Brexit progress elusive as sides ask each other for help

By Gabriela Baczynska and Elizabeth Piper

SALZBURG, Austria (Reuters) - British Prime Minister Theresa May urged fellow European Union leaders at an informal summit on Wednesday to follow her lead and adapt their Brexit negotiating stance to secure a good deal.

However, before a dinner in the Austrian city of Salzburg, some of those leaders said key elements of the "Chequers" plan that May was aiming to sell to them needed reworking, and Irish Prime Minister Leo Varadkar said there had been no progress at all in six months on the delicate issue of the Irish border.

With just over six months to go until Britain leaves the EU, both sides are keen to secure some kind of deal on future relations before the end of the year, to avert a disruptive "cliff-edge" exit from EU agreements and institutions.

"If we're going to achieve a successful conclusion then, just as the UK has evolved its position, the EU will need to evolve its position too," May told reporters on arrival in Salzburg. "I'm confident that, with goodwill and determination, we can agree a deal that right for both parties."

EU summit chairman Donald Tusk said parts of the British plan indicated a "positive evolution" in the UK's approach.

"On other issues, such as the Irish question, or the framework for economic cooperation, the UK's proposals will need to be reworked and further negotiated," he said.

European Commission President Jean-Claude Juncker said a deal with Britain was still "far away", an EU official said.

One of the biggest stumbling blocks is the need to prevent border posts being erected between the British province of Northern Ireland and EU member Ireland.

"THE ONLY CREDIBLE PLAN"

May said her Chequers proposal on a future customs and trade arrangement would maintain "frictionless trade" with the bloc, and that it was "the only credible and negotiable plan on the table that delivers no hard border in Northern Ireland and also delivers on the vote of the British people".

The plan calls for Britain to remain in a free trade zone with the EU for agricultural and manufactured goods, which would be covered after Brexit by a "common rulebook" of regulations.

May has said she will not accept an EU proposal that would keep Northern Ireland in a customs union with the bloc if there is no other agreed plan to avert a hard border.

A British government source said London could not accept any proposal that would effectively move the customs frontier into the Irish Sea.

But Dublin has Brussels' backing for its drive to ensure that the border does not once again become a cause of the north-south tension that bedevilled it in the last century.

"I don't think we're any closer to a withdrawal agreement than we were in March, so I can't report any progress unfortunately," Varadkar told reporters. "We have yet to see an alternative text from the UK government that anybody in the European Union finds to be acceptable."

At dinner at the Felsenreitschule theatre -- known to film fans for a scene in the musical "The Sound of Music" -- May was due to make another pitch for support for her Chequers plan.

She will then be out of the room on Thursday afternoon when the other 27 leaders discuss her proposals.

Tusk said he would call an additional summit in mid-November to seal any deal with Britain.

British Brexit Minister Dominic Raab told London's LBC radio that if the EU did not give ground, it would be "lose-lose" for both sides - and that a "no-deal" Brexit would cause short-term disruption, but not chaos. He said Britain would not seek to delay its exit and would leave the EU as planned, on March 29.

"NOTHING ON IRELAND"

But the summit host, Austrian Chancellor Sebastian Kurz, said that, while a no-deal Brexit would be difficult for the EU, it would be terrible for Britain.

"If you want to make a deal, both sides will need to try to find a compromise," he said. "I am still optimistic."

According to an EU official, Barnier has suggested going to the "bare bones" on any checks between the rest of Britain and Northern Ireland, which could be further reduced if there is a trade facilitation agreement similar to that with Japan.

Northern Ireland's Democratic Unionist Party, which supports May's minority government in Westminster, said that would still mean an unacceptable border between the province and the rest of the United Kingdom.

EU officials are minded not to paint May into a corner, aware that she faces increasing opposition to her plans in her own Conservative Party and needs a victory of sorts to persuade a reluctant parliament to back a deal.

May has told lawmakers that they will vote either for a Chequers-based deal or to leave without an agreement. Mel Stride, a junior treasury minister, said that, if pro-Brexit and pro-EU lawmakers reject her plan, they could usher in a second referendum on EU membership.

"We could end up not leaving the EU altogether," he told Sky News. "There is a danger of that happening."

But Raab said the government would not call a second referendum, and that parliament was unlikely to ask for one.

(Additional reporting by Alastair Macdonald, Francois Murphy Andreas Rinke, Jan Strupczewski in Brussels, and William James in London; Editing by Kevin Liffey)