Ireland at risk as UK considers limited EU trade deal
Canada-style deal ‘on cards’
Disarray in the UK over Brexit is pushing it towards a limited trade deal with Brussels - which will be bad for Ireland.
When you take into account the "series of contradictory red lines" and mixed messages coming from the UK, "you end up with a Canada-style deal", a senior Brexit source told the Irish Independent.
"If that's their decision, we can do it, but it's not good for Ireland," the source added.
So far Prime Minister Theresa May has confirmed that Britain will leave the EU's customs union, and is not planning on entering into any newly arranged EU-UK customs union.
On an official visit to London to meet Mrs May and Brexit Secretary David Davis, the EU's lead negotiator Michel Barnier made clear the constrained options available if the UK sticks to this position.
"The only thing I can say is without a customs union and outside the single market, barriers to trade in goods and services are unavoidable," he said.
Canada's trade deal with the EU took more than seven years to negotiate and does not include services, including financial services.
Crucially, it has limited scope for tariff-free trade on agricultural products.
If the UK pursues a Canada-style agreement and remains outside the customs union, it will require customs checks on the Border as well as the application of tariffs on goods not included in the free trade agreement.
Rancour and division within the British Cabinet has all but paralysed Mrs May in making decisions about the road ahead.
Rumours of a planned Tory heave against Mrs May in favour of Foreign Secretary Boris Johnson - the poster-boy for Brexit - are abounding, undermining her already diminished authority.
Instead of concentrating on getting Brexit right, the prime minister is concerned with "keeping her own ship steady and it's all about appeasing the Brexiteers", said one source close to the negotiations.
The UK and EU agreed last December that regardless of what happens in the latter stages of Brexit negotiations, there will be no hard Border between Ireland and Northern Ireland.
But how exactly this commitment can be fully upheld is now unclear if the UK-EU relationship is restricted and outside a customs relationship.
The questions are "can we trust London?", and "can London deliver December's deal?" given the turmoil in the government, said an Irish source.
"What we are working on now is ensuring that what we agreed back in December is fully reflected" in a legal document, said Taoiseach Leo Varadkar yesterday.
He said he was "not entirely clear about what is being sought in terms of the UK's relationship with the union and the UK's relationship with the single markets".
"What we have in the agreement made in December are some very serious commitments that we will avoid any hard borders and barriers to trade or the movement of people between Northern Ireland and the rest of Ireland," he said.
He raised the prospect of a special deal for Northern Ireland if the UK moves too far away from Europe. This would undoubtedly be opposed by UK junior coalition partners, the DUP.
Mr Varadkar said the Irish Border could be seamless in "one of three ways, either through the new relationship between the UK and the EU, through bespoke plans that the UK is mandated to come up with, or, thirdly, a unique arrangement with Northern Ireland.
"Obviously these are matters for the UK government, but as soon as we have any clarity on the kind of relationship the UK wants with the EU, we can take it from there."
Being in a customs union restricts Britain from conducting trade deals with other countries as it would have to apply EU tariffs on any country that doesn't already have an EU trade deal in place.