Written evidence – Fianna Fáil (BUI0005)

Introduction

Fianna Fáil, the largest opposition party in the Republic of Ireland, welcomes the opportunity to make a submission to the House of Lords European Union Committee which is examining the impact of Brexit on the relationship between the United Kingdom and the Republic of Ireland.

While Fianna Fáil fully respects the result of the Referendum we are nevertheless deeply concerned about the direct negative impact that Britain’s withdrawal from the European Union will have on the entire island of Ireland economically; politically and socially and on British-Irish relations.

The United Kingdom is our nearest neighbour and ally; our largest trading partner; and crucially co-guarantor of the Good Friday Agreement. As a consequence Brexit poses amongst other things a direct threat to our trading relationship, the Common Travel Area, North-South relations and the peace process. In addition, restrictions on the free movement of capital, labour and goods could also irrevocably change the nature of our relationship and is a cause of grave concern.  Ireland therefore stands to be affected by the UK’s decision to leave the European Union more so than any other EU member state.

While ultimately the long-term outcome for Ireland will depend on the relationship that the UK establishes with the EU, and the terms and conditions of such a relationship, we are of the firm opinion that the final arrangement must give special acknowledgement to Ireland’s distinct position and the unique and special relationship between our two countries.

Our goals are:

                   to have Ireland’s unique and distinct position recognised in the final arrangement;

                   to safeguard the peace-process and prevent the return of a ‘hard’ border that would once again divide the Island of Ireland and serious negative political, economic and social implications for the entire Island of Ireland and British-Irish relations;

                   to preserve the Common Travel Area;

                   to maintain strong trade links with the UK; and

                   to maintain and build on the close relationship and cooperation between our two countries.

This submission, which draws on relevant research, underscores the need for careful consideration of the Irish position in the negotiations going forward. An agreement that reflects our shared history and close ties will help sustain and safeguard our strong links and the hard-won peace, stability and prosperity enjoyed on our two Islands.

The Common Travel Area & Northern Ireland

Implications of a ‘Hard’ Border & the end of the Common Travel Area

Ireland and Britain have enjoyed a special relationship for many years and the Common Travel Area (CTA) agreement predates our membership of the European Union and has been in existence since the 1920s. As a result of the CTA the Irish and British Governments have reciprocal visa arrangements including passport free travel; measures to increase the security of the external Common Travel Area border; and the sharing of immigration data between our two countries’ immigration authorities.  Undoubtedly, the CTA has served both countries well and has enhanced British-Irish relations. It has resulted in increased trade and mobility between our two nations and on the island of Ireland.  The cumulative impact of the CTA, our shared membership of the EU and the peace process has rendered customs posts and checkpoints unnecessary. The dismantling of security posts and reopening of secondary border-crossings since the signing of the ‘Good Friday Agreement’ has by and large made the presence of the border invisible.

However, Brexit now poses a real and substantive threat to the very existence of the Common Travel Area and as a result of the referendum Northern Ireland will now share a land border with an EU member country which raises the possibility that a border may have to be imposed which will once again divide the island of Ireland. A recently published report by the House of Commons Northern Ireland Affairs Committee noted that there are nearly 300 formal crossing points between the Republic of Ireland and Northern Ireland, as well as many informal borders, and so this indicates the scale and the complexity of the issue before us[1].

While there have been positive statements from the British Government that there will not be a return of a ‘hard’ border, the UK’s desire to limit immigration may create difficulties in that regard.  If the UK wishes to prevent EU immigrants entering the UK through the Republic, there is a very real possibility that they will have to introduce passport controls on border routes. Once EU nationals no longer have the same ‘free movement’ rights in both countries, the land border between the Republic of Ireland and Northern Ireland could become a weak point in the UK’s ability to control EU immigration. Given the centrality of immigration in the debates prior to the Referendum this is a significant cause of concern.

Furthermore, if Britain leaves the European Union Customs Union when they leave the EU this ‘will require the introduction of new customs controls (a “hard border”) between Northern Ireland and the Republic, in order to prevent goods from crossing the border in contravention of customs checks’.[2]

A ‘hard’ border would be a serious blow to the entire Island of Ireland, but particularly for the 55.8% of people in Northern Ireland who voted to remain in the EU. Many communities in Northern Ireland would once again feel cut off from the Republic by the inconvenience of passport and custom controls and it will bring an end to the CTA which has been in existence since 1923. This would be a retrograde step that would have serious economic, political and social implications for communities North and South of the border, and for the Island of Ireland as a whole.

According to IntertradeIreland for example, one of the six North/South implementation bodies set up under the ‘Good Friday Agreement’, cross-border trade in goods and services on the island of Ireland has grown substantially over the past twenty years and now stands at circa £5bn Sterling or €6bn Euros equivalent. If custom controls are introduced it will inevitably lead to an increase in administrative costs, with direct financial impacts, cash-flow implications and operational impacts on businesses. This undoubtedly will have serious economic implications and has the potential to impact on employment and exports north and south of the border and make it more difficult for businesses to operate.

Furthermore, the possibility of passport controls will create significant difficulties for cross-border workers and students and could also damage the tourism. According to Tourism Ireland for example Great Britain is one of our top four markets for overseas tourism, delivering some 4.5 million visitors in 2015, a +10% increase on 2014. It is also a very important market for Northern Ireland, which recorded a +10% growth in GB visitors last year. Visitor numbers from Britain have continued to grow strongly to date in 2016, with the Central Statistics Office (CSO) reporting almost +16% increase between January and May[3]. However, the introduction of passport controls coupled with the devaluation of sterling and economic uncertainty is likely to negatively affect our tourism market. It is imperative therefore that every effort is made to maintain the Common Travel Area and the border as open and free flowing as possible. This is imperative not only from an economic perspective but is also essential in maintaining the strong ties and close friendship between our two nations.

The question of the Common Travel Area and the border must therefore be central to the negotiations. Ireland and Northern Ireland’s unique position in relation to this must be recognised and every effort must be made to ensure that in as much as feasibly possible Brexit does not damage or impede British-Irish relations and our mutually beneficial friendship.

Implications for the Peace Process and PEACE funding

Aside from the possibility of border controls and the threat to the Common Travel Area, the issue of how Brexit may impact on the peace process in Northern Ireland needs to be addressed.  Our shared membership of the European Union has enabled our countries to forge common bonds at EU level and to foster good working relationships. Undoubtedly, these positive relationships and the bonds developed at EU level were and continue to be intrinsic to the workings of the Good Friday Agreement and the peace process. Thus, the decision by the UK to leave the EU is an immense blow and has the potential to destabilise the peace process. Peace is fragile in Northern Ireland and the result has already thrown up questions regarding a border poll and the reunification of Ireland, with Sinn Féin opportunistically calling for a border poll the immediate aftermath of the referendum. We therefore must be cognisant of how Brexit could not only diminish our capacity to work together, but also destabilise the peace process in Northern Ireland and reignite tensions in the region. It is therefore imperative that our two nations work collectively during the negotiations to secure the best outcome for Northern Ireland and its people.

Another fundamental issue that must be addressed is the potential loss of essential EU funding to Northern Ireland and the border regions as a consequence of the UK’s decision to leave the EU. The EU has played not only a political role but also a financial role in securing peace in Northern Ireland, and the region has benefited hugely from funding from the EU. The EU for example established a cross-border PEACE Programme for Peace and Reconciliation in Northern Ireland and the Border Region of Ireland. This Programme was the direct result of the EU’s desire to make a positive response to opportunities presented in the Northern Ireland peace process during 1994. It is a unique structural fund aimed at reinforcing progress towards a peaceful and stable society and promoting reconciliation.

As demonstrated in Table 1 below by 2020 the EU will have contributed €1,563 million in PEACE funding alone. The PEACE funding has been vital in supporting the peace process and has had a very positive impact on communities in Northern Ireland. While much progress has been made since the signing of the Good Friday Agreement there are still significant issues that remain to be addressed, including sectarianism, high levels of unemployment, and poverty and social exclusion. The potential loss of this vital support and funding is a significant blow to all communities in Northern Ireland and the border regions.

Table 1 PEACE Funding 1995-2020[4]

It is unclear yet what shape Brexit will take, but it is evident that it poses risks to British-Irish relations and in particular our working relationship with regard to Northern Ireland. Whilst there is a strong consensus amongst political, business and civic groups in the UK and Ireland that there should be no ‘hard’ border and that progress must continue in relation to the normalising of relations in Northern Ireland we must acknowledge the complexity of our position in the negotiations ahead. It cannot be assumed that our need to maintain the Common Travel Area and an open border for political, economic and social reasons can and will supersede European law and procedures.

We believe that Ireland’s distinct position and the need to adopt a sensitive approach to Northern Ireland must be a top priority in the negotiations ahead. Failure to secure a deal that reflects our shared history and common interests, particularly in relation to Northern Ireland will undoubtedly weaken our ties and close relationship. However, whatever shape Brexit may eventually take we need to ensure that our Governments, the Northern Ireland Executive, all political parties and civic society work collectively to ensure that Brexit is not used as an opportunity to re-open old divisions, inflame tensions or fuel hostility and discord once again.

Wider Economic Implications

Ireland’s trading relationship with the UK is of vital importance. The UK is our largest trading partner and we trade approximately €1.2billion in goods and services per week. Our common membership of the European Union has underpinned our strong trading relationship and our shared membership of the EU single market has been crucial in bringing our economies together.

The result of the referendum is challenging on several fronts and we now have a very serious job to do over the coming months and indeed years to ensure that our strong trading relationship is protected and that solid economic ties are maintained between our two countries.

While the reaction of the financial markets to the referendum result was initially swift and severe, a fuller assessment of the impact on our economy will take some time to emerge. However several reports which were published in the run-up to the referendum highlighted the possible implications for Ireland across several areas including trade, agri-food and energy.

The Summer Economic Statement for example issued by the Department of Finance in Ireland prior to the Referendum result highlighted that recently published work by both the UK Treasury and the UK’s National Institute of Economic and Social Research (NIESR) using model based analysis suggested that a vote to leave the EU could reduce UK GDP by between 2.3 and 6.0 per cent, relative to baseline, under a range of scenarios.

In relation to the impact for Ireland, the Summer Economic Statement went on to state that estimates made using the Irish Economic Social Research Institute (ESRI) HERMES model suggest that a 1 per cent reduction in UK GDP would reduce Irish GDP by approximately 0.2 per cent, relative to baseline, over two years. This implies a possible fall in Irish GDP relative to baseline in the range of 0.5 to 1.2 per cent based on Treasury and NIESR estimates[5].

In addition, several other analyses of the potential impact of Brexit have demonstrated that Ireland in particular stands to be affected by the UK’s departure from the EU across a number of sectors and areas.  A report for example from the Economic and Social Research Institute (ESRI) published in November 2015 on the possible implications of Brexit highlighted the economic implications of a British exit from the EU for Ireland across several areas[6]. The findings made for sobering reading and are all the more stark now given that Brexit has actually come to pass.

In relation to trade for example the ESRI report estimated that Brexit could reduce bilateral trade flows between Ireland and the UK by 20 per cent of more and that whilst the 20 per cent estimate is an average figure the impact would differ significantly across sectors. The report also went on to state that the UK is more important as a source of imports to Ireland than it is a destination for Irish exports, and any barriers to trade would increase prices of UK imports to Ireland.

While the Irish economy has become less reliant on the UK for trade over recent decades, the UK remains a particularly important market for indigenous firms. Some sectors, including the agri-food sector for example, continue to have a relatively high dependency on exports to the UK. The Irish Famers Association (IFA) for example noted that in 1973 70 per cent of our food exports were to the UK, whilst in 2015 this figure was much lower but still significant at 41 per cent. In addition a report from Teagasc published in 2016 examined 4 scenarios in the event of Brexit and the largest impact showed a reduction in total Irish agri-food exports of 8 percent or €800m, while the smallest impact of Brexit showed an annual loss of agri-food export value of circa €150m or 1.4 percent of agri-food export value.[7]

The terms of a UK exit will also have several other implications for the agriculture and agri-food sectors, including plant and animal health regulatory regimes. All of these are currently harmonised at an EU level and Veterinary Ireland, the association of Veterinarians in Ireland, have warned that: ‘Ireland shares a land border with the UK…. If Britain withdraws from these EU standards or applies different standards it could have potential ramifications for cross-border processing, animal identity, animal disease controls or food safety’.[8]

Our agri-food sector is just one of the many sectors that stand to be adversely affected by Brexit and it is hugely important that as free as possible market access to the UK is maintained and vice versa. We believe that the minimization of trade barriers is in both our interests and that there is continued harmonization of plant, animal health and food safety regimes.

Conclusion

We are in unchartered territory as no member state has ever decided to withdraw from the EU. There is no clear timeline for when Article 50 will be invoked and although Prime Minister Theresa May has insisted that ‘Brexit means Brexit’ we do not have any indication yet as to what this will actually look like or mean in practical terms.

We are however clear that Brexit poses substantial challenges to British-Irish relations and Ireland stands to be affected by the UK’s decision to leave the EU more so than any other member state. Our two nations are intrinsically intertwined; we are bound together by our past, our strong economic, social and cultural ties and our shared future in relation to Northern Ireland.

We are in no doubt that Britain’s departure from the EU will be a defining moment not only in UK-EU relations, but also British-Irish relations. Ireland remains deeply committed to the EU and so we must navigate a new way forward and develop a new relationship that recognises our membership and commitment to the EU whilst also preserving and building on our close ties with the United Kingdom.

The negotiations ahead will undoubtedly be complex, at this juncture there are no certainties and unravelling 43 years of EU membership will be no easy task. However, we must endeavour to work together to secure the best deal for both our nations. In the midst of trying to negotiate a new way forward we must first and foremost ensure that no harm is done to Northern Ireland and its people; so much effort and so many people have worked tirelessly to get Northern Ireland where it is today we cannot let it slip back to the dark days of the past.

The UK will have to decide for themselves what sort of relationship they want with the EU but it is our hope that in the post Brexit era the strong links and common bonds between our two nations will be preserved and that we will continue to work closely together for the betterment of our nations and our people.

27 September 2016