Thread by @BrunoBrussels

Brexit talks next week will be overshadowed by EU fears that the government might be reneging on previous commitments to avoid a hard border in Northern Ireland.
Negotiations will formally begin again as early as next Tuesday or Wednesday after the budget.

Talks will be repeat of the “tunnel” earlier this month with the aim of getting something a deal over the line after mid-November.
There is still cautious optimism in Brussels but some concern UK is moving back on previous agreements on Ireland.

EU officials and diplomats are carefully scrutinising PM's speech yesterday. Everyone is in the dark.
“Only Olly Robbins, her chief negotiator, the PM and a tiny circle know what is going on and what the plan is,” said one source.

There are four main points or “steps” set out in May’s statement yesterday.

“First, we must make the commitment to a temporary UK-EU joint customs territory legally binding, so the Northern Ireland only proposal is no longer needed,” she told MPs.

This is about a “legally watertight” commitment or cross reference in the withdrawal agreement to the future relationship. it might be merely be a note that with a deal, probably including a customs union, the EU’s controversial Northern Ireland backstop “is no longer needed”.

There are questions on the EU side. Does this mean the current EU version of the backstop is deleted? Or does “not needed” mean elements of Northern NI specific text stays but is overwritten by UK-wide arrangements? Or is it all redrafted and woven into a new UK-wide backstop?

Government fears that unless withdrawal agreement commits EU to finding a UK-wide customs arrangement then it will be taken to court by Brexiters and it will lose. EU is ready to help by deleting a reference in draft withdrawal treaty to a separate customs territory for NI

New drafts will incorporate government proposals on “temporary”, although open ended, arrangements. The compromise would mean that existing EU backstop would be “overwritten” receding into the background, expressed in highly technical references to EU legislation, of a new draft.

“We are waiting to see what Mrs May meant next week,” said a source close to talks. "It is quite possible that where we end up will allow her to claim victory."

“The second step, is to create an option to extend the Implementation Period as an alternative to the backstop,” she told MPs.

“if at the end of 2020 future relationship was not quite ready - proposal is that the UK would be able to make a sovereign choice between UK-wide customs backstop or a short extension … would mean only one set of changes for businesses - at point we move to future relationship.”

This is the possibility of using an extension to the transition, at some point after the end of 2020, to negotiate a “temporary” customs union to avoid a hard border in Ireland.

That extension, as she notes, would then only mean one more set of changes for business because the UK-wide “temporary customs arrangement” would be “seamless” with a future relationship.

This raises question of whether May is moving towards a permanent customs union as part of a future trade deal. German officials last week signalled “we will have a new customs union between the EU and the UK. It will be much like the customs union between the EU and Turkey.”

[May’s “fourth step” in the statement is is for “the government to deliver the commitment we have made to ensure full continued access for Northern Ireland’s businesses to the whole of the UK internal market”...

This implies that she is still looking for regulatory alignment with the single market, on goods, alongside a possible customs union]

“Third step, Mr Speaker, is to ensure that were we to need either of these insurance policies – whether the backstop or a short extension to the Implementation Period – we could not be kept in either arrangement indefinitely,” she told MPs.

This is seen by the EU side as a bit vague.
Presumably, they think it is a mechanism covered by a "joint committee" disputes structure already in the withdrawal agreement involving both sides in decisions.

“The decision procedure in the joint committee is not clear as this has not been agreed yet,” said a senior EU diplomat.

Britain could always insist on trade sovereignty, leaving any backstop or transition extension, under the withdrawal agreement but that would mean consequences.

An existing “punishment clause” sets out measures that EU could take against Britain. This could be a “lump sum penalty” fine or suspension of access to EU markets possibly meaning the imposition of tariffs or loss of aviation rights.