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The text is provisional and the political battle has only just begun. But a draft Brexit agreement has taken shape that could guide Britain out of the EU and shape relations for years to come.
The technical breakthrough came after weeks of “wearing” negotiations, in the words of one participant, with both sides struggling to craft a document that would pass muster with a restive British parliament and demanding EU capitals.
While some details remain a closely guarded secret, the progress made turns on one pivotal compromise over the so-called “backstop” plan to avoid a hard border on the island of Ireland. “Everyone had to give some ground,” said one EU diplomat briefed on talks.
Theresa May will crucially be able to claim that the fallback arrangements will never force the UK to create a customs border along the Irish Sea, with special arrangements for Northern Ireland that would divide its economy from the UK mainland.
This was facilitated by Michel Barnier, the EU’s chief Brexit negotiator, dropping his opposition to a bare-bones UK-wide customs union being written into Britain’s withdrawal treaty.
With this in place, the so-called “backstop to the backstop” — a Northern Ireland-only plan proposed by Mr Barnier and vehemently opposed by Downing Street — will be overlaid and “disappear” from view, according to EU figures briefed on the arrangements.
But the UK-wide customs union comes with conditions and constraints, designed to satisfy Dublin and other EU member states, which some insiders in Whitehall fear Mrs May will find impossible to sell to her cabinet and parliament.
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The EU side also struck a note of caution over whether the blueprint would ultimately win cabinet support in the UK. “Lets not confuse white smoke with fog over the Thames,” said one official.
Brussels’ concessions, in other words, carry a big political price. The first is a guarantee to Ireland that Britain will not be able to leave a UK-EU customs union backstop without the EU being satisfied that arrangements are in place to avoid a hard border, either through a trade deal or a successor plan for Northern Ireland.
Brexit secretary Dominic Raab had pressed for a unilateral mechanism to escape such a customs union, so the UK could ultimately pursue an independent trade policy. But the EU refused to accept such provisions without its original Northern Ireland-only backstop to the backstop being in the withdrawal agreement.
That would have entailed spelling out how Northern Ireland would remain in the EU’s customs zone and regulatory orbit — anathema to the Democratic Unionists on whom Mrs May relies for her Commons majority.
Even after the compromise, Mrs May must still justify a treaty text that would keep Northern Ireland aligned to the EU’s single market rules enabling the free flow of goods and agricultural products across the Irish border. Northern Ireland would also be expected to apply the full “union customs code” — integrating it with the EU’s customs zone in a deeper way than the rest of the UK mainland.
The second big challenge for Mrs May’s team will be explaining the so-called “level playing field” conditions that accompany the UK-wide customs union — a type of rule-taking that incenses Brexiters.
Many EU member states were surprised at a full customs union being brought into the withdrawal agreement and wanted guarantees in return that would prevent unfair competition from Brexit Britain.
Mr Barnier inserted into the draft text some of the most severe restrictions placed on any country outside of the single market. This includes the UK abiding by the EU’s competition and state-aid rules, even if they change in future, and paying due regard to European Court of Justice rulings in this area.
So-called non-regression clauses are also included in the agreement, which sets a floor on environmental rules, labour policy and taxation. This would bind London to existing policies that are deeply unpopular with some Conservative MPs, including the working-time directive and targets for renewable energy.
“We’re not trying to be overzealous,” said one EU diplomat handing Brexit. “But there isn’t the trust left to do anything else.”
One worry for Downing Street is the risk that EU member states may press for even more stringent conditions. France, Germany, the Netherlands, Spain and Italy have all called for EU negotiators to go further, so Britain would “dynamically align” with the bloc across all areas covered by the “level playing field”.
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Similar pressures could emerge over fish. In the draft deal, the fish sector is excluded from any UK-EU customs union until an agreement is reached on reciprocal access to waters. Some EU countries — notably France, Denmark, Belgium and the Netherlands — had pressed for stronger guarantees.
Given all these pressures, Mrs May’s compromises might only make sense if she is able to argue that the Irish backstop truly is an insurance policy that neither side should need to use.
One way to do so would be to point to a clause in the draft treaty to potentially extend Britain’s transition period beyond December 2020. That is, however, hated by MPs on both sides of the House of Commons.
The other is to point to another document — a declaration on future relations — that remains incomplete.
Little wonder that when EU ambassadors meet on Wednesday to discuss the “state of play” of Brexit talks, no-deal planning will also be on the agenda.
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