May’s Brexit Deal Suffers Major Setback After EU ‘Rejects’ UK Arbitration Mechanism

Senior sources tell HuffPost UK of fresh roadblock

Theresa May’s hopes of securing a Brexit deal have suffered a major setback after the EU signalled it could not accept a key plank of the UK’s plans, HuffPost has been told.

The EU27 have rejected Britain’s proposed model for independent arbitration of a temporary customs partnership with the bloc, senior Whitehall sources have revealed.

The fresh diplomatic roadblock emerged as rumours swirled that at least one Cabinet minister was on the edge of quitting in the wake of the resignation of transport minister Jo Johnson.

The arbitration mechanism was seen by several members of the Cabinet -including Attorney General Geoffrey Cox - as crucial to the UK retaining its right to control any future links to the EU.

But figures in Brussels have made clear in recent days they cannot accept the plan, creating an impasse that could spark fresh fears of a collapse in the talks and a ‘no deal’ Brexit.

“They think they’ve got us on the run,” one senior figure told HuffPost. “But they haven’t. We’ve drawn a line in the sand.”

British officials have put intense effort into a complex compromise plan to ensure that the EU did not have a veto over the mechanism of the UK-wide temporary customs arrangement.

The plan was seen by both Brexiteers and Remainers in the Cabinet as the best way of avoiding a hard border between Northern Ireland and the Republic of Ireland, and of avoiding a new border in the Irish sea between the province and mainland Britain.

However, it is understood that arbitration by an independent body is now no longer being discussed by the two sides after the EU made clear that it would be legally impossible to subject EU laws to anything other than the European Court of Justice (ECJ).

May has repeatedly insisted that the ECJ cannot have any direct role in the UK’s exit and Cabinet Brexiteers have made the issue a red line in the talks.

The idea of a ‘review procedure’ is still being worked on, but Brussels is adamant that fundamental decisions about customs are not for ‘arbiters’ to make.

Meanwhile, amid fears of a fresh resignation, allies of Brexit Secretary Dominic Raab made clear that he was not intending to walk out of the Government. He believes instead that his main job is to help the PM ‘do the right thing’.

Johnson resigned with a call for the PM to hold a second referendum on Brexit to give the public a verdict on her deal, no deal or remaining in the EU.

Other senior Government sources stressed that there was still a lot of work to be done in the negotiations, but both sides had a strong interest in getting a deal. “It’s not a case of x rejects y,” one said.

No.10 had been buoyed by the Attorney General’s words in a Cabinet meeting on Tuesday, when he suggested he favoured a form of arbitration rather than a system that would allow the UK to unilaterally pull out of the customs arrangement.

But the pushback from Brussels may now tip Cox into advising ministers that the hoped-for compromise plan is no longer viable. “The EU’s stance makes his job a lot easier,” one source said.

May had hoped to convene a special Cabinet meeting for either Monday or Tuesday, but the continuing diplomatic difficulties could delay it once more.

The UK is set to formally leave the EU on March 29, 2019.

The DUP, which is helping prop up May’s government, has stepped up the pressure on the PM in recent days with a fresh warning that it will not tolerate any regulatory difference between Northern Ireland and the rest of the UK.