He said changes being demanded by Britain to remain a member of the EU may be “too high a price to pay” and the Government should clearly state in advance what sacrifices should be made.
“Ireland obviously wants Britain to stay in the European Union more than any country.
“The question for us is what price are we willing to pay in order to keep them in?”
Ireland’s consistent policy for the past three decades has been to argue against a “two-speed” Europe, which would involve different levels of integration by different countries.
“I do not believe we can or should sustain this position any more,” Mr Martin said at an address to the Institute of International and European Affairs in Dublin.
“Britain has rarely been our only ally on important negotiations and we have many opportunities to develop closer coordination with other states,” he said.
Britain wants the EU to be pared back to little more than a free trade area.
“Undermining the core of the union, stripping away the consumer and worker protections which our citizens value so much, and handicapping the ability to address clear problems in the union, would be too high a price to pay,” Mr Martin said.
“By all means if permanently staying out of the euro is required, or if they want to opt-out of a broader budget, there are means of accommodating them, but the union has to be about something more than trade.”
He urged the Irish Government — when the EU presidency concludes at the end of June — to announce “a formal process to set out Ireland’s position on the future of the union.”
He said: “I would like this to be an all-party affair, however at a minimum a white paper should be prepared this year and it should form the basis of our future negotiating positions.”
In a question and answer session after his speech, he said every Government department here should be analysing the potential effect of a British exit on its work.
Former Fianna Fáil Minister and advisor on the North, Martin Mansergh, told the forum that the country’s European policy “should not be a prisoner of the British-Irish relationship.”