to comply with European rules. This would questions the U.K.’s sovereignty position — a critical aspect for Brexiteers.

The U.K. is due to leave the EU on March 29, 2019. With about five months to go, time is running out before the U.K. and the EU solve their outstanding differences and ratify the exit agreement in their own parliaments.

The ratification process could prove complicated if Prime Minister May does not have majority in parliament to get it approved.

Without approval for the Withdrawal Agreement, the U.K. could leave the EU abruptly in March, bringing uncertainty for businesses and consumers on both sides.

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