Ireland and Brexit: the Good News

Dec 30, 2020

On Christmas eve the Brexit deal was done and the Irish breathed a sigh of relief. Even so, not all in Ireland would agree with Irish Times columnist David McWilliams assessment that the EU-UK Trade and Cooperation Agreement (TCA) was ‘the best news for Ireland in 100 years, couldn’t have worked out better for us!’ – especially those who make a living in the fishing and long-distance haulage industries.

Nevertheless, there was widespread relief in Ireland that a no-deal Brexit had been avoided. As Taoiseach Micheál Martin observed, there is no such thing as a ‘good Brexit’ for Ireland, but the EU-UK TCA was ‘the least bad version of Brexit possible’.

The central achievement of the EU-UK TCA is that there will be free trade in goods between the United Kingdom and the European Union – no tariffs, no quotas. This is good news for the Irish economy, particularly the food sector, which faced crippling tariffs under a no-deal Brexit. But, as British prime minister Boris Johnson admitted soon after the deal was done, the devil is in the detail. And there are lots of details.

Those four simple words – ‘no tariffs, no quotas’ – are contained within a document that runs to 1246 pages, not to mention the Withdrawal Agreement signed in October 2019, which included the Northern Ireland Protocol (NIP), whose wrinkles were only ironed out on 9 December 2020 and then in principle only. A positive note was the British government’s announcement it would withdraw the sections of the Internal Market Bill allowing it to override the NIP, confirming the cynical view that they were more a bargaining chip than a genuine attempt to preserve NI’s status in the union.

While the details of the TCA preserve many of the benefits of the EU customs union and single market, some of those details add layers of complication. Although there will be free trade it will be in goods not services and even then it will not be frictionless. Paperwork and border checks to ensure compliance with the TCA will add delay and costs to the free flow of goods between the EU and the UK. As a NI manufacturing industry group remarked, ‘It is the first trade deal in history which makes doing business more, not less, difficult’.

Fortunately, so far as the island of Ireland is concerned, the NIP means that TCA compliance checks will not occur at the land border between NI and the Republic, but at NI’s airports and seaports. As NI will effectively remain on the EU side of the customs border, internal trade on the island of Ireland ought not be affected. As McWilliams observed, it is the first time since the union took effect in 1801 that there are customs checks between Britain and the six counties that now constitute NI.

Some see the NIP as a step towards Irish reunification. If so, it is a mixed blessing. Few with Irish blood in their veins would not rejoice at the prospect. But the reality is that NI is like the difficult child that neither parent in a custody dispute really wants. Britain’s attitude was demonstrated in the terms of the NIP itself, which treat its oversea province differently from the mainland, while the Republic in its one-hundred-year history has rarely shown enthusiasm to force a change of sovereignty over the north.

With reunification Ireland will have to assume responsibility for the £10 billion annual subsidy Britain pays to cover NI’s fiscal deficit as well as for NI’s share of the UK national debt and it will have to upgrade services, such as health care, that are below NI standards. On top of that it will inherit a security problem in dealing with recalcitrant unionists disaffected by the changed custody arrangements. Nevertheless, if the child wants a change, its new custodial parent, howsoever reluctant, will not reject it.

For most nationalists in the north, the 1998 Good Friday Agreement along with common membership of the EU served to assuage aspirations for reunification. And perhaps the TCA, agreed a day after the centenary of the enactment of the statute sanctioning partition, will maintain that equilibrium. Yet, it is the case that 56 per cent of voters in NI voted in 2016 to remain within the EU and reunification is an obvious way to return to the status quo ante Brexit.

Already, thought is being given to creative ways to achieve reunification other than through the blunt instrument of a unitary republican state. Shared sovereignty and federalist solutions, the latter originally proposed in the 1870s during the home rule movement, are once again being examined as a means to satisfy nationalist aspiration while accommodating unionist sensibilities.

In the meantime, the Brexit-related questions most exercising Irish minds at present are whether its fishing industry will survive and whether its lorries and ferries utilising the Wales/England land bridge to the continent will be unduly delayed at ports in the UK. Already, ferry owners are promising additional direct services between Ireland and the continent. These journeys take longer than those via the land bridge but may be preferable for some goods if a logjam results.

Fishing is the industry that seems to have attracted the most publicity in discussions of the TCA despite the fact that it accounts for only a small proportion of the parties’ GDPs. To those directly affected, it is, of course, a matter of the greatest significance and industry representatives on both sides have denounced the deal as giving away too much. The disproportionate attention the industry has received is largely a product of symbolic politics. Fishing is the touchstone of Johnson’s claim that he has delivered on Brexit’s promise to restore Britain’s sovereignty and to ‘take back control’ of her fisheries.

At first sight, this fixation seems surprising as sovereignty includes the ability to grant rights to third parties to exploit resources in your sovereign territory. Yet, as Britain’s own imperial history demonstrates, a measure of a country’s relative power is its ability to resist granting concessions to foreigners. Hence, in announcing the TCA, Johnson was at pains to claim that after a transition period the UK will be ‘free to catch and eat as much fish as it likes from UK waters’. Well, yes and no.

The Fish Annexes to the TCA provide that at the end of the five-and-a-half-year transition period the share of the catch will be determined annually, but they also suggest it will be at the level then prevailing and that, if the UK were to reduce the value of fish available to EU fishing boats, the EU could impose a comparable cost by tariffs on fish it imports from the UK.

In aggregate terms the value of fish available to EU fishing boats will decrease by 15 per cent in the first year and at 2.5 per cent per annum thereafter, so that by 1 July 2026 the value will be 25 per cent below the 2020 level, an estimated reduction of €160 million per annum. But, as with the agreement itself, the devil is in the detail. Quotas of some species and localities of fish will be cut more than others. And this is the major source of complaint of the Irish fishing industry.

Of that €160 million, the Killybegs Fishermen’s Organisation estimates that the Irish industry will lose €44 million and, of that, €31 million relates to mackerel, the main source of income of the Irish fishing industry. Ireland’s share of mackerel will fall from 21 per cent to 13 per cent. This is particularly galling as mackerel caught in UK waters spawn in seas off the west coast of Ireland. The KFO has called on both the Irish government and the EU to provide compensation.

Barring any last-minute glitch, the EU and the UK are likely to ratify the TCA. Even so, we have not heard the last of Brexit. In fact, the TCA leaves much to be debated in the future. Already, Ireland’s deputy prime minister Leo Varadkar has warned Johnson that Britain may be punished if it strays too far from EU rules and regulations, while Johnson has threatened withdrawal if the EU uses its provisions to impose retaliatory tariffs. Despite such posturing, the TCA’s commencement on New Year’s Day will be good news for most sectors of the Irish economy, even if it is not the best news in 100 years.

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