Good afternoon. A critical moment is approaching to try to draw a line under the seemingly never-ending row between London and Brussels over the implementation of the Northern Ireland protocol.

This newsletter returns often to this subject because it holds the key to normalising many other aspects of the post-Brexit relationship which have been placed on hold because of the UK’s backsliding on its obligation under the protocol.

In recent weeks the specialised committees of the Trade and Cooperation Agreement have been meeting to discuss the workings of the trade deal, but on so many levels — from easing the VAT regime to relaxing the operation of agrifood border controls, the files are blocked.

So what now? I spent the first half of this week in Brussels, with my colleague Andy Bounds, trying to get a detailed sense of where EU-UK technical talks have got to on the protocol, and what might happen next. The picture, honestly, is mixed.

To zoom out, very quickly, the core issue here is how to square the circle of implementing a protocol that leaves Northern Ireland following EU laws for goods, VAT and state aid, while not allowing the Unionist community to feel alienated from the United Kingdom.

As things stand, the Unionist parties are all avowedly against the protocol and the largest, the Democratic Unionist party, is refusing to enter into Northern Ireland’s power-sharing executive until these issues are resolved to its satisfaction.

This has paralysed the operation of the Belfast/Good Friday Agreement which requires both the two main (Unionist and Nationalist) parties to agree to be in government for the executive to function. 

As the agreement approaches its 25th anniversary, it is on its knees. Northern Ireland has been without a functioning executive for over a third of that time, with deeply adverse consequences for the region’s public services and political governance. 

A short window is now opening to cut a deal. Having decided to postpone fresh Assembly elections, the Westminster government is passing legislation to extend the deadline until as far as January 19. Add a 12-week election period, and you get to April 13 2023. Unless the government extends yet again, that’s the window for a deal. 

As the former Northern Ireland secretary Julian Smith put it during the debate on the legislation. “We are in the last-chance saloon . . . [the] thing we have to achieve is a deal with the EU that allows our colleagues in the DUP to get back into the executive.”

How to achieve this? In Brussels, when talking to all sides involved, you are struck by a contradictory sense of both urgency and inertia: an urgent desire to fix this mess, but a technical and political impasse over how to do so.

Because in truth, both sides are still viewing the Northern Ireland Brexit problem from opposite ends of the telescope.

The European Commission believes it is doing all it can to operate the deal Boris Johnson signed in the least intrusive way possible. 

It notes that it is subcontracting its external border to a foreign power which, in its view, has shown very little good faith in respecting the agreement thus far. Trust is in short supply, notwithstanding the recent improvement in attitudes from the Rishi Sunak government.

The DUP and the British government want the deal fundamentally rewritten, as formally expressed in the DUP’s “seven tests” and the UK government’s Northern Ireland Protocol bill which, if enacted, unilaterally guts the agreement.

The EU vision of a fix is that the deal fundamentally remains, but with incremental steps to de-dramatise its implementation. The UK government and the DUP want a recognition that a much deeper rethink is required to get the Stormont executive functioning again.

As the DUP leader Jeffrey Donaldson put it this week “if [the European Union] value the institutions arising from the Belfast Agreement then it is time for them to change course and set their sights on a solution to replace the protocol which unionists can support.”

On a technical level, the two sides are whittling away at their differences, but even on areas like customs and agrifood checks — where solutions are in theory easier to find — it is clear that the ‘border’ in the Irish Sea that the DUP wants completely swept away isn’t disappearing.

Arguments continue over how much paperwork sellers in Great Britain should have to fill in when sending goods to Northern Ireland. 

Is it necessary to use the 10-digit “CN” codes that GB exporters use to send goods to the EU (and which are the basis of EU customs) or can that data be obtained via commercial needs, to avoid GB sellers having to “export” into the UK’s own internal market? 

As has been clear with GB-EU exports, such paperwork deters smaller exporters, which the DUP argues diminishes Northern Ireland’s place in the UK internal market. The DUP wants ‘no trade diversion’, but that is obviously implicit in the deal Johnson signed.

The Commission is often blamed for being too rigid, but major EU member states still talk about the protocol being a “gaping hole” in the EU’s single market — dramatic language, perhaps, but also reflective of political realities about how far Maroš Šefčovič, the EU negotiator, can go in cutting a deal.

There is also a new EU-UK data-sharing system being tested to enable the EU trade authorities to see what is going into NI from GB — vital, say the Commission, to give the EU the confidence to take a more risk-based approach. 

But some EU member states are getting negative feedback from the ground about the operation of the new system. Fixing this is key to getting the EU to take a more risk-based approach on, say, agrifood checks, to help make that ‘border’ shrink in size. 

On the issue of parcels (think NI consumers getting their Amazon deliveries) there do not appear to be any expansive solutions, with work ongoing to try and disaggregate business and consumer traffic, which is technically very difficult. 

All of that technical trade stuff on reducing border frictions (bear in mind the DUP’s ‘seven tests’ want no border at all) comes before we get to the so-called governance question — in other words the role the EU’s top court plays in enforcing the deal.

As Sir Alan Dashwood KC, a prominent lawyer who has advised the government in the past, observes in a letter to the Financial Times today, the role of the ECJ in enforcing infringements of the protocol against the UK “may be considered by some to represent an especially serious encroachment on UK sovereignty”.

Certainly that’s true for eurosceptic Conservatives who see Brexit as an exercise in the repatriation of sovereignty, and whose views have driven the current government into the hardest possible Brexit trade deal with the EU.

Dashwood’s solution — to use the dispute resolution mechanism in the Withdrawal Agreement and agree not to proceed immediately via the ECJ infringement proceedings when addressing disputes under the protocol — has clear echoes of ideas being put about by Steve Baker, the Northern Ireland minister and arch-Brexiter.

But I fear that such ideas are nothing more than castles in the air. Neither the European Commission nor the member states are anywhere close to entertaining such solutions. And the fact that the UK side is hoisting these trial balloons speaks to the gulf between the two sides.

Is the situation entirely hopeless? No. Come the spring there may be a moment when multiple factors combine, like a political vice, to deliver a deal. But threading the political needle will require immense skill from a new prime minister who is politically weak and sometimes naive.

Tactically, from a British perspective, the plan must be to get the DUP to engage in the new year and to accept an agreement on the Irish Sea border even though it falls far short of their ‘seven tests’ but is, nonetheless, tolerable.

The alternative, it must be made clear by the British government, is a return to a form of direct rule in which the Irish government will have a role to play — surely a worse scenario for Unionism than accepting some ‘wins’ on border de-dramatisation and getting the executive up and running. 

All this is asking the DUP to swallow a lot, given how deeply entrenched its political position is on the Protocol.

If that can be done, then a deal that gets the DUP back into power-sharing will give Sunak leverage with the right wing of his party, who will hate the realistic compromise on the ECJ question, but may have to live with that too — or risk destabilising progress in Northern Ireland just as Joe Biden is preparing to board Air Force One for a triumphal visit next April.

(The ERG may also be asking themselves whether accepting a Sunak-authored compromise today is better than leaving the NI situation a mess until the next election when — if Labour were to win — that would hand Sir Keir Starmer the perfect excuse to align the UK with the EU on goods and agrifood regulations, a move all purist Brexiters would abhor.)

It is a massive task for all sides. As we’ve seen time and again in Brexit talks — think back to David Cameron and Theresa May’s negotiations — technical solutions that split the difference in Brussels have a high risk of being politically stillborn when they arrive back in London. 

Will it be different this time around? I hope so, not least for the people of Northern Ireland and the future of the Good Friday Agreement which, of course, are the real casualties here. But the challenges are daunting.

Brexit in numbers

The chart this week speaks to the sudden revival in the immigration debate which followed figures showing that net UK migration had soared above 500,000 in the year to June.

There were specific reasons for this as the Migration Observatory at the University of Oxford explained, which were related to the UK opening its doors to Ukrainians and Hong Kong Chinese and a growing number of international students. 

Both of those factors should be good news for the UK’s international reputation, firstly as a humanitarian state, and secondly for one of its most important exports (an international student is effectively an education export) which subsidises home students.

But the reaction to the headline figures from some figures on the right at a time when the UK is facing the biggest squeeze on living standards since the second world war, highlights the underlying political salience of the immigration issue.

It may have been somewhat off the radar since Brexit, but Labour’s clear commitment to rule out bringing back free movement of people with the EU speaks to an understanding that immigration could very quickly get back to the foreground of politics.

A future Labour government should, in my view, negotiate a youth mobility chapter with the EU — it is culturally important and will be good for industries like hospitality and childcare that are desperately short of labour.

That said, the reason the Johnson government wouldn’t do a deal in 2020 was that the EU wouldn’t accept caps on numbers from individual member states, leading to the prospect (it was feared) of lots of young people from poorer EU countries piling into the UK.

That kind of thinking may make many in the British middle classes despair, but there’s no point denying that the politics of immigration can get tricky, fast.

I shall be away next week, but my colleague Andy Bounds is going to write for you from Brussels, which should be an interesting change of perspective.

And, finally, three unmissable Brexit stories

• This week the FT launched a new series looking at the impact of Brexit on Britain. In the first part, Economics Editor Chris Giles speaks to economists who have crunched the numbers and concluded that “Brexit has significantly worsened the country’s economic performance.” Future pieces, coming out over the next few days, look at trade, business and politics.

• Reforming democracy could be the next Brexit, argues Robert Shrimsley. Constitutional reform is the fantasy football of politics, he writes, where “its appeal grows the further you are from the real action.”

• Britain has become more like a continental country, not less, since leaving the EU, argues Janan Ganesh. Britain was at its most liberal and “Anglo-Saxon” inside the European project. A paradox, he says, Leavers can chew over at their leisure.