As phase two begins, this is a good time to take stock. Here are five areas of focus:
1. Getting a transition agreement
A transition agreement is essential to protecting Irish trade, jobs and companies. The two-year Article 50 period ends in March 2019. At that time, the UK will either crash out of the EU or enter a transition period. A ‘no deal’ situation would be catastrophic for Ireland. Planes would be grounded, ships docked, energy supplies interrupted and trade thrown into disarray.
And so a transition period must be secured. The EU’s position is that any transition must respect the status quo. The UK would continue to sign up to EU laws and regulations, observe the tariffs of the customs union, pay into the EU budget and participate in EU programmes. But it would no longer have a say in EU decision-making.
This is not attractive to the UK; if they are pushed too hard, growing public irritation could see a call to walk away. To offset this, the UK is likely to seek some easy concessions (eg: observer status on decision-making bodies) and some hard ones (eg: restrictions on free movement).
Ireland will form its own view on these as talks proceed, but we have an important role in keeping the talks on track.
2. Shepherding the December agreement
Our Government believes the December agreement is unambiguous in aligning the economies of Northern Ireland and the Republic, under EU rules and regulations, such that the UK cannot apply changes that would lead to North-South border controls. The agreement also appears to align the economies of Northern Ireland and Britain. Joining the dots essentially fully aligns the UK economy to the EU, but with the EU making all the decisions.
I tested this line of thinking last week in London with British ministers. Unsurprisingly, they didn’t share that view. The December agreement hasn’t been widely discussed in the UK yet, but for Ireland, it is critical – both in avoiding any North-South border controls, and in protecting free trade between Britain and Ireland. The Irish Government is going to have to watch the phase two talks like a hawk.
3. Representing the interests of Northern Ireland
It’s obvious that the lack of a Northern Ireland Assembly during Brexit is bad news. A small army of civil servants in Northern Ireland should be working on policies and relationships that protect an open border, funding for services and jobs. MLAs could be out across the EU, making the case for Northern Ireland, worthy of EU cooperation and support. Without an Assembly, none of this is happening.
Unionists do, at least, have some representation. The DUP enjoys unprecedented access in Westminster, and is using it, for example, to make the case for restoration of direct rule. But what of the nationalist community? While the DUP focuses on strengthening the union, who’s focusing on strengthening North-South cooperation? The SDLP no longer has any MPs. Sinn Fein MPs don’t engage in Westminster. Their votes could have been instrumental in the 41 amendments tabled to the UK’s Brexit legislation, but they chose not to use them. So the nationalist community has no representation during the most important talks since the Good Friday Agreement.
In this void, the Irish Government must work harder than ever to ensure nationalist interests are well represented during phase two Brexit talks.
4. Strengthening British/ Irish relations
The Taoiseach’s tough talk to the British went down well here last year. But as one political correspondent put it, he was chalking up short-term public support at the expense of the national interest. How so? Because his words registered in the UK – they were heard by British politicians and public alike. And they can retaliate in a hundred ways that could cost Irish jobs. A little extra paperwork for Irish goods driven across the UK, a few extra checks, a delay here and there. Costs rise, competitiveness falls, food gets to European shelves a day or two late. Companies close down.
Brexit will continue to be a point of tension between the UK and Ireland in 2018. In the past, such tensions were addressed privately. Megaphone diplomacy might make for good soundbites, but it’s not a smart way of building good relations with our neighbour and most important ally.
5. Getting Brexit-ready and seizing the opportunity
Right now, Ireland’s economy faces two serious threats. The recent changes to the US tax code have yet to be fully appreciated in Ireland, but they have the potential to wipe billions off our corporation tax returns and hinder inward investment from the US.
At the same time, Brexit threatens domestic industry, from large-scale manufacturing to small farmers and food producers. These threats could be shortly accompanied by an EU attack on our corporate tax base, and by a global economic slow-down.
These threats demand an ambitious new wave of economic investment and expansion, aimed at growing and internationalising Irish-owned companies. We are more than capable of achieving this, but for some reason, have never really gone for it.
Maybe there was no need, as foreign investment was enough. Brexit and US tax changes should be the catalyst for action. Significant investment in training, adaptation funding from the EU, relaxation of state aid rules, much greater in-market supports in export countries, access to far cheaper credit – a comprehensive programme of support and expansion could reap benefits for Ireland for decades to come.
Think Lemass/Whitaker 2.0 – we’ve done it before, it’s time to do it again.