Brexit – An Irish perspective.
The initial thought that arises when writing about Brexit from an Irish viewpoint for a European audience is that the writer must not bore the reader with a detailed summary of Irish history. But, since much of the Irish perspective on Great Britain’s withdrawal from the European Union is linked to our ties with Great Britain, our nearest neighbour, some facts and background details are necessary.
Size and population
Ireland is an island with a total area of 84.000 km2 and a population of 6.8 million. On the island are two separate states. Northern Ireland has an area of 14.000 km² and a population of 1,9 million. In size, it is comparable with Schleswig-Holstein which is approx 15% larger. In population, it is comparable with Thüringen whose population is 15% greater. The Irish Republic is five times greater with area of 70,000 km² and a population of 4,9 million. It is almost the same size as Bavaria but its population is just 80% of Hessen. Their two capitals – Belfast (Northern Ireland) and Dublin (Irish Republic) are 160 kms apart, or two hours by road.
Ireland (The Irish Republic) is the 30th largest economy in the world. In 2019, our exports were €153bn – €73bn (48%) to the EU and €14bn (9%) to the UK. In 2019, our imports were €89bn – €61bn (69%) from the EU and €19bn (21%) from the UK. Despite the UK’s proximity and our similarities in language, legal system and culture, our membership of the EU from 1973 has enabled us to diversify our trade connections.
Historically, Ireland was under British rule for many centuries. Our 1916 rebellion led to the signing of the Anglo-Irish Treaty in 1921 and the establishment of an Irish state. Its terms allowed the six counties of Ulster (now called Northern Ireland) to remain part of the United Kingdom. This was the first time the island was politically divided and this “Partition” gave rise to much political unrest in the following decades.
This unrest led to ongoing violence in the towns and villages of “The North” particularly from 1970 onwards. This conflict, known as “The Troubles” resulted in over 3.500 deaths. The root cause is that the majority in Northern Ireland, the Unionists, see themselves as British and wish to remain as part of the United Kingdom. The minority, the Nationalists, identify with those in the south and want reunification with the rest of Ireland in an independent Irish Republic.
The Good Friday Agreement
Political efforts by the British and Irish Governments, with the continual assistance of the US Government finally resulted in the Good Friday Agreement in 1998. This complex three tier agreement established power sharing arrangements between all political groups in Northern Ireland; cross-border North-South institutions and an ‘east-west’ British-Irish Council. The ‘principal of consent’ was central. Essentially, this affirmed the legitimacy of aspiring towards a united Ireland while recognising the current wishes of the majority in Northern Ireland to remain in the UK.
A key part of the Good Friday Agreement was the complete removal of all physical borders between the North of Ireland and the Republic leading to completely free movement between both States. This resulted in the significant development of inter-island trade; the dismantling of barriers to peace and stability and the development of closer cross-community relations.
Among other issues, this lack of a border has caused major problems in the ongoing negotiations between the UK and the EU, as it will be the only land frontier between both sides. In existence since 1921, it cuts through lakes, farms and villages as it winds its way into and out of both states throughout its 500km length and its 300 major and minor crossings. It is longer than the German-Poland Oder-Neisse line which I understand has far fewer crossing points.
Based on recent history, neither Ireland nor the EU wants to see the re-installation of border controls on the island. The fear is that it would reawaken political unrest and that supervision of border crossings would be very difficult. But, understandably, the EU will want reassurance that its single market and customs union will be protected from the uncontrolled flow of goods between both territories.
Various solutions have been proposed, including, initially, the installation of a border down the middle of the Irish Sea. Its effect would have been to separate Northern Ireland from the rest of the UK to the delight of the Nationalists and the anger of the Unionists. Based on the Unionist response, the then UK Prime Minister Theresa May, dependant on Unionist votes in Parliament, rejected it. The EU also proposed that Northern Ireland become part of a “common regulatory area” with Ireland, which would mean Northern Ireland being subject to different regulations than the rest of the UK — an idea also rejected by the UK government.
The Protocol on Ireland / Northern Ireland
One of the two main documents of the February 2020 Withdrawal agreement is the Northern Ireland Protocol. It recognises the achievements of the Good Friday Agreement in establishing normal relationships between North and South and aims to maintain them after the UK’s departure from the EU. It ensures that Northern Ireland will remain aligned to a limited set of EU rules mainly related to goods, and that the EU’s Customs Code will apply to all goods on entry to Northern Ireland, thus avoiding any customs checks and controls elsewhere on the island. Customs duty will apply to goods which enter and remain in Northern Ireland. Duty will not apply to goods in transit to the South, thus entering the EU’s Single Market. Clarity is still sought concerning services.
Additionally, and for some, confusingly, the EU and UK have agreed to give a role to the Northern Irish legislature, (known as the Northern Assembly), on the long term impact of EU law in Northern Ireland. This consent mechanism is concerned with VAT (sales tax); state aid and regulatory alignment on goods and customs. Four years after the end of the transition period, and for every subsequent four years, the Northern Assembly can by simple majority consent to the continued application of relevant EU law, or vote to discontinue it. If voted down, the Protocol would end two years later.
From a Southern Irish perspective, the welcome aspect of the Protocol is that a hard border on the island is avoided and that the all-island economy is protected. Crucially, for Northern Ireland, it remains in the UK customs territory and will benefit from future Free Trade Agreements that the UK may enter into.
The Internal Market Bill
Then in September, the British made a most unexpected move. Its government brought a bill to Parliament – the Internal Market Bill. This bill included clauses that would give the UK Government the right to unilaterally regard parts of the Northern Ireland protocol as inapplicable. These included the requirement for some customs checks on the Irish Sea between the North and Britain. Despite the heavy defeat of these clauses in the House of Lords, this bill is still being debated there.
The EU reaction is that this action by the UK Government breaches the good faith obligation of the Withdrawal Agreement. However, despite the initiation of formal infringement procedures by the EU, negotiations continue in the run up to the end of the transition period on 31st December.
Meanwhile we concern ourselves with the obvious day to day implications of Brexit, whether a deal is agreed or not. Much uncertainty remains. In the event of a no deal, Brexit customs duty and import VAT will be payable at the point of entry into Ireland. The UK tariffs on entry are still unclear. The price of our inputs and exports to and from the UK will increase, possibly considerably.
Our connectivity to Europe
As we are an island with approx 50% of our exports going to the EU, one of our main concerns has been the impact of Brexit on the UK Landbridge and on our Maritime Connectivity to Continental Europe. A recent government assessment advises that there will be adequate capacity on direct routes to Continental Europe to take all of the traffic currently going via the GB Landbridge.
Shipping companies support this conclusion. They have announced a number of additional direct services to Continental Europe. Starting in January 2021, Stena Line will double the capacity and the frequency of its sailings from Rosslare to Cherbourg. DFDS will offer a new service from Rosslare to Dunkerque, serviced by three ferries, each with a capacity for up to 125 heavy goods vehicles and six weekly departures from each port. CldN will add a second weekly call from Cork to Zeebrugge to cope with the increasing demand on this route.
Additionally, the shipping companies have consistently assured the Government’s Department of Transport they will respond to any increases in demand for direct maritime connectivity when border controls between the EU and the UK are introduced. All of these announcements and reassurances, though late in the day, are welcome. While travel through GB was previously faster than the 24 hour sailing time to France, all freight companies will try to avoid the GB Landbridge through Wales and England via Dover, as long delays at the ports are likely.
A new Connecting Europe Facility (CEF) Regulation is also due to come into force on I January. Under this regulation, Ireland will be located on two TEN-T core network corridors for the first time. The ports of Dublin, Cork and Foynes (Shannon) will be linked to core ports in Northern France, Belgium and the Netherlands on the North Sea – Mediterranean Corridor. They will also l be linked to the French ports of Le Havre and Nantes Saint-Nazaire on the Atlantic Corridor. These TEN-T realignments will further maintain Ireland’s continued connectivity with the rest of the EU after the UK no longer forms part of the network.
Irish Business now
We have examined the risks to our supply and sub-supply chains; we have worked hard to install the further related IT enhancements; we have familiarized ourselves with the intricacies of the new supporting documentation. We are considering if we will continue importing / exporting via the UK incurring tariffs and long delays at channel ports. We are waiting to see if it will be more economical to source goods and raw materials from Europe instead of the UK. While negotiations drag on and on, we wonder should we expect the introduction of a transition phase in early 2021.
As Brexit has been such an important topic in Ireland since the 2016 vote, it is no surprise that all of our large companies and the vast majority of our medium sized businesses confirm that they are ready for the new challenges ahead. As of now, we understand that agreement is outstanding on relatively few issues. This gives us hope that compromises will eventually be reached and that a final Brexit deal will emerge. Let’s hope that our expectations are realistic.
Michael Kealy, Company Solutions, Dublin – December 2020