The European Commission has published a draft UK withdrawal agreement which would establish a “common regulatory area” between the EU and Northern Ireland after Brexit.
The plans envisage an area spanning the whole island of Ireland with no internal borders and free movement of goods.
And it suggests that EU and UK customs authorities should jointly oversee movements between Northern Ireland and the British mainland, while Europe would retain control over aspects of taxation and state aid in the six counties.
Released in Brussels by chief Brexit negotiator Michel Barnier just days before Prime Minister Theresa May sets out her own vision of post-Brexit relations on Friday, the text is likely to significantly heighten tensions in the long-running talks.
The EU text puts into legal terms the Joint Report agreed by Mrs May and European Commission president Jean-Claude Juncker in December, and is due to be agreed by the remaining 27 EU states next month.
At a Brussels press conference, Mr Barnier signalled frustration at the lack of progress in the negotiations, telling reporters: “We must pick up the pace.”
He repeated his warning that agreement on the transition deal following Brexit sought by Mrs May is “not a given”.
On the crucial issue of the Irish border, the draft text spells out in detail how the principle of “regulatory alignment” agreed in December would be implemented if the UK fails to find technological or diplomatic solutions to keeping the border open.
If such solutions are not found, the draft text states, “the territory of Northern Ireland, excluding the territorial waters of the United Kingdom ... shall be considered to be part of the customs territory of the Union”.
Customs controls would be “carried out jointly by the Union and the United Kingdom customs authorities competent for the territory of Northern Ireland”.
Northern Ireland would remain subject to EU restrictions restricting state aid for companies, in respect of measures affecting trade between the territory and the EU.
But the arrangements for the common regulatory area would cease to apply if and when alternative solutions are agreed to “address the unique circumstances on the island of Ireland, avoiding a hard border and protecting the 1998 Agreement in all its dimensions”.
The text provides for safeguards allowing the UK unilaterally to take time-limited “appropriate measures” in the case that its application leads to “serious economic, societal or environmental difficulties liable to persist”.
Ireland’s Foreign Minister, Simon Coveney, said the proposals amounted to a “backstop” option if a better arrangement cannot be found.
“This is very much a default and would only apply should it prove necessary. This is about delivering on our shared objectives of protecting the Good Friday Agreement and the gains of the peace process, no less, no more.”
He added: “This represents a logical outworking of the commitments made by the UK, including on protecting the Good Friday Agreement in all its parts and the gains of the peace process and avoiding a hard border on the island of Ireland.”