London Mayor and pro Brexit campaigner Boris Johnson said recently the UK leaving the EU would be like a prisoner escaping jail!
The UK goes to the polls on June 23 to vote in a referendum on a Brexit and if a majority votes in favour of a Brexit, the UK will then begin the process of leaving the EU.
The impact on Ireland if the UK leaves the EU is unknown, but Teagasc and the Agricultural Economics Association of Ireland, recently looked at some of the facts, figures and concerns around a possible Brexit.
1. This is not the first time the UK has held a referendum on EU membership, albeit last time in 1975 it voted on whether to say in the then EEC and 67.2% of the population voted to remain. Article 50 of the European Treaty allows any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
2. If the UK votes to leave the EU, nothing will actually happen for at least two years. It would take a minimum of two years for the actual divorce to happen, with negotiations and an exit package to be agreed. Greenland left the then EEC in 1985. It only joined in 1973 when it was part of the Danish realm. But when it gained its independence from Denmark in 1979, it took until 1985 before it left after six years of negotiations.
In terms of timing, under Article 50 of the TFEU, the UK must give a minimum period of two year’s notice of its intention to leave the EU and a more extended time period of five or even 10 years might well be required to facilitate an orderly exit. However, the UK is due to hold the Presidency of the EU in the second half of 2017…that could be awkward for everyone to say the least.
3. There is no ‘ideal’ exit strategy for the UK, if it votes for a Brexit. No country has left the EU. If it votes to leave, then it must notify the EU formally of its intention to exit, then the exit negotiations begin. Norway’s agreement is unlikely to be popular with the UK as it does not address the UK’s political issues with the EU – it cannot impose immigration controls. Switzerland’s deal with the EU is not likely to be popular with the EU, as it would give access to certain sectors in trade.
4. The UK is likely to be the largest (population) country in Europe within a generation. It currently has a population of 65m which is expected to increase to 77m within a generation. That population needs food and services and good, a lot of which would have to be imported.
5. The UK is highly dependant on imports and will not embark on a food self-sufficiency policy. However, the UK is a more important as a source of imports to Ireland than it is as destination for Irish exports, and any barriers to trade would increase prices of UK imports to Ireland. One-tenth of EU exports are to the UK, whereas half of UK exports are to the EU. New trade agreements with the EU would need to be negotiated. Further, the UK may look to third countries, including South American counties, for increased supplies of poultry and beef which would see Irish produce having to compete with cheaper products.
6. Ireland is not the only country which would be most affected by a Brexit – the Netherlands and Cyprus will also be severely hit if a Brexit takes place, especially the latter which is a member of the Commonwealth and has strong banking ties with the UK and is home to two sovereign British military bases.
7. The UK is Ireland’s largest single trading partner. Total Irish merchandise exports in 2014 were valued at €92 billion, of which almost €13.6 billion were exports to the UK. Ireland also imports a significant amount from the UK. In 2014 Ireland exported €4.5 billion in agri-food products to the UK, primarily in the form of beef, dairy products and processed foods. Ireland’s imports of agri-food products from the UK are also substantial, amounting to €4.1 billion in 2014.
8. Ireland is the only country to share a land border with the UK. If a Brexit takes place, that will potentially see Ireland and the UK revert to border controls. Specific issues for Ireland and the UK would need to be addressed, including the volumes of milk that come into Ireland for manufacturing milk. That milk could not be processed into a product that could carry a ‘produce of EU’ label.
9. What is Ireland reliant on the UK to import?
- 56% of fresh beef imports into the UK come from Ireland.
- 56% of butter into the UK comes from Ireland.
- 28% of cheese into the UK comes from Ireland.
10. In relation to UK agriculture, it is understood that direct payments to farmers in the UK would not pass a ‘value for money’ audit by the UK Treasury, so any budget towards supporting agriculture in the UK is likely to decrease. However, that said tariff elimination would expose UK dairy and drystock, so UK is likely to see dairy and drystock as ‘sensitive’ products in trade negotiations.