BREXIT is a headache for the European Union but a full-blown crisis for Britain with the high risk of collateral damage for Ireland.
That is what European Agriculture and Rural Development Commissioner Phil Hogan declared when he recently addressed two Oireachtas Committees in Dublin.
He told the Agriculture Committee he had no new insight as to what the consequences of Brexit are for Ireland, Britain, cross-border relations or the UK’s future relationship with the EU.
Mr Hogan was echoing the views of most experts when he stated that nobody knows what the future holds.
What is accepted however is the importance of the British market to the food industry and the farming community in Ireland Central Statistics Office figures show that in 2015 we exported almost €5.1 billion worth of agricultural products to Britain while imports from the UK were worth €3.8 billion.
An ESRI report last year estimated that the potential reduction in bilateral trade flows could be as high as 20%, with an even higher impact on agriculture, food and beverages.
Mr Hogan told the Oireachtas European Affairs Committee it is no exaggeration to suggest that Brexit concerns Ireland almost as much as it concerns the UK.
He said things have begun to clarify since British Prime Minister, Theresa May, announced she will give formal notice of the UK decision to leave by the end of next March.
The pound has weakened and there have been signs of how Brexit will raise food prices in the UK.
“The land border is another question. Until 1973 the trade or economic aspect of the Border was an Ireland-UK affair.
“Then, when both countries joined the European Economic Community, it became an EU-affair. Now, for the first time in history, the trade or economic aspect of the Border is about to become an EU-UK affair or an EU-Ireland-UK affair.
“Mr Hogan urged Committee members should reflect on how important the EU aspect will become if Britain turns again to a cheap food policy as part of its drive to become more competitive in international markets.
“North of the Border will be cheap food and a different way of supporting farm incomes, while south of the Border will operate under the Common Agricultural Policy of the European Union.
“There is not a great deal we can say about it at this stage because no one knows exactly how it is going to finish. However, we must get used to the salient facts,” he said.
Commissioner Hogan predicted that conversations between Dublin and Brussels will be almost as significant as those between London and Brussels.
The first public estimates are as high as €40 billion for the UK debt to the EU for past promises. Reflecting EU accounting rules, unpaid promises have built up in recent years and now Brtain must make good its share of this backlog.
“How is this going to be resolved? To the extent that the UK escapes this commitment, other member states, including Ireland, will have to stump up extra contributions. This is another reason for Ireland to be wary,” he said.
Mr Hogan said he did not intend to speculate further. The position of the European Commission remains as it has been since the referendum.
Until Article 50 notification is received, the negotiations cannot begin, although a great deal of preparatory work is in hand.
The Commission’s task force is being led by Michel Barnier, a former French Agriculture Minister and a past European Commissioner. It is no coincidence that one of his first visits was to Dublin.
Mr Hogan said the extent of economic integration on the island of Ireland is unmatched anywhere else in the EU.
Therefore, the level of potential disruption from a so-called hard Brexit will be considerable. This is already acknowledged by the Irish Government in the recent budget.
However, he warned of serious potential negative outcomes. For example, 40% of all Northern Irish milk is processed in the South.
More than 50% of Irish beef and cheese goes to Britain. A total of 40% of Ireland’s exports goes to the UK. Ireland’s all-island energy market, cross-Border health care, fisheries and aviation will all be potentially affected by a hard Brexit.
On the other hand, a hard Brexit might bring some opportunities for Ireland. What will happen to Britain’s financial sector if it loses its all-important passporting provision?
“Will inward investment choose Ireland rather than the UK? Although these possibilities do not, for the moment, seem to offer a consolation for the difficulties Ireland is already experiencing due to the decline of sterling, they raise unanswered questions,” he said.
Mr Hogan said there are other delicate political issues not least of which is the status of the Good Friday Agreement, which is underpinned by reference to EU law.
There are questions over the future of the common travel area and the status of Irish citizens in Britain as well as British citizens resident in Ireland, of whom there are more than 250,000.
He said Ireland and the United Kingdom are joined together in many ways and that is not going to be changed by Brexit.
However, the fact remains that Brexit is going to throw many old issues into a new light.
“Ireland and the EU must be quick to understand this and find ways to deal with it,” he said.
Mr Hogan said Ireland must use the days from now to next March to make its case clear and heard and ensure it is taken into account.
He reassured the Committee and the Irish Government that the Commission understands the difficulties Ireland faces.
“We are in this together as we fight for the best possible outcome for Ireland and the EU as a whole,” he said.
© Irish Examiner Ltd. All rights reserved