Kieran Coughlan: Better the devil you know with Brexit issue
This is undoubtedly the most significant of votes for the UK, in a generation.
The European Union project and its former incarnations, the EC and EEC, impacts on almost every aspect of everyday living for its citizens.
VAT on purchases, regulation of food standards, common customs charges on imports into the EU, traceability and labelling of food, approval of medicines, recycling of electronic waste, testing of crop sprayers, health treatment of EU patients living in and travelling across Europe, transferability of social insurance, are just some examples of European influence.
Perhaps one of the areas where Europe is failing is in border controls, and one of the strongest arguments for an exit from the EU is the suggestion that Britain can once again control its borders as it sees fit. TV footage of hordes of asylum seekers in the Calais Jungle, waiting for a chance to smuggle into the UK, is a reminder of the attraction of the UK as an immigration destination.
On the “Yes” side, the campaign to remain is focused heavily on the economic implosion that might occur should Britain leave.
For British voters, it’s simply a case of weighing up whether they are better off in or out of Europe. But the ramifications of the outcome affect the rest of us Europeans — and will affect us Irish like no others.
Trade, travel and emigration links between Ireland and the UK run deeper, stronger and longer than with any other EU member state. In 2014, destination UK accounted for over 40% of Irish agricultural exports.
This level of trade is very much reciprocated, with goods and services from the UK to Ireland totalling £27.86 billion in 2014, or 30% of all imports into Ireland.
Breaking this down, food and drink exports from the UK to Ireland accounted for over €3bn in 2014. The impact of a British exit from the EU is anyone’s guess, but given the quantum of trade between our two nations, a small disturbance can have a huge effect.
Consider, for example, a scenario where currency markets react negatively to a Brexit, such that the value of sterling weakens significantly. The capacity of Ireland to maintain farm produce exports at current levels, priced in euros, would be significantly compromised, due to a complex substitution effect. The substitution could arise from British customers switching to alternative produce, or using cheaper imports from other destinations (for example, non-EU countries whose currency movements would better track the pound).
A weakened sterling would also increase competition from UK-based farmers, for Irish products priced in comparatively expensive euros.
Finally, imposition of border controls can have the knock-on effect of re-introducing import tariffs and customs.
Meanwhile, UK farmers could argue for production-linked supports, effectively designing their own CAP.
Teagasc have undertaken a study of the potential impact of a Brexit on our economy.
A range of conclusions are presented.
A vote to stay in Europe will have little impact on existing trading relationships; it’s a case of continue as is.
Even with an exit from the EU, the UK could enter into a “free-trade agreement” with the EU, which effectively means the same trading benefits already in place between the UK and other members.
Interestingly, it would appear that Ireland wouldn’t have the capacity to negotiate its own trade and tariff deal with the UK, but would instead fall under any EU negotiated deal.
Teagasc suggest that a Brexit that increases barriers to trade would “drive a wedge between Irish and UK prices and most likely reduce the volume of agri-food exports from Ireland to the UK.”
Quantifying a more grim scenario of a 15% fall off in volumes to the UK, and a drop in prices of 30% to facilitate the dumping of displaced product into other markets, suggests a loss in gross income to Irish farmers of €290m, or about €2,500 per Irish farm.
In real terms, the added volatility that could come about as a result of a Brexit could wipe out many already vulnerable Irish farms.
The drop in income would be more pronounced in dairy and beef sectors, where Ireland has the lion’s share of the market.
From an Irish perspective it looks like a case of the devil you know (the UK staying with Europe) being better than the devil you don’t.
