Commissioner Hogan addresses PAI Conference on "Brexit: implications for public policy and public administration in Ireland"
EU Commissioner for Agriculture & Rural Development Phil Hogan addressed a Public Affairs Ireland Conference this morning in Dublin on "Brexit: implications for public policy and public administration in Ireland".
In his speech the Commissioner said: "While the impact of Brexit will be particularly hard-felt in Ireland, not least because this country is the only Member State which shares a land frontier with the UK, its impact will also be felt right throughout the European Union and beyond."
He added: "... anybody who stands up at this conference and claims to know with certainty what the consequences of Brexit are for Ireland, the UK, cross-border relations or the EU is mistaken and misleading. The truth is that nobody knows what the future holds, whether in terms of the conditions under which the UK will leave the EU or the post-Brexit environment in which the UK and the EU or Ireland and the UK will have to coexist, because there will have to be a relationship of some kind."
The full text of the Commissioner's speech is reproduced below.
Speech by Phil Hogan, EU Commissioner for Agriculture & Rural Development at the PAI Conference on "Brexit: implications for public policy and public administration in Ireland"
Dublin 21 October 2016
Ladies and gentlemen, it is a great pleasure to be here in Dublin this morning and to have the opportunity to participate in this conference, on a subject that is not alone generating enormous interest right around the world but has profound implications for public policy and for public administration in this country.
You have assembled a very impressive list of speakers, with varied backgrounds, and the conference has the potential to provide a number of fascinating perspectives on just how Brexit will impact on Ireland and on public administration in particular.
I would like to start by making two important observations. While the impact of Brexit will be particularly hard-felt in Ireland, not least because this country is the only Member State which shares a land frontier with the UK, its impact will also be felt right throughout the European Union and beyond.
Secondly, anybody who stands up at this conference and claims to know with certainty what the consequences of Brexit are for Ireland, the UK, cross-border relations or the EU is mistaken and misleading. The truth is that nobody knows what the future holds, whether in terms of the conditions under which the UK will leave the EU or the post-Brexit environment in which the UK and the EU or Ireland and the UK will have to coexist, because there will have to be a relationship of some kind.
Having said that, the EU's desire is to have the UK as a close partner and we look forward to the UK confirming its intention in this respect.
The history of Ireland and its relationship is one that has been told over and over again and rarely more so than this year, when we celebrate the 100th anniversary of the Easter Rising. The relationship between the two countries has matured and is now closer than most of us could have imagined possible just a couple of decades ago.
Of course there are many reasons for that closer relationship, but I believe firmly that the deepening of the relationship is, at least in part, due to our shared membership of the European Union (or the EEC as it was when we joined together on 1 January 1973).
So, for the first time since Irish independence, we will have a situation in which one country will be a member of the EU while the other will not.
While the relationship between the two independent countries has evolved slowly over nearly a century, there will a potentially profound change in the relationship over a much shorter period of time.
That, leads to the question of when all of this will happen. In the first instance, it is the exclusive prerogative of the UK government to notify the European Council of its decision "to withdraw from the Union in accordance with its own constitutional requirements."
A lot has been said about Article 50, so perhaps it is worth looking briefly at just what it says. In paragraph 2, it says that "the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union."
It goes on, in paragraph 3, to say that "the Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period."
So, what is the timetable? The British Prime Minister has now indicated her government's intention to trigger Article 50 by the end of March 2017. That, therefore, is the date from which the two year withdrawal negotiations will begin. The European Commission, and indeed the other institutions, welcomes this indication and the Commission is steadfastly standing by its position that "there can be no negotiation without notification".
What seems to be dawning on a lot of people is the complexity associated with withdrawing from the Union. Such a withdrawal involves a complete disentanglement from all of the European Union institutions – the Commission, the European Parliament, the Council, the European Court of Justice, the European Investment Bank and so on.
What, for example, will be the status and entitlements of UK citizens in the other 27 Member States of the EU and vice versa. They all currently enjoy a range of specific rights to live, to work and to access pensions, health care and public services that are only guaranteed because of EU law.
The question, and one to which I don't have the answer, is whether all of this can be done in two years and, if not, what happens then? Will the European Council agree by unanimity to extend the two-year negotiating period and, if not, what happens then?
If the period of negotiation is to be extended beyond the end of March 2019, it would seem reasonable that it would be extended for at least some months, bringing it beyond May 2019 and the next European Parliament elections.
As the UK remains a full member until such time as its withdrawal enters into force, one assumes that, in such a scenario, the UK would again elect its 73 MEPs. If, on the other hand, the UK's withdrawal takes effect in March or April 2019, either because a satisfactory agreement has been reached or the European Council fails to agree on an extension of the two-year negotiating period, what implications will that have for the composition of the European Parliament.
Under the TFEU, the number of MEPs is capped at 751. The current distribution of seats, which saw Ireland lose a seat, was determined well in advance of the 2014 election and, given that the distribution is population-related, one assumes that the distribution will be reviewed well in advance of the 2019 elections. The question though is, on what basis – with or without the UK's 73 MEPs. And, if the UK is not part of the next European Parliament, will there be a question of the redistribution of the 73 MEPs and what implication could that have for Ireland's level if representation ?
It is worthwhile recalling that, in their statement in the immediate aftermath of the referendum, the Presidents of the European Council, the European Parliament and the European Commission, together with the then Dutch Presidency, confirmed that "until the process of negotiation is over, the United Kingdom remains a member of the European Union, with all the rights and obligations that derive from this."
The period since the referendum has been one dominated by speculation and rumour, much of it unfortunately misinformed. That is one of the reasons why the European Commission welcomes the decision of the UK government to trigger Article 50.
It is also unfortunate that some of the suggestions made are contradictory and, frankly, it's difficult to know which to believe. I think that it's worth noting the comments of the UK Secretary of State for Exiting the European Union, David Davis, when he told the House of Commons on 10 October that, in relation to the UK's negotiations with the EU, "we won't be giving a running commentary".
Much of the more recent speculation has related to whether the UK will, having left the EU, wish to remain a member of the Single Market and/or the Customs Union. Clearly, whatever position the UK takes on this issue has very obvious implications for Ireland.
This is a good moment to recall the comments of the President of the European Council just last week, when he said that, in its negotiating position, the EU will "stick unconditionally to the Treaty rules and fundamental values. By this I mean, inter alia, the conditions for access to the four freedoms. There will be no compromises in this regard." President Tusk was very clear that the United Kingdom's choice is between Hard Brexit and No Brexit. These remarks of President Tusk reflect just what President Juncker himself said in Paris two weeks ago.
Trade with the UK
There are other panellists who I'm sure will also speak about the trading relationship between Ireland and the UK, but let me say a few things about that too, particularly in relation to the trade of agri-food produce.
In 2015, Ireland was the UK's biggest export market, accounting for 17 per cent of their exports. Ireland was the second biggest exporter to the UK (after the Netherlands) with 11 per cent of total UK agri-food imports. Ireland is the Member State that is most heavily dependent on the UK market for both exports and imports. 45 per cent of Irish exports are destined for the UK. 53 per cent of Irish beef, 57 per cent of cheese and 78 per cent of live animals are exported to the UK.
Together, these three sectors account for almost half of Irish agri-food exports to the UK, the full value of which is almost €5 billion annually. Half of agri-food imports into Ireland, worth €4.3 billion, come from the UK. Finally, 52 per cent of agri-food exports from Northern Ireland, worth almost €800 million (depending on when the currency rate was calculated), come to Ireland.
In a recent Brexit challenge paper, the UK's former Deputy Prime Minister, Nick Clegg, pointed out that the UK food and drink sector contributes £26.9 billion to the EU economy, which is more than the car and aerospace manufacturing sectors combined. His working assumption is that there will have to be a 'hard border' between the UK and Ireland. His conclusion is that "Brexit could have far-reaching negative effects on the British food and farming industries."
One could go on and on in this vein but, perhaps I'll leave the last word on this issue to the Minister for Agriculture, Michael Creed, when he said recently "when you mix milk form the queen's cows with Paddy's cows, what do you get ? Irish butter, sour cream or Irish milk. That's an issue because labelling is part of what we do." Perhaps he summarised it just right when he said, "there really is no upside to Brexit for Ireland."
Common Travel Area
Just a couple of minutes ago, I mentioned President Tusk's reference to the four freedoms, one of which is the free movement of people. The common travel area (CTA) dates back to the establishment of the Irish Free State in 1922. It allows nationals of the countries in the CTA to travel freely within the area without being subject to passport controls.
In its statement on preparations for Brexit, the Irish government identified the Common Travel Area as one of its four priorities. Secretary of State, David Davis, acknowledged the long-standing existence of the common travel area and said that "the Prime Minister is determined to deliver a practical solution that will work in everyone's interests."
This all sounds fine – the two countries involved in the common travel area want it to continue so what's the problem ? The problem goes back to an issue I mentioned at the outset which is that, since independence, Ireland and the UK have either both been in or out of the EU. We are now entering into a new scenario. So, how consistent is a common travel area with one country in the EU and one outside. The common travel area post-2019 would be a common travel area between a Member State of the EU and a so-called Third Country.
In his statement to the House of Commons on 10 October, Secretary of State Davis said, "we will return sovereignty to the sovereign institutions of this United Kingdom. That is what people voted for on June 23: for Britain to take control of its own destiny, and for all decisions about taxpayers' money, borders and laws to be taken here".
However, evidence provided to the Northern Ireland Affairs Committee at Westminster by the EU's Brexit Taskforce suggested that "as the CTA is an agreement between two EU members and protected by EU protocol (it is currently included in an annex to the Lisbon Treaty), it would no longer apply if the UK was outside the EU. Whilst the CTA predates British and Irish membership of the EU, it is not clear that its status in international law is sufficiently robust for it to bind EU members beyond their mutual obligations to each other in the event of a Brexit."
While it seems quite clear that there is a mutual desire on both sides of the border and between Dublin and London to maintain the common travel area, there are others who might also have a view. As the Northern Ireland Affairs Committee concluded, "in the event of Brexit, the border between Northern Ireland and the Republic would become an external border for the EU and so would principally be a matter of negotiation between the UK and the EU."
While much of the rhetoric has been about whether there will be a hard Brexit or a soft Brexit and what implications either may have for the type of border that will exist, it seems reasonable to suggest that it is only a 'No Brexit' that will mean no change to the border.
Implications for public policy and public administration in Ireland
The decision of the people of the UK has created an unprecedented situation. It will require a new relationship between the UK and the European Union and a new relationship between Ireland and the UK.
In terms of the latter, we have witnessed and are part of a closer relationship than has probably ever existed between the two countries. We are one another's largest trading partners, with trade worth more than a billion euro conducted between the two countries every week, sustaining more than 400,000 jobs directly. We move freely between the two countries, as evidenced by the fact that Dublin to London is one of the busiest international air routes in the world. And we have special voting rights in one another's countries.
Brexit represents potentially the most profound single change in the relationship between Ireland and the UK since independence. It could have huge implications for the trading relationship, as evidenced already in some way arising from the fall in the value of sterling. It could have significant changes for the manner in which people move freely between the two jurisdictions.
For public policy makers, the next few years are, to put it mildly, 'going to be interesting'. The devaluation of sterling is already putting pressure on Irish exports. Irish suppliers of goods are services are going to have to be more competitive to hold market share in the UK or more imaginative in finding new markets. This will also be a challenge for the relevant departments and agencies, particularly the Departments of Finance; Jobs, Enterprise & Innovation as well as the Department of Foreign Affairs and Trade. I'm sure that this is something about which you'll hear much more from Jim Power and Kevin Sherry.
I'm sure they may reflect on the realities of an increasingly globalised market, which is likely to continue to be liberalised in the context of new international trade agreements which the EU is endeavouring to conclude. This is particularly the case in my area of responsibility, as I visit new and existing markets to identify and develop new markets for the EU produce, including high-quality, high-value agri-food products from Ireland.
While much of the debate about the post-Brexit landscape has inevitably focused on the movement of people and trade in goods, there are many other issues which are exercising the minds of business people and, I'm sure, policy-makers.
In financial services, the UK has a strong current-account surplus with the EU and employs 1 million people. What will be the relationship between the UK's financial services' sector and the EU post-Brexit, particularly if the UK no longer has access to the Single Market in financial services.
Likewise, the question of whether the UK opts to maintain single market-related energy legislation has potential consequences for energy supply in this country and I'm sure issues of security of supply etc. will form a key element of negotiations.
The importance of energy cooperation is illustrated by the fact that the UK grid is connected to other EU networks through a system of interconnection. The European Commission has placed a particular priority on the development of a resilient Energy Union and we have made very good progress. For example, during the last year we continued to build a single market where energy can flow freely, and where no Member State is left isolated.
In this regard, infrastructure is critical. We have adopted 195 European projects of common interest that benefit from accelerated planning and simplified regulation, and are eligible for financial support. Northern Ireland is part of the single Irish electricity market. Meanwhile seven undersea interconnectors are currently planned from the UK, of which six are to EU Member States.
Security issues, migration and the maintenance of the peace process in Northern Ireland will pose significant challenges for An Garda Síochána and the other relevant agencies and government departments.
Tourism, which has been something of a shining light in the economic recovery has benefited from very strong numbers of visitors from the UK, encouraged by a strong pound. The weakening sterling will also put pressure on this sector and challenging those involved in the sector to up their game in terms of the value offered for the product.
Any macroeconomic shock will have to be carefully managed as the government continues to rebuild the economy and operate within the necessary fiscal rules.
In view of the many challenges facing Irish policy-makers and legislators, I welcome the government's confirmation that it has put in place a range of arrangements to ensure a whole-of government response to Brexit, including a new Cabinet Committee to oversee the overall government response. Importantly, the government a commitment to continued dialogue with other EU leaders and governments and the EU institutions. This is important because Ireland's interesta and loyalty are with the European Union.
It is not a coincidence, therefore, that the EU Commission's chief negotiator, Michel Barnier, should have come to Dublin on one of his first visits to EU capitals. I'm sure that Eamonn Molloy will have much more to say about this.
Much has been said and written about Brexit both before and since the referendum. I would regard where we are today as not so much a 'phoney war' but 'no man's land'.
In the immediate aftermath of the referendum, the Presidents of the European institutions urged the British government to "give effect to this decision as soon as possible." It is entirely understandable that the British government would take some time to do just that but it is welcome that we now know it will happen by the end of March next.
The European Union is committed to the continuation of a Union of 27 Member States which together will "address our common challenges to generate growth, increase prosperity and ensure a safe and secure environment for our citizens." I'm sure that such an objective could just as easily be attributed to the UK outside the EU, which is something about which I'm sure Neil Holland will have more to say.
The next few years will be challenging for all of us. No matter who we represent – the Irish government, the British government or the European Union – we all want to have a series of post-Brexit constructive relationships.
That said, we will all have to defend our respective interests in the negotiations and President Tusk was very clear when he said that "our task will be to protect the interests of the EU as a whole and the interests of the 27 member states."
There is any number of scenarios for the post-Brexit environment and it is incumbent on you as public policy makers to prepare for those scenarios.
Finally, I think it's worth repeating something I said before the referendum, particularly when I visited the UK, and that it that the UK's departure is a loss for both the UK and the EU. In my view, both will be worse off for this decision. The UK is the second-largest economy in the EU, accounting for 16 per cent of the EU economy. As a result of the UK's departure, the EU will lose its position as the world's largest economy.
The UK will no longer be part of a 500 million bloc which has, because of its size and economic strength, considerable negotiating strength when it comes to trade negotiations etc.
For those of you who deal with EU issues and work with your British counterparts, you are, in my experience, losing an ally in the EU.
This conference is a useful insight to what might happen and I appreciate that my contribution this morning has posed more questions than it has provided answers. That, unfortunately, is the reality and will probably be the reality until the Prime Minister blows the whistle next spring.