Richard North, 08/05/2018  

One is increasingly irritated by the media focus on the ongoing Westminster/Whitehall end of the Brexit drama. There is an almost total failure to understand that what happens in these tiny metro village is of extraordinarily little importance in the grander scheme of things.

Tellingly, though, we have a report from the Guardian telling us that our revered prime minister, Theresa May, is facing renewed cross-party pressure to accept membership of the EEA or risk defeat in the Commons.

This, of course, assumes that the House of Lords vote on Tuesday night isn't a damp squib and that the amendment to the Brexit Bill is carried, requiring the government to enter negotiations on our continued membership of the EEA. Only then would it get to the Commons for the drama to start all over again.

Should the amendment get that far, the hope is that there are enough MPs prepared to back Mrs May into a corner. But even in that unlikely event, there are procedural moves that government can make which would put the matter back on the table.

That might become crucial ploy as we hear that the ERG with its claimed 60 members, is holding a mass meeting in parliament on Tuesday, concerned that that Britain will never fully leave the EU.

But, confronted with a full-blown rebellion, Mrs May can still "do a John Major" and engineer a motion of no confidence. Even with the fixed-term parliament law, this can bring the government down.

If the motion is upheld, there must be attempts made to form an alternative government, but if a new government is not confirmed by the Commons within 14 days, that precipitates another general election. Tory MPs will know this and they also know that, following the local elections, Corbyn would be in with a chance.

Tories being Tories, the chances are that they will make a lot of noise but, when push comes to shove, the tribe comes first. Past form suggests they will support party above country and back away from forcing Mrs May down the EEA route.

Meanwhile, officials have been tasked with the impossible - find a deal on Mrs May's "preferred option" of a customs partnership. This is supposed to be acceptable to Brexiters and remainers in her cabinet, as well as MPs and EU negotiators. Unicorns are optional.

As an indication of the Herculean problems that Mrs May faces, we also learn that her policy paper, the one that was rejected by the "War Cabinet" last week, has been withdrawn for "further work". It is not going to be discussed at this week's regular meeting.

Downing Street is saying: "It was agreed on Wednesday that more work needed to be done to flesh out the general principles agreed – no hard border and as frictionless trade as possible". They "realise the urgency" but refer to Greg Clark's Marr interview. "It is a crucial question to get right", he said.

Moving away from the foetid atmosphere of inner London, we get a sense of the bigger picture from Dublin, where the Irish government is concerned that many MPs and peers still believe that Dublin will back down at the last minute on the hard border.

The Guardian has talked to an Irish parliamentarian who visited the Westminster village recently. He should not have been had he been aware what a closed society it harbours, but he was surprised by how confident MPs were that there could be a frictionless border between north and south without, what the paper terms, "a customs union".

The reference to "customs union" may simply be a reflection of how much the well has been poisoned, with even Irish MPs confused by the constant references to this unnecessary distraction.

This Irish MP, however, has definitely sussed out the situation – far better than our media seem to have been able. "Both May's proposals for maximum facilitation and a customs partnership have been rejected by [the EU negotiator] Michel Barnier as magical thinking", he said.

We now move to a "source close to the taoiseach, Leo Varadkar". This unnamed person is also on the ball, telling the paper: "Westminster is mistaken if it thinks the Irish government will move. And it has no understanding of Leo Varadkar. He is someone who will do the right thing for Ireland. They think we'll get to the last point of the negotiations – and the border will be the last thing – and we'll move, and we won't".

Our anonymous source insists that the EU would defend Irish interests as fiercely as Dublin – despite DUP party leader, Arlene Foster, declaring that the EU was being unrealistic. We also have the UK's former ambassador to Washington, Sir Christopher Meyer, weighing in, accusing the EU of putting the Good Friday agreement at stake by "weaponizing" the border issue.

These two noisemakers are typical of those cluttering the debate, and there are many more, not least the buffoon Johnson who is playing his usual game of undermining his own prime minister, testing the water again to see how far he can go before he is finally fired.

Nevertheless, the EU remains consistent – and unmoved. It has just issued a background briefing for Member States in anticipation of the General Affairs Council Meeting in Brussels next Monday, which gives no hostages to fortune.

In its four pages, it is made abundantly clear that there is no agreement yet on the Irish question, with the reminder that nothing is agreed until everything is agreed.

Looking at the partially agreed draft agreement again, one is reminded that the substantive requirements were set out in the Northern Ireland protocol, with the key issue being the establishment of a common regulatory area. The essence of this is the maintenance of the Single Market acquis on both sides of the border, with provision for tariff-free movement of goods which mirrors the provisions in the EEA agreement.

As regards a customs union, the one relevant reference in the draft agreement refers to maintaining alignment with its rules, "unless or until an alternative arrangement implementing another scenario is agreed". The detail in the protocol is left to the annexes, which have yet to be fleshed out, leaving a huge measure of uncertainty. 

If one assumes that the full provisions of the customs union apply, that would require goods entering from outside Northern Ireland (whether from the rest of the UK or from non-EU countries) to carry exactly the same tariffs that the goods would attract had they been exported directly to an EU Member State.

That would raise the added complication of tariffs having to be calculated and collected on the movement of goods from the mainland UK to Northern Ireland – unless, of course, the UK as a whole adopts the EU's common external tariff, and matches its preferential rates agreed with other third countries.

Such issues, and including the monitoring of VAT payments, are major issues to the EU. We have seen from the experience of the "carousel fraud" on VAT how easily minor loopholes in the export control system can amount to tens of billions in losses. And, more recently, the UK was subject to a claim by the EU for €2.7 billion in unpaid customs duty, after falling foul of systematic undervaluation fraud on goods imported from China.

On this basis, there is no question of the EU backing away from its insistence on the implementation of its backstop plan, as represented by the protocol and its yet incomplete annexes. This is not just a matter of solidarity with Ireland. The credibility of the entire EU system is at stake.

This leaves us exactly in the position that we were at the beginning of the negotiations. No amount of ducking and diving, palace coups and parliamentary plotting is going to change this. Brexit is where Westminster meets reality.

With that, Mr Juncker could well emulate President Truman with a sign on his desk, only this might state: "the fudge stops here". Chocolate-coated or not, Brussels is the place fudge goes to die.

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