The EU is demanding Britain accept that Northern Ireland may need to remain inside the European customs union and single market after Brexit in order to avoid "a hard Border on the island of Ireland".
The explicit mention of an "all-island" approach by Dublin and Brussels directly contradicts the UK position and will infuriate the Democratic Unionist Party, on whose votes British prime minister Theresa May's government depends for a parliamentary majority at Westminster.
The European Commission on Wednesday circulated an update on negotiations, seen by the Financial Times, which concludes that the avoidance of "regulatory divergence" on the island of Ireland is "essential" to protect the peace process.
“It consequently seems essential for the UK to commit to ensuring that a hard Border on the island of Ireland is avoided, including by ensuring no emergence of regulatory divergence from those rules of the internal market and the customs union,” the paper states.
Minister for Foreign Affairs Simon Coveney said on Friday morning the document "crystallises our position. If the UK wants to move on to phase two of the negotiations then the question of a hard border needs to be addressed."
He said it was encouraging that the EU's position was in sync with the Irish Government's. The EU position had been galvanized and he did not expect it to change, he told RTÉ's Morning Ireland.
Mr Coveney said wanted a solution for Northern Ireland and for the UK to remain in the Customs Union.
Given the practical challenges of the UK leaving the customs union Mr Coveney has called for a transition period of up to five years after Brexit, well in excess of the 2 years suggested by London.
The commission adds that the regulatory arrangements “are (or may be in the future) necessary for meaningful North-South co-operation, the all-island economy and the protection of the Good Friday Agreement”.
His Ministerial colleague Charlie Flanagan said on Friday “a hard Border flies in the face of the Good Friday Agreement” and said Government believes anything that is disruptive to the 1998 agreement “will be unacceptable in the context of the current negotiations.”
The statement comes days after Northern Ireland secretary James Brokenshire made clear that it would be "impossible" to imagine Belfast remaining within the EU's customs union and single market, in effect creating a trade border along the Irish Sea after Brexit.
‘Leave as one UK’
"We will leave the EU in 2019 as one United Kingdom, " Mr Brokenshire said in Brussels on Monday. "We need to ensure that nothing is done that undermines the integrity of the UK single market." He added: "I find it difficult to image how Northern Ireland could somehow remain in while the rest of the country leaves. I find it impossible."
The commission stance on the potential need for an all-island regulatory solution reflects the hardening position in Dublin over border issues as the Brexit divorce negotiations enter a critical phase.
One senior EU official said the Irish felt they were reaching a point of “maximum leverage” and were “really worried” by the UK position, which insists the Irish Border questions can only be fully addressed through a UK-EU trade deal.
Another negotiator involved in talks noted Ireland’s firm stance was becoming a “wild card” factor in the efforts to make “sufficient progress” in divorce talks by December so that talks on UK-EU future relations can begin.
Both Britain and the EU say they are committed to ensuring that Brexit does not undermine the 1998 Good Friday peace agreement or lead to the emergence of hard-Border infrastructure between the Republic and Northern Ireland.
Significant progress has been made in the six rounds of Brexit talks to date, including agreement on joint principles to maintain the Common Travel Area between the UK and Ireland.
But the Border issue has remained far from resolved. Sensitivities over Northern Ireland have been exacerbated by the UK government’s reliance on the DUP for its parliamentary majority and by the breakdown in Northern Ireland’s power-sharing arrangements, which have left it without an executive since January.
The DUP rejects the idea of any special arrangements after Brexit that would keep Northern Ireland within the EU’s regulatory orbit.
Dublin has long said Britain should stay in the customs union, reducing many but not all of the political and practical challenges over the Northern Ireland border.
Irish officials question the feasibility of the “invisible” Border proposed by the UK, with imports and exports being notified online.
Taoiseach Leo Varadkar said this week that he was "more optimistic" that a deal on divorce talks could be reached by the end of the year.
But he added that the ultimate decision "will, of course, all depend on what happens over the next number of weeks and what specific assurances and written guarantees we can get from the UK." - Additional reporting: The Financial Times
