Brexit: Difficult decisions in the offing

As we enter 2018, Brexit remains high on the agenda. The agreement reached in December has allowed the talks to progress to the next stage, but significant challenges remain.

As former British prime minister Tony Blair put it in an interview with this newspaper: " What the discussion over Ireland shows is the central dilemma . . . of the whole negotiation, which is you are either in the single market and customs union, in which case you have an open border and frictionless trade, or not, which means you have a hard border and a hard Brexit." The pre-Christmas deal gave Ireland some assurances, but did not solve this conundrum. This is one of the reasons why a hard Brexit remains a real risk.

The stage-two talks will start with consideration of a transition period, which would commence after the UK leaves the EU, but before it completes negotiations on its new relationship. Ireland’s interests lie in a transition period being put in place, as it should mean that not too much would change immediately after the UK leaves the EU in March 2019.

However, there could be difficult decisions here, too, for the Government. Blair warns that the UK government may try to delay detailed negotiations on the UK’s future trading relationship with the EU until after it actually leaves the EU. This would inevitably leave open the question of how a hard border would be avoided on the island of Ireland.

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The Government here could thus face a choice of what attitude to take on a withdrawal deal, if the Border issue was not yet clarified. As Blair said, the UK parliament would also face the decision of whether to approve an exit deal, if much still remains to be negotiated on the future relationship.

Despite the agreement reached in December, there are few signs that the London government is coming to terms with the decisions it faces. UK trade minister Liam Fox continues to talk about negotiating new trade arrangements with third countries and there is even suggestions that the UK might seek to join the Trans-Pacific Partnership, involving 11 countries in the Pacific region.

There is no clarity on how it plans to reach trade deals outside the EU, while at the same time meeting its commitment to avoid a hard Border between the UK and Ireland. To do deals on its own terms with third countries, the UK would have to carry through on its commitment to leave the EU single market and customs union. In turn this threatens the return of border controls on the island of Ireland, the only land frontier between the UK and the EU.

All this lies ahead, as we delve into phase two of the talks. The Government won some important commitments during phase one, but making them stick could be an even greater challenge.