Brexit: EU fishing row threatens to snag May’s customs union plan
Key member states unwilling to offer tariff-free access to EU market without reciprocal deal
A sign on a boat in Brixham harbour, England. According to estimates, 33% of the catches of the European fishing fleet are caught in British waters. Photograph: Robin Millard/AFP/Getty Images
Theresa May is facing fresh opposition from EU countries that have large fishing communities to her demands for an agreement before Brexit day on a temporary customs union to solve the Irish border problem.
A number of key member states are expected to oppose a commitment to an all-UK customs deal on the basis that negotiations are yet to start on what access European fishing boats will have to British waters after Brexit.
The EU has repeatedly said it will only allow British seafood exporters tariff- and quota-free access to the European market in return for an agreement that its fishing fleets can continue to operate around the UK.
Agreeing to a customs union in the withdrawal agreement would mean the EU had ceded its leverage by providing tariff-free trade on seafood into the internal market without reciprocal guarantees on access to British waters.
The issue has been discussed by the EU’s chief negotiator, Michel Barnier, with ministers from the member states.
The mooted extension to the transition period is a new idea being put forward by the EU to help Theresa May square the circle created by the written agreement last December and the draft withdrawal agreement in March.
That committed the UK and the EU to ensuring there was no divergence between Northern Ireland and the Republic of Ireland.
But it also, after an intervention by the Democratic Unionist party, committed the UK (not the EU) not to have any trading differences between Northern Ireland and Great Britain.
The problem is that these are two irreconcilable agreements. They also impinge on the legally binding Good Friday agreement, which brought peace to Northern Ireland and in some senses pooled sovereignty of Northern Ireland giving people a birthright to be Irish or British or both.
If the UK leaves the EU along with the customs union and the single market then the border in Ireland becomes the only land border between the UK and the EU forcing customs, tax and regulatory controls.
The backstop is one of three options agreed by the EU and the UK in December and would only come into play if option A (overall agreement) or option B (a tailor-made solution) cannot be agreed by the end of transition. The Irish have likened it to an insurance policy.
The new EU idea is to extend the transition period to allow time to get to option A or B.
But an extension is problematic for Brexiters and leave voters, who want the UK to get out of the EU as soon as possible.
The Irish and the EU will also still need the backstop in the withdrawal agreement, which must be signed before the business of the trade deal can get under way. Otherwise it is a no-deal Brexit.
Extending the transition into 2021 would mean another year of paying into the EU budget. Britain would have to negotiate this but it has been estimated at anywhere between £10bn and £17bn.
Staying in the EU for another year would also mean continued freedom of movement and being under the European court of justice, which Brexiters would oppose.
France, Denmark, the Netherlands, Spain, Belgium and Germany are understood to have deep concerns about ceding such ground in the negotiations.
The problem poses a fresh threat to the British government’s hopes of solving the issue of avoiding both a hard border on the island of Ireland and a customs border in the Irish Sea between Northern Ireland and Great Britain.
The prime minister has said she wants the “backstop” solution in the withdrawal agreement, under which Northern Ireland would in effect stay in the single market and customs union alone, to be scrapped in favour of the whole of the UK staying in a customs arrangement temporarily.
In the latest development, the European commission has floated a plan in which the full terms of a “bare bones” customs union for Great Britain would be laid out in the withdrawal agreement, so there would be no need for negotiations on it after Brexit. Northern Ireland would stay under the full EU customs code.
The backstop would come into force at the end of the transition period should a comprehensive trade deal to ensure there is no need for a hard border on the island of Ireland not be agreed in time.
A senior EU official conceded that the proposal would not remove the need for a Northern Ireland-specific backstop that would keep the province in the single market as the UK gave up its membership.
The issue of what to do about fisheries would also remain with member states likely to reject to any deal that undermines the “trade-off” envisioned in the bloc’s negotiating position papers in which British exporters were only given access to the single market in exchange for European fishing boats keeping access to the seas around the UK.
Norway is not in a customs union with the EU and its exporters of shrimps, mackerel, herring, great scallops and Norway lobster all pay tariffs in order to sell their products, with taxes rising on processed goods. There is a tariff of 2% imposed on the import of whole fresh salmon, while the tariff for smoked salmon is 13%.
“Access to waters will remain a priority,” an EU official said. “The problem now is that … you are basically saying you get tariff-free quota-free access – but we don’t know where we will end up on access.”
Niels Wichmann, the chief executive of the Danish fishermen’s association, which holds a place on the Danish ministry of food’s Brexit taskforce, said: “The issue of access to waters is part of the trade negotiations. That is what we have said from the start, and we discussed this with Michel Barnier when he came to Denmark. And he confirmed that this was also his position.”
The UK environment secretary, Michael Gove, has said he expects British fleets to “keep more of their own fish” after Brexit, in what would be a hammer-blow to the EU fishing industry. According to recent estimates, 33% of the catches of the European fishing fleet are caught in British waters.
A backstop is required to ensure there is no hard border in Ireland if a comprehensive free trade deal cannot be signed before the end of 2020. Theresa May has proposed to the EU that the whole of the UK would remain in the customs union after Brexit, but Brussels has said it needs more time to evaluate the proposal.
As a result, the EU insists on having its own backstop – the backstop to the backstop – which would mean Northern Ireland would remain in the single market and customs union in the absence of a free trade deal, prompting fierce objections from Conservative hard Brexiters and the DUP, which props up her government.
That prompted May to propose a country-wide alternative in which the whole of the UK would remain in parts of the customs union after Brexit.
“The EU still requires a ‘backstop to the backstop’ – effectively an insurance policy for the insurance policy. And they want this to be the Northern Ireland-only solution that they had previously proposed,” May told MPs.
Raising the stakes, the prime minister said the EU’s insistence amounted to a threat to the constitution of the UK: “We have been clear that we cannot agree to anything that threatens the integrity of our United Kingdom,” she added.
The EU fishing industry estimates that a loss of access would lead to a reduction of about 50% in the European fleets’ net profit and thousands of jobs.
The size of the fishing sector in the EU is relatively small but it has an outsized impact on the decisions of politicians given its importance to often deprived coastal communities. An EU diplomat said: “We don’t want dead fish on our doorstep.”
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