Fox Takes Hard Line on Brexit as U.K. Works for Breakthrough

  • Trade minister says ‘not afraid’ of failing to get EU deal
  • Fox tells Bloomberg U.K. could fall back on WTO terms with EU
U.K. Secretary for International Trade Liam Fox discusses the next steps in Brexit negotiations and trade deals.

U.K. Trade Secretary Liam Fox took a tough line with the European Union just as his prime minister is engaging in high-stakes diplomacy to reach a breakthrough in Brexit talks.

In a reminder of the complex political backdrop Theresa May faces at home, the veteran Brexit backer said the U.K. has done enough to satisfy the bloc’s demands for money and it’s time to move talks on to trade.

Britain is “not afraid” of talks breaking down and falling back on World Trade Organization terms, Fox said in a Bloomberg Television interview in Sydney Tuesday. “We believe that we’ve gone far enough to be able to get into this second stage. Remember, we’re almost getting into 2018 and we’re leaving in March 2019. So we need to make progress now because time is getting short.”

The EU has set Britain a Dec. 4 deadline to improve its offer on the Brexit divorce settlement and also come up with a solution to the thorny question of the Irish border -- the new frontier between the U.K. and the EU that will cut the island of Ireland in two. 

Fox is striking a combative tone that is in contrast to May, who has been speaking in recent days of the need for both sides to “step forward together.” 

Careful Choreography

May is engaged in carefully stage-managed diplomacy, culminating in a meeting with European Commission President Jean-Claude Juncker next week, which is tipped to be the moment the two sides could seal an agreement that will allow long-delayed trade talks to commence.

To cross the final hurdle, May needs to negotiate with the Northern Irish party that props up her government what it can offer the EU as a solution to the border issue.

The border issue has emerged as the main obstacle: there has to be a policed frontier somewhere as the U.K. is leaving the single market that makes the current open border possible. But a return to checkpoints would stir memories of decades of violence between Catholic and Protestant groups.

The EU proposes leaving Northern Ireland aligned with Ireland on regulations such as agriculture, but that would imply some kind of border between Northern Ireland and mainland Britain, which the Northern Irish DUP rejects.

Careful Wording

The wording of the U.K.’s commitment needs to satisfy the Northern Irish who want to stay as close to the rest of the U.K. as possible and the Irish, who want an open border with the north. The European Commission is taking Ireland’s side. May relies on the support of the DUP after losing her parliamentary majority in June’s election. In some good news for May, the threat of an early election in Ireland that could have added yet more complication has been averted.

Fox said the whole of the U.K. will be leaving both the EU single market and customs union, in a rebuff to the EU’s proposals.

“We are leaving the customs union and the single market, and that’s the whole of the UK, not a part of it,” Fox said. “We cannot see a hard border between Northern Ireland and the rest of the united kingdom. Our border lies around the U.K not across the U.K., and that’s a reality that will have to be dealt with."

Fox also had some divisive words for those in the U.K. who continue to oppose Brexit, some of whom are in his party: "I’m afraid there are a small hard core out there who sadly prefer to see Britain fail than see Brexit succeed just to prove that they were right. I find that unpatriotic and un-British."

Next Steps

EU chiefs are expecting May next Monday to offer more money toward liabilities such as pensions and infrastructure projects it had committed to but has yet to pay, according to people familiar with the situation. A written offer on the financial settlement has already been drafted pending May’s final approval, one of them said.

Chief EU negotiator Michel Barnier is Berlin to meet with Germany’s Angela Merkel in Berlin on Tuesday.

If May can give the EU the assurances it needs on the financial settlement, the Irish border and on the protection of the rights of EU citizens in the U.K -- then it would give EU diplomats 10 days to agree on the choreography of a summit of leaders on Dec. 14-15. One European official sees a 60 percent chance of a deal in December.

— With assistance by Svenja O'Donnell

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