MNI INSIGHT: UK Seen Plotting Long Game Over Irish Border

--Brussels May Seek June Irish Border Showdown Ahead of Autumn Withdrawal Treaty

--Trump Protectionism Could Pressure UK To Choose U.S. Or EU Over Trade

By Kevin Woodfield

     LONDON (MNI) - European Union chiefs suspect the UK government is seeking

to draw out a resolution of the vexed Irish border question in the hope that

some of the EU-26 states abandon Dublin in the endgame as trade interests take

precedence, MNI understands.

     It is thought that the EU-27 will therefore be more determined to try to

flush out London's position at the next European Council in June. Brussels is

also seeking leverage in the end-state trade talks by making it clear that the

transitional deal struck last week is nothing more than a political statement of

intent. It will only become certain when the Withdrawal Treaty is agreed and

ratified -- which is not expected before the end of this year.

     The two camps did agree last week to an intensive programme of talks on the

Irish border question but both sides continue to look at the issue in different

ways, driven by conflicting end-state trade relationship motives. 

     Brussels insists that the so-called 'backstop' -- which legally guarantees

ongoing regulatory alignment between Northern Ireland and the Republic unless or

until another solution is found -- should be the sole option in the Withdrawal

Treaty, MNI believes. This position is based on the argument that a legal text

cannot contain several options. 

     UK Prime Minister Theresa May had little choice but to rule out a backstop

portrayed as threatening the unity of the UK. But MNI has learned that a letter

she sent to European Council President Donald Tusk on the eve of last week's

European Council acknowledged that a backstop of some form would have to find

its way into the Withdrawal Treaty -- a position she underlined to Parliament on

Monday. 

     For the UK, however, a hard border can also be avoided by the two other

options drafted in the European Commission's December's phase 1 agreement -- a

definitive trade/economic deal and/or specific technical solutions -- and MNI

understands that London wants the Withdrawal Treaty to give parity to all three.

--DIVERGENT TRADE POSITIONS

     MNI also understands that neither side is seeking a breakdown in the

negotiations and that the key EU players do not see -- and do not seek -- a

reversal of Brexit.

     But Brussels continues to see London's case for future trade to be governed

by a process of 'managed divergence' as cherry picking the benefits of the

single market without paying any costs. Not only is the EU-27 maintaining -- at

least outwardly -- a show of unity in defending its trading rules, insisting

that the UK position will secure no more than a 'Canada-style' free trade deal

largely devoid of services. 

     The EU-26 still appear to be behind Dublin in continuing to see the Irish

border issue as a useful way of putting the spotlight on what it sees as the

impossible contradictions of the UK's position.  

     Brussels believes that it can help the UK to resolve its difficulties by

negotiating a customs union which would tie UK trading patterns a lot more

closely to its nearest neighbour, obviating the need for a customs -- or hard --

border on the island of Ireland. 

     MNI believes the only issue to raise the temperature at last week's

European Council -- that saw a remarkable show of EU unity behind May's stand

against Russia -- involved the UK's aspiration to strike a trade deal with the

U.S. 

     London's gravitation towards the U.S. would be curtailed by a customs union

with the EU, which views the Trump Administration's threat of steel tariffs as

the latest episode in worsening transatlantic relations.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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