Ambassador, Ladies and Gentlemen.
Thank you for the invitation to speak to you today.
In recent years BITA has established a name for itself as an active promoted of strong relations between Ireland and Britain. It has helped reinforce deep and broad connections in what is, for both countries, our most important trading relationship.
Today your work is more important than ever because this relationship is confronted with a threat of genuinely historic proportions.
In politics there is a tendency to see too many events as significant. There is a breathless pace of debate and media coverage which generally reads far too much into the controversy of the day. In truth it has become increasingly hard for even the well-informed to distinguish between issues which really matter and those which have only a passing significance.
There is no doubt where the issue of Brexit fits.
It is a defining challenge for this generation. Not just nationally but also internationally the stakes couldn’t be higher.
For these islands, Brexit carries profound and lasting social, economic, politic and even cultural implications.
The 52% vote for Brexit last June represents a dramatic step away from a framework for close cooperation between states. It is a rejection of the idea of strong, rule-based multinational organisations and a return to an early twentieth century conception of national sovereignty.
It is my intention to be constructive and to devote the bulk of my remarks to a non-political look at relations between Britain and Ireland post-Brexit. However there is simply no way of ignoring the context of what has happened particularly over the last twelve months.
Due to various candid publications we know a lot more about what happened during the referendum campaign. It was no high-minded reflection on economic and political models.
The sheer scale of the demonization of Europe has left a scar which cannot be wished away. Those who took a somewhat more restrained approach cannot escape the reality of the rank xenophobia and casual mendacity of key parts of the Leave campaign.
It is, for example, interesting that Prime Minister May this week informed the House of Commons that EU citizens make a positive contribution to the UK’s economy and society. Which makes you wonder why there has been a decade of rising hysteria about the fact that they were let in, in the first place?
Next month negotiations will begin on the terms of Brexit. A core challenge which the government here has so far failed to grasp is the need to restore even elemental trust in the idea that Britain wishes Europe well. It is difficult to see how the negotiations can go well in the absence of some effort to move away from the shrill anti-European rhetoric which has done so much damage to British political discourse for three decades.
Being “pro-having the cake and pro-eating it” and describing any resistance as the equivalent of a “punishment-beating” from a “concentration camp guard” might well be tabloid fodder but it is corrosive of the basic mutual trust on which all successful negotiations are based.
Perhaps a good start to a more constructive approach would be an acknowledgement that the other members of the European Union are capable of deciding for themselves where their long-term interests lie.
And it is also important for us all to realise that the predictions of damage to the UK’s economy have not been proven wrong as some are loudly claiming.
What has happened is that the Treasury and Bank of England significantly altered policy in order to limit short-term economic damage – but Brexit is not about what happens over six months or twelve months, it is about what happens over the next generation.
The Chancellor’s budget shows £122 billion in extra borrowing. A comprehensive survey of large companies published this week shows 58% saying that Brexit is “already having a negative impact.” More importantly it shows 84% saying that it is “Vital” to their business “that government handles Brexit negotiations well.”
Investment decisions are being stalled and there is a general air of uncertainty which has not been dispelled by the White Paper. The fact remains that there is no evidence of a positive economic impact from Brexit and overwhelming evidence that significant action is required to mitigate its likely negative long-term impacts.
For Ireland the stakes could not be higher. Our closest and most significant trading partner is leaving a Union which has, for us, been central to achieving previously unimaginable progress. All possible scenarios show Brexit having a negative impact on growth, employment and public finances.
What we face today is a turning point as significant as that of sixty years ago when we moved to open up to the world embrace a European future and build new relations within these islands.
The first and most fundamental choice we have to make is where we stand in relation to the future of the Europe.
We are a diverse country with many conflicting political opinions – but there is an overwhelming consensus amongst the Irish people that we will remain a committed member of the European Union.
A small and peripheral nation has nothing to gain from the model of international relations founded simply on looser cooperation, limited legal enforcement and greater regulatory competition. A seat at the table and access to fair competition enables our sovereignty.
People investing in Ireland and using it as a European base can be assured that we will continue to have full and free access to what will remain one of the largest world markets – and that we will be a pro-enterprise voice when it comes to regulation.
The challenge of Brexit for Ireland may actually be more complex than it is for the UK.
This is because for us it involves four distinct, and often conflicting, dimensions.
These involve North/South connections within Ireland, East/West relations with Britain, our wider relations with the European Union and, critically, our own core economic strategies.
I would like to focus on the East/West dimension and how we can try to secure strong long-term connections between Ireland and Britain. Obviously the arrangements with Northern Ireland will define a large amount of our long-term relations.
This will be reinforced by the fact that UK resident in Northern Ireland will continue to have an automatic right to Irish citizenship and, therefore, to EU citizenship. This will be the largest concentration anywhere of EU citizens outside the EU’s border. It is a special case whether or not this is reflected in special status.
The relationship between Ireland and Britain will change but I believe there are a series of actions which we can take to mitigate the damage and to put in place a secure basis for future relations.
There are many sectors where there is no alternative but to more aggressively diversify our markets, however this does not mean that trade with Britain will be anything other than hugely important for us.
We can have a dynamic trading relationship which benefits us both – but to do this we have to move dramatically beyond the way we do business today. We have to rethink fundamental elements of our core policies.
I believe that there are four central challenges which we must overcome.
Secure All Elements of the Common Travel Area
The first one is that we have to secure all elements of what is now referred to as the Common Travel Area. The CTA is central to the closeness of our people and our ability to interact seamlessly. It is, however, something rarely defined in great detail.
A lot of commentary has focused on the idea of visa free travel and the right to work in each other’s jurisdictions. Certainly these are fundamental elements of the CTA, but it goes much further.
To all intents and purposes what we have is an almost complete interconnection of rights in the areas of social protection, health services, access to education and the ability to interact with state services without applying nationality criteria. Over the last five decades many of these rights have been underpinned by EU law. As these protections disappear we have to replace them or we risk long-term misunderstandings.
This is an area where there does appear to be significant progress. The White Paper and statements in the House of Commons provide important reassurance.
There are of course potential traps, especially concerning immigration controls on external borders, but there are no problems which generosity and goodwill cannot overcome either in our two countries or within the EU as a whole.
Reduction Regulatory Impacts
The next major challenge is to reduce the potential barriers to trade which will come from the post-Brexit regulatory regime.
Recent research has suggested that compliance costs can be a bigger barrier to trade than customs duties. Clearly this is not the case for all businesses, but it is something which we can work to address.
At present, all independent assessments suggest that the model of Brexit being proposed by London threatens to maximise trade regulations. It is clearly not possible to invent a completely frictionless customs border so we have to design means of mitigating their impact.
Because of the Single Market and Customs Union this is an area where we have to develop activity nearly from scratch. I believe our core strategy should be to both limit and subsidise compliance costs.
The amount of information to be collected has to be limited and automation maximised. A permanent consultation process for each major trading sector should be in place with a legal right of consultation before new regulations and new administrative arrangements are put in place.
As for the cost of compliance with new trade regulations, there should be, for at least a lengthy transitional period a direct subsidy of the costs of adaptation. For many firms this will be the first time that they will have to track their trade for customs authorities or this will mark a dramatic increase in such activity. They will need to pay for training, technology and often new personnel. Having to meet this through existing resources, while at the same time facing new customs duties will directly damage their competitiveness.
Given the stated attitude to work permits for EU nationals, the many Irish firms which move Irish and EU staff back and forth to the UK will face potential barriers and at very least regulatory compliance costs.
Again, the only effective way of addressing this is through a new partnership and support approach by government.
It is in practical, substantive actions such as this that we can actually help companies cope with Brexit.
Sectoral Support Strategies
The third major area for action is to recognise the impact of Brexit will vary from sector to sector and therefore the response has to vary.
We need a series of meaningful sectoral support strategies to help navigate the next five to ten years.
The recent sectoral dialogues have shown that you get distinctive feedback if you engage with different sectors in a way which allows them to move from generalities to specifics. They have shown us the problems and this approach can also help direct the solutions.
Due to the UK being outside of the Single Market existing state aid rules will obviously not apply. There will be other constraints, but we should have the ability to implement direct sectoral support as this might help mitigate the full impact of extra costs or other barriers.
New Arrangements for UK/Ireland Cooperation
The final major area for meeting the challenge of Brexit is to understand that we need to significantly increase the direct and permanent connections between our governments. If we want to have a constructive relationship where we actively manage issues then we must understand that informal, crisis-focused contacts simply won’t be good enough.
At present we have a deep and ongoing contact because we both attend every European meeting. At political, diplomatic and administrative levels we know each other well and we work together because so much of our work is within the formal context of the EU. We will now have to replace this contact.
We have seen in recent years in relation to Northern Ireland, that when we step back from intensive engagement at the highest levels even the most serious issues can be let drift.
Following Brexit there will be many unanticipated problems and possibly even opportunities in relation to East/West issues. To tackle them we need structures which demand active rather than passive engagement.
Under the Good Friday Agreement the British-Irish Council, has competence to discuss EU issues .While they do very good work I don’t believe that issues as urgent and complex of what faces Ireland and the UK due to Brexit can be left solely to the Council.
Our objective should be a clear one of having in place arrangements which oblige regular and structured discussions between our governments. This could be an evolution of the British-Irish Council or it could be something new along the lines of the Nordic Council of Ministers. That body has an independent secretariat and its members differ in terms of membership of the European Union and NATO.
If we are to have real cooperation then it can’t be an afterthought and it can’t be optional.
We also require a significant increase in the expertise we allocate to bilateral relations. At a minimum every significant area should have dedicated personnel allocated to London – obviously not as many as we have in the Brussels Permanent Representation but certainly a step-change on current staffing.
As I’ve said, the last year has been a deeply dispiriting one. There is no way of papering over the scale of the threat posed by Brexit. But Brexit is happening and it is happening in a hard and potentially chaotic manner.
The challenge is to do everything possible to mitigate its immediate impacts and to put in place foundations for a new long-term relationship.
Britain and Ireland will continue to be major trading partners. To maximise the benefits of this trade we have to start with a generous and comprehensive approach to the Common Travel Area.
We need to do everything possible to reduce and where necessary subsidise the impact of new trading regulations. Understanding that different sectors have different needs, a series of specific sectoral support strategies are required at very least to navigate a lengthy period of transition.
Finally, and perhaps most importantly, we have to replace the intimate connection enabled by our joint participation in the European Union. This requires a new commitment to staffing and structures in our respective Embassies which require a systematic engagement on common issues.
Whatever about how it came about Brexit is now a fact of life. There is no evidence we can avoid any negative impacts but we now have to do everything possible to limit them.
We’ve heard a lot of warm words and generalities – it’s time to get specific with concrete actions to shape what happens in the years ahead.