Opinions & Ideas

Category: United Kingdom Page 1 of 2

The problem is Brexit itself, not the backstop.

Brexit, of its nature, means hard barriers between the UK and the EU.

This is because it means the UK having different standards, and, sooner or later, different trade arrangements and tariffs than the EU.  

Whether these barriers are at the geographic boundary, or a few miles away, makes little difference.

These new barriers will bring delays, extra bureaucracy, and eventually bankruptcies, in their wake.

This is what Brexit means, and was always going to mean. Taking back control, by its nature, means more controls

The UK Government says it wants to impose these controls for two reasons.

The first is to be able to control immigration to the UK from the EU.

The truth is that the bulk of the immigration to the UK is not from the EU, but from outside it. EU immigration to the UK will fall off anyway because the population of the EU countries, from whom immigrants have come to the UK, is set to decline.

The second is to be able to make its own trade deals with non EU countries.

This argument is unconvincing. On leaving the EU the UK will lose the trade agreements it ALREADY HAS with the EU, and through the EU, with other countries.

In fact, leaving the EU will mean the UK losing trade agreements with countries that account for 70% of all UK trade. It will need a lot of new agreement to make up for this sudden and dramatic loss!

The backstop would reduce the effect of this, but not remove it altogether, especially if the UK opts for a different VAT regime to the EU.

No Deal

If there is no deal, and no backstop, the European Commission said in a paper published in November, that ;

“Member States, including national authorities, will play a key role in implementing and enforcing EU law vis-à-vis the United Kingdom as a third country. This includes performing the necessary border checks and controls and processing the necessary authorisations and licences.”

The paper does not exempt any of the EU Member State from this requirement.

Indeed if the EU Customs Union and Single Market were to deliberately fail to control any of its borders, it would soon cease to exist, as a Customs Union and a Single Market.

This would not be in Ireland’s interest, to put it mildly.

WHAT HAPPENS IF THERE IS NO BREXIT  DEAL?

The European Commission has produced a paper setting out the preparations that will have to make for a “No Deal “ Brexit, and what would have to done to deal with it.

I have extracted some of the interesting quotations from it.

It is quite explicit in some respects, but those who say there will be no hard border in Ireland in any circumstances will need to seek further clarification from the Commission.

BORDER CHECKS

The Commission paper says

“Member States, including national authorities, will play a key role in implementing and enforcing EU law vis-à-vis the United Kingdom as a third country. This includes performing the necessary border checks and controls and processing the necessary authorisations and licences.”

It adds

“The Commission is working with Member States to coordinate the measures they adopt to ensure that contingency preparations are consistent within the European Union”

and says that

“Member States should refrain from bilateral discussions and agreements with the United Kingdom, which would undermine EU unity”.

THE IRISH CASE

The Commission paper recognises that Ireland has a particular problem with Brexit.

It says its stands ready to  explore pragmatic and efficient support solutions, in line with EU State aid law and that it

“ will support Ireland in finding solutions addressing the specific challenges of Irish businesses.”

But it does not say that Ireland would be exempt from applying the EU Customs controls on the border between Ireland and Northern Ireland.

This omission does not seem to tally with statements being made by some in Ireland.

It is unclear what sort of help the Commission will be able to give Irish businesses.

78 DETAILED PAPERS AVAILABLE

In order to assist stakeholders in their preparation for the withdrawal of the United Kingdom, the Commission has published 78 detailed sectoral information notices guiding individual industries on the steps to be taken.

It would be useful to scrutinize these papers as to their application to business between Ireland and Northern Ireland.

Contingency measures in the immediate aftermath of a No Deal Brexit will in general have to  be

“temporary in nature, and should in principle not go beyond the end of 2019”

AIR TRANSPORT DISRUPTIONS

In the area of air transport, the withdrawal of the United Kingdom, without any arrangement in place at the withdrawal date, and without operators concluding the necessary and possible alternative arrangements, will lead to abrupt interruptions of air traffic between the United Kingdom and the European Union, due to the absence of traffic rights and/or the invalidity of the operating licence or of aviation safety certificates.

Regarding traffic rights, the Commission says it will propose measures to ensure that air carriers from the United Kingdom are allowed to fly over the territory of the European Union, make technical stops (e.g. refuelling without embarkation/disembarkation of passengers), as well as land in the European Union and fly back to the United Kingdom. This will create a really difficult situation for UK airlines

ROAD TRANSPORT DIFFICULTIES

Regarding road transport, in case of no deal scenario, as of the withdrawal date, UK hauliers will have market access rights limited to the permits offered under the European Conference of Ministers of Transport (ECMT) which would allow for considerably less traffic than what currently takes place between the Union and the United Kingdom.  This will have serious implications for Irish businesses using UK hauliers to get goods to the continent.

In the case of a no deal scenario, as of the withdrawal date, goods entering the European Union from the United Kingdom will be treated as imports and goods leaving the European Union to the United Kingdom will be treated as exports.

COLLECTION OF DUTIES AND TAXES

The Commission says that all relevant EU legislation on imported goods and exported goods will apply, including the levy of certain duties and taxes (such as customs duties, value added tax and excise on importation), in accordance with the commitments of the European Union under the rules of the World Trade Organisation.

The need for customs declarations to be presented to customs authorities, and the possibility to control shipments will also apply.

The Commission paper does not say that the border in Ireland would be exempt from this. This will need to be clarified.

The Commission calls on Member States to take all necessary steps to be in a position to apply the Union Customs Code and the relevant rules regarding indirect taxation on 30 March 2019, in case of a no deal scenario, to all imports from and exports to the United Kingdom. Again there is no explicit, or implicit, exemption for the EU border in Ireland.

Customs authorities may issue authorisations for the use of facilitation measures provided for in the Union Customs Code, when economic operators request them, and subject to relevant requirements being met.

Ensuring a level-playing field and smooth trade flows will be particularly challenging in the areas with the densest goods traffic with the United Kingdom. The Commission is working with Member States to help find solutions in full respect of the current legal framework.

The paper also deals with financial services and with residency rights for UK citizens living in EU countries.

ANIMAL AND PLANT HEALTH CHECKS WILL BE NECESSARY

The Commission says that, in the event of a “No Deal” goods will have to undergo sanitary and phytosanitary controls by Member States authorities

“at Border Inspection Posts, which is a matter of Member State responsibility”.

Ambiguity about how all this might apply on the Irish border does not help businesses with their contingency planning.

 

UK LABOUR STANCE ON BREXIT WILL BE CRUCIAL

The worst possible outcome of Brexit for Ireland would be the UK crashing out of the EU, without a deal, next March because the UK Parliament cannot make a decision. The key to avoiding this disaster is in the position of the British Labour Party.

So far, the focus of discussion in regard to Brexit has been on whether the minority Conservative Government can reach sufficient consensus internally, to make a deal to withdraw the UK from the EU.

But such a deal can only come into effect if it is approved by the House of Commons.

Here the stance of the British Labour Party is crucial.

If Labour were open to supporting the deal, or even to abstain in the vote, the DUP and the hardline Conservative Brexiteers would not be able to stop it.

On the other hand, if Labour, the DUP, and the hardline Brexiteers all oppose it, the deal will not come into effect.

There would then be massive political uncertainty, the likelihood of the UK crashing out of the EU on 29 March, and a huge blow to the global economy.  One could then blame on the DUP and the hardline Brexiteers, but Labour, as the bigger party, would bear more responsibility than the others for this debacle.

LABOUR’S  “SIX TESTS” ARE BESIDE THE POINT

The Labour Party has set six tests that it says the Withdrawal Agreement must pass, if Labour is not to vote against it in the House of Commons. On close examination, the tests seem to be designed to allow Labour to vote against any conceivable deal that Mrs. May could negotiate on a Withdrawal Treaty.

These tests that Labour says the Withdrawal Agreement must pass  are;

“Does it ensure a strong and collaborative future relationship with the EU?”

Comment. This is impossible because the future relationship will not be negotiated now, but later during the transition period.

“Does it deliver the “exact same benefits” as we currently have as members of the Single Market and Customs Union?”

Comment. This is also impossible because there would be no point having an EU Single Market or Customs Union, if, as a  non member, the UK could get all the benefits that members get. In any event, these issues will not be settled in the Withdrawal Treaty.

“Does it ensure the fair management of migration in the interests of the economy and communities?”

Comment.  The UK has not yet finalized its OWN future migration policy so it is unreasonable to expect the Withdrawal Agreement to do what the UK government itself has been unable to do. In any event, what would Labour’s migration policy be?

“Does it defend rights and protections and prevent a race to the bottom?”

Comment. This is not going to be settled now. It will be the subject of the future trade negotiations and the EU will be doing its best to ensure that the UK, outside the EU, does not reduce quality, environmental and labour standards to win market share.

“Does it protect national security and our capacity to tackle cross-border crime?”

Comment.  Again this is for the future negotiation, not for the Withdrawal Agreement. The only way the UK can take part in the European Arrest Warrant is by staying in the EU and accepting the jurisdiction of the European Court of Justice. National Security policy is the responsibility of member states, not the EU, and cannot be bound by an agreement made by the EU.

Does it deliver for all regions and nations of the UK?

Comment. This is a matter for the UK government, not for the Withdrawal deal from the EU.

So the Agreement cannot pass these tests, for the simple reason that none of these six matters can be finalised until later.

They are not valid tests for a Withdrawal Agreement, and the Labour Party should know that.

It is true that the Withdrawal Agreement will be accompanied by a political declaration about the framework for future relations between the UK and the EU. But, legally speaking, this declaration cannot give binding commitments on the six points raised by Labour.

In fact, on some of these matters, like security policy, are ones where the EU could not give commitments, even in a future Trade agreement, without the consent of the legislatures of each of the 27 member states of the EU.

The Labour Party knows this perfectly well.  Choosing six tests designed to give a basis for rejecting any Agreement Mrs. May could negotiate would be a legitimate and normal opposition tactic, if the government had an overall majority. But it does not. It depends on an agreement with the DUP, which the DUP has said it is prepared to break.

AND WHAT HAPPENS IF LABOUR DEFEATS  THE DEAL IN PARLIAMENT?

Let us assume Labour wins a vote to reject the Withdrawal Agreement Mrs. May makes, what does Labour do then?

Obviously, Labour would like either a General Election or a change of Government in this Parliament.

But , even if that happens, a Labour led Government could not have time to negotiate a new Withdrawal deal,  that would pass its own six tests, between now and the 29 March next year, the date on which the UK will be out of the EU, deal or no deal.

The only way Labour could pass its own six tests would be by withdrawing the Article 50 letter written by Theresa May, and seeking to keep the UK in the EU after all.

There is legal doubt as to whether the UK has the power to withdraw its Article 50 letter. The European Court of Justice would have to adjudicate on that.

Secondly, staying in the EU after all, would require a second Referendum.

A second Referendum would have a lead time of 22 weeks, from the decision to hold one to Polling Day. This is because of the requirements of the law in Britain. 

A special Bill for a Referendum would have to pass in both the Houses . This twenty-two week delay would bring us beyond the UK ‘s automatic exit date of 29 March, unless the UK had first got permission to withdraw the Article 50 letter.

All this has huge implications for the whole of Ireland, not just the border.

So, to avoid a crash out Brexit, Irish diplomacy now needs to focus on the Labour Party as well as on the Conservative Government.

TWO OPTIONS…BOTH DIFFICULT

The Labour Party needs to be persuaded to come off the fence and either

  •    back a realistically negotiable withdrawal deal or
  •    say clearly that it would prefer the UK to say in the EU.

Labour could then base their parliamentary tactics on whichever of those two options they prefer. Either would be less disastrous than the present fudge.

TIME LIMITS RISK A BREXIT CRASH

RIGID TIMELINES COULD LEAD TO A BREXIT DISASTER…..SCOPE AND TIME FOR CREATIVE THINKING NEEDED

In his book “Fateful Choices”, which describes how country after country tumbled into what became the Second World War, the British historian, Ian Kershaw wrote

“The fateful choices that were made were not predetermined or axiomatic. But they did reflect the sort of political system that produced them.”.

A Global War was not anyone’s preferred option, but a combination of ideology, a fear of being encircled or pre empted, and miscalculation of the intentions or reactions of others, gave the world the most destructive war in human history.

Similar blind forces are in play in the Brexit negotiation.

The current UK political system, and the anxieties and obsessions it has generated, determine the UK position on Brexit.

This expresses itself in an artificially inflexible, and brittle, interpretation of the meaning of the 2016 Referendum result.  

The UK Government has so far been unable to convert that into a detailed, legally viable, and constructive, outline of its desired future relationship with the EU.

If it got into detail, the disagreement between Cabinet members is so deep that the Conservative Party would split and the Government would fall. The Labour opposition has a similar problem.

It suits both of them that the EU side in the negotiation is insisting that substantial progress must be made on other issues, before negotiations about the future relations between the EU and the UK begin, because if the UK Government had to set out a detailed position on the future relationship, it is liable to split. UK party and public opinion has been polarised and is unready for compromise. The Conservative Party is consumed with its leadership struggle and cannot be relied upon to make a deal that will stick. The Foreign Secretary’s four ”red lines” make compromise impossible.

Likewise the EU political system determines the EU’s approach. There is quite understandable annoyance that the UK, for whom so many special deals were made in the past, now wants to leave the Union it freely joined over 40 years ago. The EU negotiating position is necessarily inflexible because it has to be determined by 27 countries. It can only be changed by consensus among them, and that can only be arrived at very slowly.

Yet the time limit set in Article 50 of the EU Treaty is very short. It will require immense speed of negotiation, on a vast range of difficult questions, not only between the EU and the UK, but also potentially with the World Trade Organisation and perhaps with EFTA, which the UK would have to join if it wants to be in the European Economic Area, like Norway. All this will have to be done between January and November of 2018.

Both sides in this negotiation should ask themselves this question……Are they at risk of finding themselves on rigid tramlines, heading straight for a cliff, and if so, should some rail sidings be put in place, into which the two trains might pull, for a moment of reflection, before they go over the edge in March 2019?

A  former Judge in the European Court of Justice, Franklin Dehousse recently  argued that separating  trade issues from those concerning the  Irish border  artificially disconnected connected topics, and thus  limited the possibility of constructive tradeoffs.  

But he also insisted that the UK must first come up with “precise proposals on all withdrawal matters”.  

He is right. There is no point in the UK asking for the EU to move on to trade matters,  unless and until the UK itself is capable of spelling  out in substantial detail  what it wants, and says exactly what  trade, environmental, and consumer safety policies it will follow post Brexit. It is because the UK is unable even to say what it wants, in the long term, on these issues, that there has been no progress on discussing Irish border issues.

Meanwhile  the UK Trade Policy Observatory (UKTPO), in an article by Professors Alan Winters, Peter Holmes and Erika Szyscak, has suggested that Theresa May’s idea of a “transition” or “implementation” period of two years, after the UK had left the EU, might be very difficult to implement. If so, the UK will crash out of the EU in March 2019.

They saw several problems with Theresa May’s transition idea. They are not trivial issues..

One was that, when the UK leaves the EU in March 2019, it will also be automatically out of the EU Customs Union too. Therefore they claimed it would have to negotiate a new temporary Customs Union with the EU, for the transition period. It would have to notify the WTO of this new temporary Customs Union, which could potentially lead to protracted negotiations with WTO partners.

The UK and EU would also have to agree on how all EU Regulations and Directives would apply in the UK during the transition period, with complete certainty on how mutual recognition of testing and certification,  and the free mobility of labour, would work.

According to the UKTPO authors, the status of such an agreement under EU law would not be certain, but because it would cover issues on which EU member states retain competence. This might mean that the transition agreement itself might require ratification by all EU member states too. That would take time, and meanwhile the UK and its EU trade partners would be in limbo. The UK might be already out of the EU,  while its transition deal had not yet been ratified and was inoperable.

Given the delays ratifying the EU/Canada deal, which got bogged down in the politics of the French speaking part of Belgium, this is a daunting prospect.

Imagine going through all that for deal that might only last two years, and then going through the same process ALL OVER AGAIN for the final deal!  

So negotiating and ratifying a transition deal could be almost as difficult as negotiating the final permanent deal!

The UK needs to engage itself seriously with the complexities of Brexit.  If it looks at all these complexities thoroughly, sense is that it may then conclude that, despite Boris Johnson’s anxiety to leave quickly, the time limits are far too severe and that more time is needed.

If the UK was wise, it would ask its EU partners to extend the negotiation time from two years, to (say) six years.  That extension of the negotiating period could be done by unanimous agreement among the 27 EU states and Britain.

With a longer negotiation period, the UK would need no transition deal and would remain a member of the EU, until the final exit deal was done. There would be only one deal to negotiate and ratify, the final deal.

There are really no good options here.

.It would be politically difficult for any UK government to ask for an extension of the negotiation time. “Leave” supporters would suspect betrayal.  There would be very deep reluctance on the EU side to grant such a request.. Some EU states would feel that extending the period was being far too easy on the UK, and that the UK needed a reality check.  Others would argue prolongation of the exit negotiation might destabilise other EU members, and distract the EU from other urgent work.

These are valid objections, but they are arguably less damaging than the real likelihood that the UK will crash out of the EU without any deal.

Lengthening the period to six years would, however, allow the UK electorate to consider, in a more informed way, the full implications of the course they are following.

The present tight time frame minimises the opportunity for creative thought.

Instead, it maximises the influence of blind bureaucratic and political forces.

It increases the likelihood of miscalculation, and of the UK leaving the EU with no deal at all. That would be very bad for Ireland, or for the EU as a whole.

 I hope more negotiating time can be agreed.  If not, the tempo of the negotiation must be immediately and dramatically increased.

Unfortunately, there is little sign that the current UK government, the originator of Brexit, sees this.

New Fault lines in Europe…..the political consequences of Brexit

If one reviews European history over the period since the Reformation five hundred years ago, the role that England has sought to play in Europe has been that of holding the balance between contending powers. It used its naval strength, and the overseas colonies  its naval strength allowed it to hold, to exercise that balancing European role.

At no time in the last 500 years, did the UK seem to disengage from, or turn its back upon, continental Europe. Indeed England felt it so much a part of continental Europe that Henry V111 actually contemplated  being a candidate for Holy Roman Emperor.

Rather England sought to be sufficiently involved in Europe to exercise its balancing role effectively, but without being so intimately enmeshed in continental issues, that it lost its freedom of action. England’s extension of its power to Ireland and Scotland were contributions to its goal of defence against, and influence over, continental Europe.

That same motivation lay behind the decisions the UK took to go to war in August 1914 and September 1939… that of maintaining a balance in Europe

The position that the UK held in the EU on 22 June 2016, the day before the Referendum, could be said to have been a perfect expression of that traditional English approach. The UK was having its European cake, and eating it at the same time.

The UK was a full voting member of the EU, but was exempted from aspects of EU policies that it might have found too entangling, like the euro, the Schengen passport free zone, Justice and Home Affairs cooperation and the Social Chapter of the EU Treaties.

But as a full voting member, the UK could still influence the direction of the EU, and, if necessary, slow down developments it did not like,  such as a major role for the EU in defence, where the UK preferred the job to done by NATO.

The UK’s budget contribution had been modified through a rebate, and agricultural policy had been modified in a direction sought by the UK.

The UK, it could be said, had the best of both worlds the day before the Referendum.

It was sufficiently IN, to exercise influence on the EU, but sufficiently OUT of it, to maintain the sort of freedom of action that befitted its historic role.

WHY IRELAND SEES THE EU DIFFERENTLY

Ireland’s position is very different from that of the UK.

It has different, but not incompatible, priorities. They explain why Ireland is determined to remain in a strengthened European Union.

Like most of the smaller and medium sized powers in Europe, Ireland does not have the military or economic strength to exercise the sort of freedom of action that a bigger power, like the UK, France or Germany, could exercise. Whereas bigger countries might find European rules to be, at times, a slightly inconvenient restraint, a smaller country finds these common rules a source of protection, security, and freedom.

For a smaller country, the common rules guarantee it against unfair competition by an overweening bigger neighbour. They make the markets in which it competes predictable, open, and free of arbitrary behaviour. The common rules that the EU makes, and enforces, enable a  country like Ireland to compete on equal terms for international investment, something that would not be the case if bigger countries were unconstrained by  a rule based system.

Even in fields in which it might not be directly involved, like defence, a smaller country, like Ireland, benefits from the fact that bigger countries cooperate, through common organisations, like NATO and the EU, to preserve and defend a peaceful, and secure, space in its vicinity. Without peace in Western Europe in the preceding fifty years, there would have been no Celtic Tiger in the 1990s!

Now that the people of the UK have decided, in a Referendum, to quit the European Union, much is changed.

THE UK IS GOING BEYOND THE REFERENDUM MANDATE

The UK government has decided to go further than the requirements of the referendum decision of 23 June 2016, and to leave the Customs Union, and the European Economic Area as well, and to reject any jurisdiction of the European Court of Justice, adds to the difficulties.

It changes the context in which common threats must be faced, by both the UK and Ireland. Brexit may be an exclusively British initiative, for which Britain is wholly responsible, but its effects will be felt by others.

This is most topically illustrated by the question of information sharing on terrorism between the 28 EU states, including the UK.

This sharing is done under the Schengen Information System, which the UK can access as an EU member, and where disputes about what can be shared can adjudicated objectively  under the aegis of the European Court of Justice.

As a non EU member , the UK will  have to negotiate a special deal  to get access to this information. Access may not be automatic, particularly if the UK continues to reject ECJ jurisdiction on disputes about  what may, and may not, be shared, and how.

Now that the UK General Election has failed to endorse the Prime Ministers vision of a hard Brexit, the parties who will be forming or supporting a new government here have the opportunity to reopen some of the question like the Customs Union and acceptance of ECJ jurisdiction in certain areas. I hope that these are thoroughly looked at again, in an open minded way in the inter party negotiations and the options properly debated. That debate did not take place in the General Election campaign at all.

THE EU ALLOWS THE MAKING OF COMMON RULES….IT  ALSO ALLOWS THEM TO BE AMENDED, INTERPRETED AND ENFORCED, IN A CONSISTENT AND EFFICIENT WAY

The example of EU cooperation against terrorism illustrates the fact that EU has provided the UK, and its fellow EU member states,  with a common system for

  • making,
  • amending,
  • enforcing and
  • interpreting

common rules on matters as diverse as food safety, aviation, intellectual property protection, and consumer protection in the purchase of financial products.

The fact that the rules are now common to all, means that food can be sold, airline competition facilitated, patents respected and savings protected across the whole 28 countries of the EU.

The fact that the rules can be amended in a single legislative process for all members saves a lot of time.

So does the fact that they will, if necessary, be enforced effectively and uniformly across Europe, under the supervision of the European Commission.

The fact that these common rules will be interpreted, in a uniform way across the whole of Europe, under the aegis of the ECJ, also avoids all sorts of confusion, haggling and duplication.

Without the EU, none of this would be the case.

It is really important for a business that seeks to sell goods across Europe to know that the  standards the goods must comply with will be the same everywhere and that these rules will be enforced and interpreted in a consistent  way in every EU country.

Outside the EU, to open EU markets to its exports, the UK will now have  to negotiate a new deal on each topic, then agree a separate procedure for  future amendments to  that deal, and agree procedures  for enforcing and interpreting the deal.

This is what the Swiss, with their 120 different Treaties with EU, enjoy. A lot of work!

It is possible to envisage, with a huge one off effort of political will on both sides, the completion and ratification of an initial Trade and Services agreement between the UK and the EU sometime in the next five years.

An equally daunting task will come afterwards, when one has to update, interpret, and ensure adequate enforcement of, the initial agreement. The opportunities for gamesmanship by commercial and political interests, for opportunistic blocking minorities, and for sheer bloody mindedness are easy to imagine.

Everything will be up for grabs each time. Bureaucracies will have never ending occasions to justify their separate existence.

But that is the path the UK has chosen.

BREXIT NEGOTIATIONS WILL DIVERT TIME AND TALENT FROM MORE IMPORTANT MATTERS

It will, I regret to say, involve the diversion of top level official talent, in 28 capital cities, away from anticipating the challenges of future, and instead towards reopening agreements made over the past 44 years.

Our most talented civil servants will be taken up with digging up the past, rather building the future. It is a tragedy.

The Brexit process will not be like a member leaving a club of which he or she no longer wishes to be a member, which is an easy enough process, once the bar bill has been settled.

It will be much more like a divorce between a couple, who have lived together for years, have several small dependent children, a mortgage, and a small business they had been running together. Not only have past bills to be settled, but future liabilities have to be anticipated, decisions made about the running of the business, and rights and responsibilities in respect of the children, agreed.

It would be naive to think that the divorce between the UK, and the other EU countries, including Ireland, will not leave scars. I hope that is all they will be, scars, that will gradually become less visible.

The financial terms of Brexit will be important, as they are in any divorce. They will encompass the future as well as the past. One should remember that Switzerland and Norway contribute to funds to help poorer EU countries to whose markets they have access through arrangements with the EU. It is unlikely to be different for the UK, but if we are to have a constructive negotiation on financial contributions, we also need to have a constructive discussion of the terms of UK access to the EU market.

As the initiator of Brexit, the UK has the primary responsibility to make it work for both sides.

Negotiators on both sides should remember the wise words of an Assistant US Secretary of State in 1945;

“Nations which are enemies in the marketplace, cannot long remain friends at the council table”.

Bitterness in trade negotiation can poison other forms of cooperation. The initiators of Brexit in this country may not have given much thought to that, but those who will negotiate it now,  have a duty to think about it.

IRELAND’S IMPORTANT ROLE

Everyone must work to ensure that no open wounds remain at the end of the negotiation. I am sure that, as a full, loyal and active member of the EU, Ireland will work tirelessly to minimize misunderstandings, to interpret UK concerns for our EU colleagues, and vice versa. As the only English speaking member of the EU, I expect Ireland will at times also have a role in interpreting the United States for our European Union colleagues .

The best way of avoiding leaving open wounds when the negotiation is finished, is through timely anticipation of the things that could go wrong.

I hope that some of the things I say this evening will help in that regard.

FISHERIES

Starting closest to home, we will have to reach agreements on the highly emotional and symbolic issue of fisheries. Fish do not respect territorial waters. While fishing boats can, in theory, be restricted to territorial waters, fish cannot. Overfishing in one jurisdiction affects the livelihood of fishermen in another. Conservation is vital. Who will adjudicate on this, ten years from now? Will there be quotas? Who will allocate them? In the absence of agreement, one can easily envisage clashes, even physical clashes, in seas around us.

NORTHERN IRELAND

Also close to home, there is the issue of Northern Ireland. Originally, when the UK and Ireland joined the EU in 1973, Northern Ireland was the subject of a de jure, if not de facto, territorial dispute between the two countries. As a result of the improved relationship between the two countries that flowed from their common membership of The EU, and as a result of a great deal of creative thought and mutual concession, that issue has been resolved.

Now Brexit has intervened.

The two big parties in Northern Ireland have taken opposite sides on Brexit.

They have revived the issue of territorial sovereignty.

Both these parties seems to be more comfortable agitating about their irreconcilable demands on territorial sovereignty, than engaging in  the day to day drudgery of Ministerial responsibility in a power sharing Administration,  in a time of limited budgets. It is time for Ministers in Stormont to go back to work.

In the past, Prime Ministers and retired statespersons could fly in to Belfast,  to provide cover for a new compromise between the parties that allowed them to get back to work.

As Brexit will absorb so much of everyone’s time in coming years, the scope for this sort of high profile counselling will be less.  Reality therapy may be needed.

The scale of border controls in Ireland, and at ports on either side of the Irish Sea, and of the English Channel, will depend on the eventual trade deal between  the UK and EU, if there is one, and on how it is interpreted over time.

The checking of compliance with rules of the origin, labelling and safety of goods will cause delays.

Even if there is a special arrangement for Northern Ireland, these matters will have to be checked somewhere, at some border, or in some port, somewhere. Such checks are a  necessary requirement for the free circulation of the goods in question in EU Single Market. I have no doubt that this is well understood here in Britain, given that Britain, under the leadership of the late Lady Thatcher, did so much to create the EU Single Market. Now that the UK is leaving, I can assure you that Ireland will be doing everything it can to preserve and enhance that remarkable achievement …the Single Market

The genius of the combination, of common EU membership of the UK and Ireland, with the Good Friday Agreement, reduced the sense of separation between both parts of Ireland, and between each part of Ireland and the island of Britain.

That made the two communities in Northern Ireland more willing to live with constitutional and institutional arrangements, that they might otherwise have regarded as less than ideal. That benign combination, of the Good Friday Agreement and joint membership of the EU, will now be brought to an end.

WHY HAVING A COMMON COURT, AND CONSISTENT INTERPRETATION, CAN HELP

As I mentioned already, Brexit has the potential to complicate cooperation between 28 or more European countries in the struggle against terrorism. Cooperation is much easier between countries adhere to common standards, uniformly interpreted under the aegis of a common European Courts system. Information can more easily be shared, new terror threats identified, and common responses agreed, in a common European system than would be possible if all we have between the UK and the EU are a series of ad hoc bilateral agreements.

Without commonly agreed protections, cooperation will become more difficult, because one will no longer have the same assurance about how the receiving country will treat the people, or the information, that one gives over.

THE DEFENCE OF EUROPE

As far as military security is concerned, the problem is less acute, because the UK will remain a member of NATO.

But, as with police cooperation,  things will not stand still.

It is likely that greater use will be made of Article 42 of the EU Treaty which allows for a common security and defence policy, with operational capacity, to be developed. The UK  used to be able to slow down use of these EU powers, and did so because it wanted any action to be under the aegis of NATO. After Brexit that will no longer be the case.

Mutual solidarity will be reduced. Outside the EU, the UK will no longer be able to benefit from the legal obligation, imposed on all EU states, by Article 222 of the EU Treaty, of help where an EU state is

 “ the object of a terrorist attack or the victim of a natural or manmade disaster”.

Outside the EU, the UK will not be taking part in meetings of the European Council which , under Article 222 must  “regularly assess threats”, whether  from within and outside the EU.

It is impossible to predict the difference the absence of the UK will make, but I am sure that regular meetings with EU colleagues, even when there is no urgent threat to be tackled, greatly facilitate speedy action when a threat does arise. UK Ministers will have less informal, casual, or routine contact with their European counterparts. Meetings will have to be set up specially.

From an Irish point of view, a lack of ongoing contact between the UK and EU could have negative consequences. A threat to the UK interests is very often a threat to Irish interests too. For example, Ireland has the same electricity grid as the UK, and our air space and territorial waters are contiguous, as is our territory on land. A threat to one of us is potentially a threat to both.

Other fora for joint work between the UK and EU states will need to used more fully.

PROTECTING KEY SHARED  INFRASTRUCTURE FROM ATTACK

Under Article 3 of the NATO Treaty, NATO members are working on “Resilience”, namely the protection of the critical infrastructure of member states. This would include the electricity grid, the commercial and health communications network, and air traffic control.  It will also involve anticipating future threats, based on the acceptance that greater interdependence across borders makes modern societies more vulnerable.

Ireland is not a member of NATO.

Now that the UK is leaving the EU , Ireland , as a member of  the NATO Partnership for Peace, may, however , have an interest in cooperating with all its European neighbours, including the UK, in this work on  the Resilience of shared networks. This would be for the protection of our own Irish people.

Ireland will also find that it is in its own interest to ensure that the EU, using Article 222 of the EU Treaty, actively helps member states that encounter threats.

Given the increasingly self oriented attitude of the present US Administration, it will be in nobody’s interest to allow Defence policy become a fault line between post Brexit Britain, and the European Union.

Working together on these matters is not a bargaining chip for negotiation, it is in the  existential interest for both parties.

So too, and for similar reasons, is the continued close cooperation between the EU and the UK on climate change.

BREXIT NEGOTIATORS NEED TO REMEMBER HOW MUCH WE HAVE IN COMMON

So when the Brexit  negotiations become fraught, as they undoubtedly will, UK and EU negotiators need to remind themselves that we have more in common than divides us, and that we each live, close beside one another, in a continent whose global weight is much less than it was 100 years ago.

In 1900, we, Europeans, made up 25% of the world population, now we are barely 7% .

At the other end of the Eurasian land mass, China will double the size of its economy in the present decade. It adds to its GDP by an equivalent of the entire GDP of Turkey….every year.

China has ambitious plans for its global role, and China has the executive coherence necessary to realize those goals.  It is thinking in ambitious geographic terms .It is promoting global connectivity through its “One Belt, One Road” concept.

The UK’s access to that Road, across the Eurasian land mass, runs entirely through the EU.

T he access of Ireland to that Road runs mainly through the UK!

I will now turn to the internal dynamics of the EU itself, as I expect they will evolve in coming years.

NEXT STEPS FOR THE EU, NOW THAT THE UK IS LEAVING

The European Commission has produced a White Paper which sets out five, rather stylised ,  scenarios.

These scenarios are

  • Continuing on as we are
  • Doing nothing but maintaining the Single Market
  • Allowing countries that want to go ahead with more intense integration, to do so within the EU legal order, and with the possibility for others to join later
  • Doing less more efficiently
  • Doing much more together.

Given that it is difficult for 27 countries to agree on new tasks (It was much easier when there were only 9 or even 15 members), I think the first option, continuing on as we are, will be the easiest to follow. This is especially the case if the EU remains unwilling to amend its Treaties

The last option, doing much more together, does not have public support at the moment, but that could change suddenly, if some external shock made it easier to overcome the normal resistance and inertia. Among the activities envisaged, under the doing much more together option, are a single European anti Terror agency and a single coast guard. These are not farfetched ideas, and indeed may be inevitable if passport free travel across member state boundaries is to continue.

The option of doing nothing, but maintain the Single Market. is not very helpful in my view.  In truth, it is almost impossible to agree where the Single Market ends, and other policies begin. The Commission argued  that this ”Single Market Only” option would make it more difficult to conclude more or deeper international trade agreements, because differences in standards would persist within the EU.

The option of “doing less more efficiently” is not very different. It would involve pursuing Single Market integration vigorously, but going slow on regional policy, and on social and public health policies that do not relate directly to the Single market. This option may appeal to net contributor countries, like Germany and perhaps Ireland, but would not appeal in Central and Eastern Europe. It may appeal to outsiders like the UK, Norway and Switzerland as it might reduce the fee they would pay for access to the Single market. But it would be strenuously resisted by many poorer EU states.

The idea of allowing some countries to “go ahead without the others” is one that has been around for a long time, and is actually provided for in Title IV of the EU Treaty governing what is known as “Enhanced Cooperation”.

While this provision has not been much used, it could be said that the euro, and the Schengen  border control free zone, are already  forms of enhanced cooperation.

I do  not see Enhanced Cooperation  as an ideal way forward for the future, because it dilutes the democratic unity of the EU, and this is already put under enough strain by the division between Euro and “not yet Euro” members. The Commission saw this scenario as allowing some countries to go further ahead on defence cooperation while other members might hang back.

MORE COMMITTMENT WILL BRING MORE INFLUENCE

It has, however, to be recognised that influence of a member state in the EU will be commensurate with its commitment and solidarity to and with other EU members.

A country that only wants to take part in policies from which it will gain, while going slow on things that might involve costs for it, will have less influence in the EU, and might not receive solidarity when it needs it, but it is hard to quantify this.

Putting it another way, an EU which encourages some countries to go ahead while others hang back could quickly divide between” policy maker” countries,  and “policy taker” countries. This is why Ireland has traditionally resisted a “two tier” Europe.

BUT WHAT DOES EU PUBLIC OPINION WANT?

Public opinion also needs to be taken into account, in working out the priorities of the new EU without the UK, and  public opinion on what should be EU priorities varies widely between countries.

When citizens in the 28 member states were asked in April 2016, just before the UK Referendum, what they wanted the EU to prioritise, they came up with quite different answers in different countries.

When it came to fighting against Terrorism, 80% of Greeks wanted the EU to do more, and 69% of Italians did,  as against only  33% of the Dutch and  44% of Danes. At that time, 66% of UK citizens wanted the EU to do more against terrorism, but then decided to leave anyway.

After France, 55% of UK citizens in April 2016 perceived their country as being under  a high threat of a terrorist attack, as against  only 11% of Irish people, 9% of Latvians and 8% of Estonians.

This was not the only contrast.

69% of Swedes and Spaniards wanted the EU to do more about the Environment, but only 28% of Estonians did .

Understandably, at the height of the Syrian asylum seeker crisis, EU action on Protecting External Borders was a priority for 73% of Greeks, but  only 43% of Irish people and  35% of Swedes and Latvians wanted the EU to prioritise that.

The dividing lines on whether the EU should do more on Security and Defence were quite revealing.

Overall and on average, 44% of EU citizens  felt the EU should be doing more about Security and Defence.

But, to my surprise given their proximity to Russia, only 30% of Latvians and Estonians, and 25% of Danes, did so.

In contrast, 60% of Greeks and 56% of Italians felt the EU should do more on Security and Defence. 56% of French citizens felt the EU should do more, but only 41% of Germans, which suggests that , a year ago anyway, there was not an overwhelming public demand for an EU defence policy.

But that was before the election of Donald Trump, and his disturbing omissions on European Security during his recent visit to Europe.

ENERGY SECURITY

Finally, given the low oil prices at the time, it is perhaps not surprising that so few European felt the EU should be doing more on Energy supply issues.  Yet a Single Energy market was identified as a priority issue by the European Commission even in their “Continuing as we are” scenario I mentioned earlier.

In 2016, only 36% of EU citizens felt the EU was not doing enough on the issue of Energy supply. The greatest support for more EU action on Energy supply was  in Greece  and Spain ( both 54%). But in the Czech Republic, only 18% felt the EU should do more on Energy Supply questions.

Given that Ireland is so completely dependent on, what will soon become a non EU country, for access to the international  electricity grid, it interesting to note that support for a common EU policy on Energy Supply was below the EU average in Ireland, at a mere 33%.

I expect that that will change and that Ireland will seek assurances on continuity of supply in any Brexit Agreement, and will want the support of its 26 EU partners in that.

THE OUTCOME OF THE UK GENERAL ELECTION

The recent UK General Election result did not endorse Mrs May’s very specific plans for a hard Brexit. The loss of support for the outgoing government in London, and in university towns, underlines this.

It now looks as if the next government will be a coalition of some kind between the Conservative Party and the Democratic Unionist Party (DUP).

Agriculture will be the subject to watch in any DUP/Conservative deal.

How will the incomes of farmers in Northern Ireland be protected and how will freedom of access for Northern Irish food products to the EU market south of the border be preserved?

Given the commercial interest many Democratic Unionist supporters have in trade across the border in Ireland, the Conservative Party may have to drop its insistence on leaving the EU Customs Union, to avoid the necessity of extensive and time consuming checking of goods crossing the border.

As a Unionist Party, the DUP will favour UK wide solutions rather than a special deal for Northern Ireland alone, and this may help ease the impact of Brexit on East/West trade between Ireland and Britain as well. That would be welcome.

If it were to decide to stay in the Customs Union,  the UK could of course, not do trade deals of its own.

But I believe there was little evidence  the  deals UK could do, outside the Customs Union,  would compensate it for the  deals it would lose by leaving it,

  • 295 trade deals, and
  • 202 deals on regulatory cooperation.

I hope the people of the UK will now have the sort of honest detailed, sector by sector, debate on what Brexit might mean, a debate that they so markedly failed to have during the General Election campaign.

John Bruton, former Taoiseach, delivering the Grattan lecture in the Irish Embassy in London on Monday 12 June 2017

 

THERESA MAY’S ELECTION

Theresa May has decided to call an early election, before the practical outworking of her Brexit strategy becomes obvious to voters. She wants to be free to modify her strategy, and ,for that, she needs a bigger parliamentary majority.

She claims otherwise. Instead she says she is calling the election because Opposition parties oppose her Brexit strategy. They don’t oppose it, actually. They have cooperated with it, to a point that makes little of parliamentary sovereignty.

The only opposition party that opposes her strategy outright are the Scottish Nationalists, who take that position because that is the way Scotland voted in the Referendum. In any event, the Scottish Nationalist Party could not bring Mrs May’s government down on Brexit, unless Labour, the Liberal Democrats and, most importantly, a significant number of Mrs May’s own Conservative MPs, voted with them, which is not at all likely to happen.

Rather more bizarrely, Mrs May justifies her call for an immediate General Election on the ground that the Labour Party has threatened to vote against the final agreement she may come back with, in two years time. What does she expect? That the main opposition party would give her a blank cheque on the terms of Brexit?!

Usually negotiators actually find it useful to be able to say, when looking for a concession, that if they do not get it, the overall deal might be opposed in Parliament .  If she is to be believed, Mrs May apparently wants to give up that negotiating chip.

Mrs May ostensibly defend the sovereignty of the UK Parliament. But now she is calling an election because the opposition will not promise not to exercise their sovereign parliamentary rights.

My own sense is that none of the reasons she has advanced are the real ones for which she has sought an early election.

She is seeking an election to increase her overall majority, so she will no longer be dependent on a hard core group of around 60 Euro hostile Conservative MPs, who hold disproportionate power at the moment because the Conservative overall majority is so small.

For these MPs hostility to the European Union has become a religion, a religion which brooks no argument, and a religion for which any economic sacrifice can be justified, even the sacrifice of the livelihoods of their own constituents. Mrs May does not want to find her day to day negotiations with the rest of the EU subject to the whim of these people, by whom the slightest compromise  with the EU 27will be portrayed as a betrayal.

It is important to remember that Mrs May, like the rest of her Party, have never taken much interest in how the EU works, in its procedures and rules, and in the compromises that underlie its very existence. She has this in common with many politicians in bigger European countries, who treat the EU as a sideshow to national politics.

So, even though her Party sponsored the idea of holding a Referendum on leaving the EU, she did not give much thought to what leaving the EU might actually mean, until the last few months, when it suddenly became something real, something that was going to happen. In a sense, she and her party, are now finding out a lot about the EU for the first time, just as they are leaving it!

Her first reaction to the Referendum was to get her Party behind her as their new Leader. So she told the Conservative Party Conference last year that she would go beyond the mere terms of the Referendum.

She would not just leave the EU.  She would refuse to join the European Economic Area (unlike non EU member Norway), and also refuse to join the EU Customs Union ( unlike non EU member Turkey).  This hard line bought the temporary quiescence of the Euro hostile MPs, up to and including on the  terms for triggering of Article 50.

But now come the actual negotiations.

This is where Mrs May’s rhetoric at the Conservative Party Conference, meets the reality of a rules based international trading system. In a rules based international trading system, unpleasant compromises are essential if  you are to persuade others are to open up their markets to your exporters,  to your bankers,  to your planes,  and to your people.

In a rules based international  trading system, you cannot, unilaterally, make, interpret and enforce the agreed rules, in a way that suits only you. There has to be a common system, which involves some concession of sovereignty.

You often have to accept an external enforcer, like the European Commission or an International Court.

And you often have to accept an external body interpreting the meaning of the rules, someone like the European Court of Justice, or a Disputes Panel of the WTO.

But this is unacceptable to those who have made national sovereignty into a religion. It is unacceptable to some of Mrs May’s Euro hostile MPs, and also, incidentally, unacceptable to some of the supporters of Donald Trump.

I have been reading publications of Conservative supporting think tanks, like the Bruges Group and “Leave means Leave”, and they are discovering now, how costly it will be for the UK to leave the EU Customs Union.

The UK will have to introduce Customs controls on the goods bought and sold between the UK and the EU. This will involve checking where the goods came from, if they are properly labelled, if they are safe, and if the tariffs due have been paid. The delays will be horrendous.

Customs clearance alone will add 8% to the cost of goods arriving by sea from Ireland or the rest of the EU.

At the moment  90million customs declarations have to be checked in the UK for goods arriving from outside the EU. Once the UK itself leaves the EU Customs Union, UK customs officials will have to check 390 million documents!

By leaving the EU Customs Union,  the UK will not only exclude itself from duty free access to the EU market, which represent over 50% of UK trade, but it will also lose the benefit of Trade agreement the EU has negotiated with 60 other countries, which account for a further  17% of UK exports.

For example, since the EU negotiated a trade deal with Korea ten years ago, UK exports to that country increased by 110%. Leaving the EU means giving that up, temporarily, and, perhaps, permanently.

Mrs May is also beginning to discover that her hard line on immigration will have costs. 20% of employees on UK farms, and 29% of employees in UK food processing plants are EU nationals, who will lose their right to live and work in the UK.   When the UK tries to negotiate trade deals with countries outside the EU, like India, it will find that it will face demands for more Indian migration to the UK.

UK Airports will find themselves losing business when the UK has to leave the EU Open Skies Agreement with the United States. More US transit traffic will be routed through Dublin. The UK will also have to try to join the European Common Aviation Agreement as a separate member, if UK owned airlines are to have the right to fly passengers between EU airports. Rivals will not make it easy for them.

UK farmers and food producers will find themselves facing tariffs of 35% on dairy exports, 25% on confectionary, and 15% on cereals. UK lamb production will be hard hit.

If Mrs May wants to be able to make deals to avoid some of these bad outcomes, she will need the sort of flexibility, that her Euro hostile backbenchers would not allow her.

That is why I think she is calling a General Election now.

The strategy may backfire.

If during the election, she is forced into explicitly ruling out various possible compromises with the EU, she will end up with LESS flexibility that she has now. .

A lot will depend now on what the Conservative Party manifesto says about how the practical problems of Brexit will be tackled. Will it deal with these issues specifically at all?  Will Theresa May be able to get through to 8 June relying on reassuring generalities about problems like customs delays, bureaucracy, higher air fares, the end of farmer income supports, migration policy after Brexit, and the loss of access to markets for British exporters?

Given that Mrs May is avoiding taking part in debates she may be able to avoid these questions, but six weeks is a long time in politics!

THE MECHANICS OF BREXIT AND ITS EFFECT ON IRELAND

 

cropped-irish-flag.jpgI am deeply honoured to have been invited to speak here today in the company of your President, John Comer, and of the Minister for Agriculture , Michael Creed.

I worked with the Minster’s father, Donal Creed, when Donal was spokesman on Agriculture for Fine Gael, and I was the then secretary of the Party’s Agriculture Committee. That was 1969, long before we joined the Common Market.

I remember many meetings with ICMSA at that time, and was always impressed by the seriousness and realism of the way in which your organisation represents its members and agriculture more generally. The fact that your President, John Comer, comes from Co Mayo is evidence of the broad national reach of ICMSA.

I have been asked to talk about Brexit. Everything I say will be a personal opinion, not representing anyone else.

Everyone would like to know what form Brexit will take, and how it will affect Irish farmers, and the rest of the country too. Unfortunately, it is next to impossible even to begin to answer that question until we first see what the UK will actually look for. Only then can we begin to speculate in an informed way about how the negotiation might go.

In what I say today, I will try to describe the mechanics of the three negotiations that will probably take place

  • the negotiation of a Withdrawal Treaty.
  • the negotiation of Treaty covering the Future Framework of relations between the EU and the UK and, possibly
  • the negotiation of an Interim Agreement, to apply after the UK has left the EU, but before a full Future Framework Treaty has been finalised and ratified

TWO NEGOTIATIONS….ONE ABOUT WITHDRAWING, THE OTHER ABOUT THE FUTURE

Article 50 of the EU Treaty says

Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, 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.”

AGREEING GUIDELINES ON THE EU SIDE

It is important to note here that it will be the Commission that will do the actual negotiation with the UK, but it will do so under guidelines agreed by the Heads of Government of the 27 Member states meeting in the European Council. It will also have to bear in mind that the final deal will have to approved by the European Parliament  too.

Given that the European Council operates by unanimity, and that its members are heads of government and each of them have countries to run at home, agreeing these guidelines will take time and be difficult.

Any one country can object to any part of the guidelines.

There are wide differences between EU member states in their sensitivity to developments in the UK. It is to be expected that

  • some will emphasise a continuing right for their citizens to live and work in the UK,
  • others will emphasise trade with the UK, and yet
  • others will emphasise how the make gains for their businesses from the exclusion of UK competition(for example in financial services).

THE FUTURE FRAMEWORK FOR EU/UK RELATIONS

It is also important to note that Article 50 says that the proposed Withdrawal Treaty shall take account of the” framework” of the withdrawing states” future relationship” with the Union.

There is no guidance in the Treaty as to what this “framework” document might say.

In their Referendum, UK voters were asked if they wanted to leave the EU, but their views were not sought on the sort of framework for future relations they would approve.

Nothing appeared on the ballot paper about

  • access to the EU market for UK produced goods or services, about leaving the European Economic Area (which includes several non EU countries) or about what UK voters would want the agreement with EU to say about
  • the status of UK citizens already living in EU countries after the UK has left
  • the status of EU citizens already living in the UK or about
  • the future rights of EU or UK citizens to live and work in one another’s  jurisdictions or to avail of social services while there

DIFFERENT PROCEDURES FOR CONCLUDING THESE NEGOTIATIONS

Article 50 continues

“ That agreement  (for the withdrawal of a state) shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.”

So while the Council guidelines for the negotiation require unanimity, the actual approval of the final withdrawal Treaty can be done by qualified majority.

But there is a time limit because Article 50 goes on to say

“ 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. “

This two year time limit applies to the Withdrawal Treaty, but there is no time limit for the negotiation the Framework for future relations.

If , within two years of the sending by the UK of its article 50 letter seeking to withdraw from the EU, a Withdrawal Treaty has not been agreed by the UK on one side, and a qualified majority  on the EU side, the UK is simply out of the EU, with no rights at all on the EU market beyond those enjoyed  by any state anywhere in the world.

This is a real doomsday scenario, but it is a realistic possibility, because the gaps in the negotiating positions between the UK and a potential blocking minority of EU states (26.3% of weighted votes representing at least 35% of the EU population) are very wide.

But, at least, the withdrawal Treaty can be approved on the EU side by a qualified majority (73.9% of the weighted votes  representing 65% of the EU population).

Agreeing the terms of the Framework agreement with the UK, of which the Withdrawal Treaty must “take account ” will be even more difficult, because this Future Framework Agreement will probably have to be unanimously agreed by ALL 27 EU states and their parliaments, unless it is a very narrow agreement covering only trade in goods.

If it is wider than this, it is likely to be deemed a so called “mixed agreement”, which is an agreement that includes matters where the competence is shared between the EU and the member states.

A ROCKY PATH TO RATIFICATION FOR A FUTURE UK/EU FRAMEWORK DEAL

In this case, every member state parliament, as well as every member state government, will have to approve the Framework agreement with the UK.

This is what happened with the recently concluded EU Agreement with Canada, which, as you will remember, was threatened with a veto by Belgium, because under internal Belgian constitutional arrangements, all five subsidiary parliaments in Belgium must agree to any international treaty signed by Belgium, and two of them did not agree.

A similar threat to an Agreement with the UK could come from a decision to call referendum  in a member state.

For example, the future of an EU Agreement with Ukraine has been put in doubt by its defeat in a referendum in the Netherlands, requisitioned by a petition of only 300,000 signatories out of a total population of 17 million, and on a turnout of slightly above the minimum required 30%.

It is easier nowadays to organise petitions online, so this could be another threat to a Framework Agreement with the UK, not just in the Netherlands, but in any other countries with similar petition/referendum provisions.

The UK could not really object to this happening because the UK itself, on 23 June, used a national referendum to make a decision affecting the whole of Europe in a profound way.

COULD THE UK CHANGE ITS MIND?

Could the UK change its mind, when it discovers that things are not turning out as its voters, and those politicians who favoured leaving the EU, hoped they would?

Article 50 says

“ If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.”

Article 49 requires the unanimous agreement of all existing member states, and of the European Parliament, to the readmission to the European Union of a member state, just as it would to a state applying to join for the first time.

In other words, the UK, seeking to rejoin the EU after having left, would be in exactly the same position as Serbia, Montenegro or Turkey is today.

A more interesting question is whether the UK, having written its Article 50 letter in March 2017, could decide, say in late 2018, just before the two year time limit  would expire in March 2019, that it wanted to withdraw the letter, and stay in the EU after all , on the existing terms?

This is not an easy question to answer.

Article 50 doesn’t say that notification once given can be withdrawn, but nor does it say that notification can’t be withdrawn.

The prevalent view is, perhaps, that notice can be withdrawn prior to actual withdrawal from the EU but the position is not clear. If revocation of an article 50 notice was not accepted by all other EU members, the Court of Justice of the European Union would have to decide the point.

This may all sound a little fanciful  at this point, but it is possible that, by late 2018, the UK might have a different view on EU membership to the one it had on 23 June 2016.

It would certainly have to organise another referendum, which could be difficult given the rigid two year deadline for complete exclusion, in the absence of an agreed Withdrawal Treaty.

But if the discussions on the Framework Agreement were going really badly, or if  the economic costs of separation were just proving greater than expected, and if prospects did not look like improving, a majority of MPs might decide to consult the voters on the possibility of taking back the Article 50 letter.

Already there is some sign that UK opinion has shifted slightly since the 23 June Referendum.

Asked in a Eurobarometer  poll last September, three months after the Referendum, whether they thought the  UK benefitted from being in the EU

  • 56%  in the UK said they thought the UK had benefitted, an increase of  5 percentage points on the previous poll and
  • only 34% said they thought it had not, a drop of 2 points on the previous poll

If that trend were to continue, things could look different in the late 2018 or early 2019.

But it would be very difficult politically to change course. National pride would be hurt.  Telling voters they made a mistake is rarely a winning political strategy……even though voters do sometimes make mistakes

CONTENT OF WITHDRAWAL TREATY

Let me now turn to what I think will be the content of the two negotiations

First ,the Withdrawal Treaty negotiation and

Second, the Framework of Future Relations negotiation

My understanding is that the Withdrawal negotiation itself is likely to cover quite a narrow, but very contentious, range of issues.

These will probably include five broad topics

  • What the UK will have to pay to leave,  what will be the UK share of any remaining financial commitments dating from its time as a member, covering matters such as pensions of EU officials , other obligations outstanding, less the UK ‘s share in EU assets
  • The mechanics and costs of moving EU institutions, like the Banking Authority and the Medicines Agency, out of the UK and into an EU country (perhaps Ireland)
  • The Rights of EU citizens already living in the UK, and UK citizens already living in an EU country. The rights of future migrants from the UK to the EU, and vice versa, will be for the Future Framework negotiation
  • The relationship of the UK with the WTO after it has left the EU

+ Special situations concerning the land boundary between the UK and the EU, as in Ireland and at Gibraltar. It is good that this being dealt with upfront, and not just buried in the wider Framework negotiations. But, obviously, the content of the final Framework deal, if there is one, is bound to affect what happens on the Irish border.

While these five issues are, on their face, straight forward, the UK contribution to the EU budget was elevated into a big issue in UK politics over the past few years. False statements were made before the referendum about the amount the UK would get back by leaving,  and a gain of £350 million a week was promised by some who now hold high office in the UK government.

So this could become a very difficult discussion.

CONTENT OF FUTURE FRAMEWORK TREATY

The Future Framework negotiation will be a much wider one and will take in matters of direct relevance to ICMSA members, such as

  • whether the EU Common External Tariff will have to be levied on agricultural products coming into Ireland from the UK, or Northern Ireland
  • how the origin of imports from the UK will be verified to ensure that they are not dumping third country products on our market,
  • how veterinary and food safety standards will be verified, and how and by whom smuggling will be suppressed.
  • whether geographic indicators will be recognised
  • if there will be a tariff free quota to allow existing trade levels to continue or if all trade will bear the appropriate tariff

The tariff issue will be particularly difficult in the food sector, because this is the sector in which the EU has the highest tariffs, and restrictions, on third country imports in order to protect the incomes of EU farmers.

Everything depends on what sort of food and agriculture policy the UK decides to follow outside the EU. Will they go for a “cheap food” policy like they had before they joined the EU 40 years ago or will they retain current supports for farmers and rural life?

There is no indication so far as the what choice they will make, at least after 2020.

Negotiations about product  safety, rules of origin, and related issues will arise with all products and services, even those to which no tariff applies, because once it has left the EU, the UK will be free to depart from recognised EU standards.

If the UK rejects the jurisdiction of the European Court of Justice, as Prime Minister May says she will, there will no longer be a referee to interpret the rules of the shared market, and all markets need a referee.

If one wants to assess the likely complexity of a Future Framework Agreement the UK and the EU will have to negotiate with one another, one has only to look at the content of the Agreement the EU has concluded  with Canada.

As well as tariffs and trade, that agreement had to cover

  • product testing and standards….would each side recognise the other side’s tests for every product or would there be duplication?
  • mutual recognition of professional qualifications….a huge field
  • the right of EU and UK firms to sell goods and services to government entities in one another’s jurisdictions
  • protection from discrimination against EU investors in the UK and vice versa
  • access to fishing grounds

The EU and the UK negotiators will not only have to reach agreement on the substance of how these matters are to be handled, but  they will also have to agree a procedure for settling disputes about interpretation, because the UK, outside the EU, will not accept the rulings of the European Court of Justice (ECJ)

But probably the most contentious issue in the Future Framework negotiation will be right of people to emigrate to the UK from the EU, and vice versa.

Control of Immigration was not, initially, one of the UK’s complaints about the EU.

The Blair government actually opened the UK to  central and east European EU immigrants, in 2004, before it was obliged to under the Accession Treaties for those countries.

But, during the Referendum campaign, immigration became the central debating point ,and leaving the EU was presented as the way of “taking back control” of immigration.

The case was over stated.

Of all immigrants moving to the UK in 2014,

  • 13% were UK citizens returning home.  
  • 42% were EU nationals emigrating to the UK. But the biggest number,
  • 45%, were non EU nationals moving to the UK.

The UK already had full “control” over 45% of all immigration which came from non EU countries, and the Minister who exercised that control then, the Home secretary, is now the Prime Minister.

But in politics, perception is sometimes more important than reality, and immigration from the EU is perceived to be a problem by UK voters.

The EU side has taken a firm line on this. There will be no participation of the UK in the EU Single market without free movement of people to work. If capital is free to move, people should be free to move too. No Single market without free movement. Discrimination on the basis of nationality is excluded within the EU, and a state should not be able to leave the EU, introduce such discrimination, but still have all the other benefits of access to the EU market. If that option were the open, others EU members would be inclined to follow the UK out of the EU.

The fact that there must be unanimous agreement, by all 27 EU countries, to the Future Framework is relevant here. Countries like Poland will not be keen on a breach of the free movement principle.

WILL AN INTERIM DEAL BE NEEDED IN 2019?

I think it should be clear, from all I have said, that finalising a Framework Agreement with the UK within the two year time frame will be so difficult as to be almost impossible.

The Agreement with Canada took six years to negotiate and it was much less complex than any agreement with the UK would be.

So what happens, in late March 2019, when the 2 year deadline is reached, if the Withdrawal Treaty has been agreed, but  if the Future Framework negotiations are still going on, with no certainty whether they are going to succeed or not?

In this case, some form of interim agreement with the UK might have to be reached. This might involve the UK leaving the EU, losing its voting rights, but still retaining full access to the EU market until a final Framework Agreement was reached.

There will be almost as many knotty questions to answer about  that sort of an Interim Agreement as there would be about a Final Agreement.

For example, what contribution would the UK  then continue to make to the EU budget?

Would there be a time limit on the Interim Agreement, and could it be extended?

Would the UK accept the jurisdiction of the ECJ during the Interim?

Would an Interim Agreement have to be approved by the parliaments of all 27 member states?

Does the EU Treaty allow for such an Interim Agreement?

CONCLUSION

My conclusion from all of this is that the decision of the UK Conservative Party to have a referendum on EU membership, without a clear alternative being known, was unwise because it will lead to a huge diversion of time and talent away from more constructive purposes.

Since the Referendum, the UK government has, retrospectively, interpreted the vote to mean a decision to leave the EEA, and leaving the European Customs Union, things that were not on the ballot paper, and are not required by its wording at all. That is undemocratic.

Brexit poses disproportionately great challenges to Ireland. It will require us to build new and stronger alliances in every EU country, and to do that we will need to understand the interests of other countries almost as well as we understand our own. We must not make the mistake David Cameron made of thinking that an understanding with Germany will deliver what we want from the EU. In the EU, every country counts.

………………………………………………………………………………………

Speech  by John Bruton,  at the AGM of the ICMSA at 4pm on Monday 28 November in the Castletroy Park Hotel, Limerick

 

THE UK NEEDS TO WORK OUT WHAT IT VOTED FOR LAST MONTH

union-jack-1027896_960_720I believe the UK itself needs to prepare a realistic proposal, taking the EU Treaty obligations of others into account, on the future relationship between the EU and the UK that it believes would be in the interest of both the UK and the EU.

That is a process that has to take place in the UK alone and not, at this stage in the other EU countries.

The UK needs to do its home work first. The UK needs to take full ownership of the challenge posed by decision in the referendum that the UK itself decided to have .

My own sense is that a relationship between EU and UK that is limited to trade in goods, and to free travel with passport controls, is easily attainable, if the UK is willing to accept EU goods safety standards.

The question is whether the UK would settle for that.

Services and movement of people are inherently inter related so this would not cover financial services exports from the UK.

On migration, the UK position is made difficult by the fact that the UK long pressed for early EU enlargement, and then, like Ireland, opened itself the migration from the new EU members without availing of the transition period.

Now, without acknowledging its own contribution to the dilemma in which it finds itself, the UK has decided to reverse all this by leaving the EU, as if the EU alone was responsible for the consequences of these UK decisions.

I fear that these contradictions within the thought processes of the UK itself will not be resolved without some sort of crisis.

From what I read, it seems to me that UK leaders are still going around the continent looking to EU leaders to solve the contradictions in the UK’s own thinking for them, which is a bit unfair.

The UK should not try to pick off individual EU states by making them special offers, because that will anger other EU states. The governments of all the 27 remaining EU states have to bring their public opinions with them too

The UK needs an agreement that all the EU states and the elected European Parliament can live with.

Ultimately all EU states are bound by the Treaties, and are required by law to cooperate sincerely with one another to “attain the Union’s objectives”.

The European Court of Justice and the European Commission are obliged to follow the EU Treaties and ensure they are respected by the member states, the Council of Ministers and the European Commission.

The Commission represents the common EU interest, and is particularly attentive to the needs of smaller states. The UK should never give the impression that it would like to bypass the Commission, by going over the Commission’s head to Berlin or Paris.

While the European Council will authorize the negotiations with the UK, it is the Commission that will do the negotiation. The European Council can issue negotiating directives to the Commission, but the European Council acts by unanimity, which leaves a lot of discretion to the Commission.

So the UK needs to come up with a comprehensive proposal that is framed in the context of these Treaties and of the needs of each of the 27 (very different) EU states.

It should probably publish that proposal, in the form of a Green Paper, before triggering Article 50.

THE EU IS ALREADY DEMOCRATIC…..TWO WAYS IN WHICH THAT CAN BE MADE MORE VISIBLE

The-UK-and-EU-flags-010One of the recurring themes in the debate about UK membership on the EU is the (false) claim that the EU is not democratic.

All EU legislation has to be passed by a democratically elected European Parliament and also by a Council of Ministers who represent the democratically elected governments of the 28 EU countries.

It is true that the members of the European Commission are not democratically elected by the people, but their names must be proposed by democratically elected governments of the 28 countries, and the Commission as a whole must be approved by the democratically elected European Parliament.

In many countries, Ministers serve in government who have not, as individuals, been elected directly. Their democratic mandate comes from the elected government of which they are part.

This is not to say the there is no room to improve the democratic legitimacy of the EU, and of its policies. I believe the EU could respond to the UK referendum by further enhancing EU wide democracy.

I make two suggestions to improve the visibility of the democratic character of the EU, and create a genuinely European democratic debate, rather than 28 separate national debates about EU matters

  • The President of the European Commission should be directly elected in a two round election by the entire people of the EU, at the same time as the European Parliament Elections
  • It should be possible for the National Parliament of the 28 to come together to request that the Commission put forward a proposal on a particular matter. National Parliaments( if a minimum number agree) already have a right to petition to delay a piece of EU legislation, so why not give them a positive right to seek the promotion of a piece of legislation (if they can obtain a similar level of support across a number of countries).

WHAT HAPPENS IF THE UK VOTE IS TO LEAVE THE EU?

cropped-European-Union-flag-006.jpgI spoke earlier this week at a very interesting meeting organised by the County Meath Association of Chambers and Business Councils in Kells Co Meath on the topic of Brexit.

Next week, I will speak on the subject at meetings in Liverpool and Birmingham, and will be able to bring to the attention of UK voters at these meetings some of the concerns expressed in Kells.

The consensus at the meeting in Kells was that there would be a dramatic impact on the Irish economy if the UK, including Northern Ireland , left the EU.

DISRUPTION OF EXISTING BUSINESS PATTERNS ON A HUGE SCALE IF TARRIFS HAD TO BE REINTRODUCED

Patterns of trade on these island that have grown up over centuries, would be radically disrupted.

All forms of distribution within the two islands would be disrupted in EU tariffs had to be charged on goods coming to the Republic from Northern Ireland and Britain.

One member of the audience, who holds a very senior position in the food industry , pointed out that products as simple as a sandwich sold in a service stations, now contain a mixture of ingredients produced in the Republic of Ireland, Northern Ireland and in England.

If the UK left the EU, and Ireland had to impose the Common External Tariff of the EU, on food ingredients coming from either Northern Ireland or Britain, many present food distribution systems would become uneconomic, and hundreds of jobs would be lost.

The disruption of the complex supply chain of the modern food industry would be dramatic.

The Common External Tariff can be as high as 35%.

The knock on effect is impossible to calculate. It would be like having to unscramble an omelette!

IMMEDIATE EFFECT WOULD BE A CHANGE OF GOVERNMENT IN LONDON

I pointed out that this would not, of course, happen overnight on 24 June, because Britain would first have to decide on who would be Prime Minister and what would be the make up on a post Brexit Government.

How long would it take to elect a new Tory leader? Until that issue is decided no decisions on EU policy would be possible.

Only once that was settled, could the UK begin to decide what type of new arrangement it would seek to have with the EU.

NEW UK GOVERNMENT WOULD HAVE TWO OPTIONS

It would have two basic options

  1. it could ask to leave the EU and, like Norway, join the European Economic Area, or
  2. it could try for a wholly new special trade agreement, like the agreement Canada or Switzerland has with the EU

THE EUROPEAN ECONOMIC AREA (EEA) OPTION

The first option could be put in place quickly and would not disrupt trade all that much. It would have the disadvantage that the UK would still have to implement EU regulations and contribute to the EU budget.

Technically it would, however, comply with a referendum vote in favour of leaving the EU. It would buy time, allowing us to see whether the fears being stoked up in the present campaign have substance or not.

THE TRADE AGREEMENT OPTION

The second option would be much more disruptive.

It would require a detailed negotiation on every type of product or service that might be sold across the border in Ireland or between the UK and the 27 member countries of the EU.

Such an agreement would take years to negotiate (probably 7 or 8 years), and would be subject to domestic political constraints in all EU countries. We can see with TTIP, which is a much narrower negotiation, how matters can become the subject of fears, misrepresentations and lobbying.

It is unlikely that a Trade Agreement would allow the UK to sell financial services into the EU. Indeed it would be in the interest of countries that might hope to attract financial services out of London and into their own capitals to make sure the UK got no concessions on that point.

WHY IS THE SOVEREIGN UK PARLIAMENT DELEGATING ITS RESPONSIBILITIES TO A REFERENDUM?

I believe that a referendum is not a suitable method for making a complex choice like the one UK citizens are now being asked to make.

The UK used to be a parliamentary democracy, not a plebiscitary democracy , like Switzerland Parliament is sovereign under the UK constitutional system, but the exercise of this sovereignty is now being delegated by parliament to a referendum.

This displays a lack of confidence by Parliament in itself.

A referendum requires people to make a snap decision on a single day, without knowledge of the future implications of what they are doing. It requires complex contingencies to be reduced to a single “yes” or “no” question.

A parliamentary process, in contrast, goes on over a long time, and thus allows new evidence to be taken on board, before an irrevocable decision is made.

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