By John Chalmers and Gabriela Baczynska
BRUSSELS (Reuters) - The European Union on Wednesday welcomed as a step forward Prime Minister Boris Johnson's latest proposals to unlock a Brexit deal before Britain's Oct.31 departure, but made clear big gaps still needed to be bridged to secure an agreement in time.
Two weeks before a make-of-break summit of EU leaders on Oct.17-18, Johnson held a call with the bloc's executive head, Jean-Claude Juncker, as his Brexit negotiator delivered his proposals to the EU hub Brussels.
"President Juncker welcomed Prime Minister Johnson's determination to advance the talks ahead of the October European Council and make progress towards a deal," the Commission said in a statement afterwards.
"He acknowledged the positive advances... However, the President also noted that there are still some problematic points that will need further work in the coming days."
That marks a change in the EU's tone after weeks of British negotiators shuttling back and forth to Brussels only to hear their ideas dismissed by the bloc as coming nowhere close to what would be needed to replace the contentious "Irish backstop".
This provision, an insurance policy to prevent a return to border controls between the British province of Northern Ireland and EU member Ireland after Brexit, is the key obstacle to a sealing a deal.
But the EU also stressed considerable differences remained, especially on the proposed customs arrangements after Brexit.
"There is progress, but to be frank lots of work still needs to be done to fulfil the three objectives of the backstop: no border, all-Ireland economy and protecting the single market," the EU's Brexit negotiator Michel Barnier told reporters.
"We will continue to work, work to reach a deal. No-deal will never be the choice of the EU, never. We will continue to work with the UK team."
British negotiators are due in Brussels again later this week.
The stakes are getting higher in the run-up to the October summit at which Johnson hopes to seal a new deal and take his country out of the bloc two weeks later. He has promised to leave on Oct.31 - with or without a withdrawal agreement.
BIG GAPS REMAIN
Johnson has said all of the UK would leave the bloc's customs union after Brexit to pursue independent trade deals around the world.
That means border checks would be needed, but all sides fear they could weigh on the delicate peace on the island of Ireland, where the EU's only land frontier with the UK would run.
London highlighted it gave ground by agreeing that Northern Ireland would remain in the EU's regulatory orbit for all goods, with consent required from Northern Ireland's devolved institutions every four years to renew the arrangement.
But it was unclear what would happen if the currently suspended Northern Irish executive was not in place, or refused to agree. The EU said the proposals on customs checks were also a point of concern, as well as VAT plans and the so-called level playing field, or fair competition guarantees.
An EU lawmaker dealing with Brexit, Guy Verhofstadt, said on Twitter that he was "absolutely not positive about PM Johnson's proposals. It doesn't provide the necessary safeguards for Ireland".
The Commission - which is negotiating Brexit with Britain for the other 27 EU member states - would "examine the legal text objectively".
With the EU still left wondering whether Johnson was truly seeking an agreement or just trying to create a semblance of negotiation to then blame the bloc if and when it fails, the tone was cautious.
"I am not optimistic," said an EU diplomat. "Some of it is a complete no-go, Britain would have to shift considerably still."
With the EU determined to avoid any abrupt, no-deal split later this month, EU sources saw another delay to Brexit as increasingly likely.
Another EU lawmaker dealing with Brexit, Philippe Lamberts, said: "We are confronted with a prime minister whose strategy, I think, is to achieve a no-deal Brexit and blame EU 'friends' for the unsuccessful outcome."