EU says ‘difficult’ Brexit talks unlikely to yield swift deal

BRUSSELS (Reuters) – Talks with Britain on amending its divorce deal with the European Union have made no headway and no swift solution is in sight, EU officials said on Wednesday, a week before British lawmakers must vote on the plan to avoid a chaotic Brexit.

Diplomats said talks in Brussels on Tuesday led by British Prime Minister Theresa May’s chief lawyer, Geoffrey Cox, failed to yield a repackaged deal, with barely over three weeks to go before Britain’s scheduled departure on March 29.

At the heart of the impasse is the Irish “backstop”, an insurance policy May accepted in the withdrawal deal to ensure no return to a hard border between the British province of Northern Ireland and EU member Ireland after Brexit.

May now wants a legally guaranteed time limit to the backstop, saying otherwise Britain could be locked indefinitely in a customs union with the EU. Brussels has offered assurances the backstop would be temporary pending a future trade deal.

EU Brexit negotiator Michel Barnier said after more than three hours of talks with Cox that “while the talks take place in a constructive atmosphere, discussions have been difficult”, according to the European Commission spokeswoman.

“No solution has been identified at this point,” Margaritis Schinas told a news conference.

Cox said on Wednesday that discussions in Brussels the previous day were “robust” and detailed. Both sides said they would continue but the schedule was not yet clear.

“It’s unlikely there would be a deal before the weekend,” an EU official said. “We are preparing for a working weekend.”

EU diplomats speculated that, if negotiators managed to seal a deal over the weekend, May could come to Brussels on Monday to give it political endorsement and take it back to London just a day before the House of Commons votes on it.

The EU’s 28 leaders including May will then decide at a March 21-22 summit whether to extend the negotiating period beyond the current exit date on March 29.

The bloc will be monitoring the British parliament’s action next week but few EU officials believed the deal would be ratified by the chamber, two months after it resoundingly rejected the package at the first go, with eurosceptics in May’s Conservative party objecting above all to the backstop.

“We are at a standstill,” said a national EU diplomat who follows Brexit. “How long an extension will depend on the House of Commons vote.”

BREXIT DELAY?

With fears on both sides of the English Channel that an abrupt divorce without a pre-negotiated settlement could spell economic turmoil, the EU is nudging London to delay its exit.

May, whose lack of a reliable majority in parliament has complicated passage of her plan, last week opened the way to a short extension of the negotiating period and the EU sees a delay until the end of June as relatively easy.

But EU leaders have also mooted a longer delay, in part to help May coax the hardline Conservative eurosceptics to accept her deal – or risk Brexit being put off for a considerable time and perhaps never materialising at all.

May was due on Wednesday to offer the lawmakers more say on workers’ rights after Brexit, an attempt to woo the main Labour opposition which rebuffed her deal in January for not keeping close economic ties with the EU.

“If the deal goes through (Britain’s parliament), then everything is fine, although the Brits may request a short, truly technical extension to complete their own legislative process,” a second EU official said.

“But if parliament rejects her deal for a second time, a short extension would not make much sense. A longer extension would be needed, six months, nine months, a year, two years.”

A long extension could also be problematic for the EU given the European Parliament elections on May 23-26, which Britain would either have to take part in or be forced out of the EU before the new assembly convenes in early July.

Some EU politicians, however, have suggested they would be willing to work around these legal constraints.

NO-DEAL PREPARATIONS

Britain’s pound remained stuck near a one-week low on Wednesday over the stubborn deadlock in Brexit talks and the lack of prospect for a swift breakthrough.

As the Brexit process goes right down to the wire, both sides are advancing contingency plans for use if Britain, the world’s fifth largest economy, tumbled out without a deal.

British trade minister Liam Fox said on Wednesday the British government had reached an internal agreement on import tariffs in case of a no-deal Brexit.

But business minister Greg Clark warned Britain faced “a very difficult set of choices”. He said unilaterally scrapping tariffs would reduce Britain’s leverage to encourage other countries to lower tariffs on British exports.

From its side, the EU said on Wednesday it had moved closer to extending permits for rail services between France, Ireland and Britain temporarily should the worst-case scenario transpire.

“The aim of this extension is to allow bilateral agreements between an EU member state and the UK to be concluded,” the EU said in a statement. It said such an offer was conditional on UK applying identical standards to cross-border train travel.