What is the ideal Brexit model – from an Irish point of view?
While most people here would like Brexit not to happen and the UK to remain within the EU, it is looking highly unlikely that this will come to pass.
At a Bord Bia briefing on Brexit this week in Dublin, Assistant Secretary at the Department of Agriculture, Food and Marine, Brid Cannon said that as part of its negotiating process to leave the EU, issues such as tariffs, the EU budget, custom controls, standards and border controls would all have to be addressed.
She also said that it would be European that establishes guidelines for these negotiations and that the UK is bound by EU rules and regulations until the point it reaches agreement on exiting.
The UK will have the freedom to establish trade agreements with third countries, but it can’t do that until it leaves the EU.”
However, she said that once this happens, while standards should not change after the exit period, if the UK takes a turn in a different direction on issues such as Genetically Modified (GM) products and labelling it could create issues for Ireland.
She cited manufacturing milk in Ireland as a possible problematic area, as a sizeable amount of manufacturing milk crosses the border and how that could be labelled when exported would be an issue.
John Fahey, a Senior Economist with AIB said the ideal Brexit would be along the lines of Norway’s arrangements with the EU.
He said that over 50% of UK imports come from the EU, but only 10% of EU exports go to the UK. He also said that the UK is the biggest recipient of FDI in the EU and is heavily reliant on migrant workers.
However, with London as the centre of financial services industry in Europe, this will have to move elsewhere, he predicted.
The impact on Ireland, he said, would depend on what trade arrangements are put in place when UK does leave.
Ideally it goes down the Norway model if it remains part of the European Economic Area (EEA), from Irish perspective.”
Under the EEA, there are four freedoms – the free movement of goods, persons, services and capital and under the arrangement, Norway implements more than three-quarters of EU legislation.
However, he warned that if other trading arrangements are put in place, higher trading costs could impact on Ireland.
He said that while a weaker UK economy buys less from Ireland and a weaker Sterling makes our goods selling into the UK more expensive.
Despite this, he said that while economic growth in Ireland will be lower in 2017/18, it is still projected to be positive.
James Walton, a Chief Economist with the UK-based IGD – a research and training charity which advises on the food and grocery industry said a two-year negotiation term seems “staggeringly optimistic”, considering what has to be negotiated.
There are 130,000 pieces of EU law affecting the UK.”
He agreed that regulatory drift between the EU and a post-Brexit UK would lead to greater complexities for trade.
He too said that the attitude taken by the EU negotiation team will determine EU/UK trade terms, not the UK. However, he said that UK exports to the rest of the world outweighs its exports to the EU.