Brexit Talks Grind On as Deadline Looms, but Hurdles Remain -- 3rd Update
By Laurence Norman in Brussels and Max Colchester in London
The U.K. and the European Union were on the brink of a draft
Brexit deal Wednesday night, although the British government's
doubts about winning Parliament's backing remained an obstacle to
EU chief negotiator Michel Barnier briefed ambassadors from
member countries on Wednesday evening that the two sides had
settled on draft text for all but one significant issue.
That last hurdle -- whether Northern Ireland should be part of
the EU's tax regime for goods and services -- prevented U.K. Prime
Minister Boris Johnson from giving final approval to the text,
according to several European diplomats.
Talks were continuing Wednesday night, but officials said an
agreement wouldn't emerge until Thursday morning at the earliest,
hours before an EU summit where the bloc's leaders had hoped to
approve a Brexit deal. Diplomats said both sides remained concerned
that Mr. Johnson's political allies, the Democratic Unionist Party
of Northern Ireland, could oppose the deal's terms and prevent the
U.K. from sealing the pact.
"I want to believe that an agreement is being finalized and that
we will therefore be able to endorse it tomorrow," French President
Emmanuel Macron said at a press conference with German Chancellor
Ms. Merkel said her confidence had grown that a deal could be
struck based on the developments of recent days. "We are in the
last meters," she said.
Both sides have been trying to complete a deal this week so that
the U.K. could leave on its scheduled departure of Oct. 31. If EU
leaders fail to back the deal this week, it is unlikely that the
two sides could formally ratify it before the end of the month.
That could force Mr. Johnson into an embarrassing retreat, after
having vowed to take Britain out of the bloc by the end of the
The question of how to prevent a physical border from being
rebuilt between Northern Ireland and EU member Ireland has been the
toughest issue to resolve since the U.K. referendum decision to
leave the EU in 2016. Negotiators have been discussing a plan that
keeps Northern Ireland legally inside the U.K.'s customs territory,
but that gives it a special status so that businesses can trade
freely with the EU.
Some anti-EU lawmakers in Mr. Johnson's Conservative Party would
likely base their support for a deal on backing from the DUP, which
opposes measures that would leave Northern Ireland outside the U.K.
customs area. A deal negotiated by Mr. Johnson's predecessor,
Theresa May, failed three times in Parliament in part because of
Diplomats said the last major sticking point is the value-added
tax regime under which Northern Ireland would operate. Under the
agreement negotiated by Mrs. May, the province would have been
legally in the U.K.'s VAT regime but aligned with many EU VAT rules
to avoid the need for a payment point at the border -- a scenario
both sides want to avoid.
However, the absence of checks raises the prospect of increased
VAT fraud. Northern Irish businesses could in theory evade paying
VAT when they import goods from the EU, depriving the bloc of
revenue and giving the province's firms a competitive advantage.
Tax fraud isn't a new problem: The EU has previously taken the U.K.
to court for failing to stop large-scale VAT fraud.
Mr. Johnson tried to build domestic support for the deal on
Wednesday, meeting with his cabinet and speaking again with Irish
Prime Minister Leo Varadkar. The prime minister told his cabinet
that "there was a chance of securing a good deal but we are not
there yet," according to a spokesman.
Stephen Barclay, the U.K.'s Brexit minister, said: "What is
essential is we reach agreement with the EU," Mr. Barclay said.
Then the question is whether that is deliverable within the U.K.
Parliament. That is the task on which we are focused."
Mr. Johnson's biggest political worries focus on the DUP, which
is supporting his minority Conservative party in Parliament. The
DUP has focused on two issues: It has resisted the prospect of
Northern Ireland being in a different customs area to the rest of
the U.K. and has insisted that Northern Irish parties give their
consent to any arrangement concerning the region.
Sammy Wilson, the party's Brexit spokesman, said any changes to
Northern Ireland's status would require the support of both
unionist and Irish nationalist parties in Northern Ireland's
legislature to take effect.
Whether or not there is a deal this week, Britain's Parliament
is expected to sit on Oct. 19 for only the fourth Saturday since
the outbreak of World War II. European leaders would only formally
back an accord if it passes the U.K. and EU parliaments, officials
The U.K. Parliament has passed a law requiring the government to
ask for a three-month delay to Brexit if there isn't an agreement
by Oct. 31, though it isn't clear how this will happen given Mr.
Johnson's insistence that the U.K. will leave at the end of October
irrespective of whether or not he has a deal.
Should U.K. and EU negotiators reach a draft deal, British
lawmakers would begin scrutinizing it on Saturday, with some pro-EU
lawmakers maneuvering to make an accord subject to another
An extension beyond Oct. 31 may even be needed if an agreement
is secured this month, to write the deal into a treaty and make it
legally operational in both the EU and U.K.
--Jason Douglas and Noemie Bisserbe in Paris contributed to this
Write to Laurence Norman at firstname.lastname@example.org and Max
Colchester at email@example.com
(END) Dow Jones Newswires
October 16, 2019 18:57 ET (22:57 GMT)
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