Minister of State McEntee’s address to the Financial Times 'Brexit & Beyond' Summit
London, 12 June 2018
Keynote Address: A European Perspective
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It is a great pleasure to be back in London and to address the third of these summits. I would like to thank the Financial Times for inviting me and for giving me an opportunity today to not only set out Ireland’s views on Brexit and the ongoing EU-UK negotiations but to also lift our heads and to look beyond the negotiating table.
In this respect, I would like to address two relationships that remain key for Ireland beyond the Brexit negotiations: our place in the European Union, a Union that is looking to the future and which is critical to Ireland’s political, social and economic interests; and our bilateral relationship with the UK, which is strong and prosperous, a state that Ireland is very keen to maintain and develop.
But first to Brexit. For Ireland, Brexit poses unprecedented political, economic, social and diplomatic challenges. Ireland will be more affected than any other EU Member State by the UK’s departure from the EU. Our relationship with the UK is unique in the depth and strength of the historic, human, political, economic and cultural ties which bind us.
For Ireland, the strategic objective of the Brexit negotiations is clear: to have the closest possible future relationship between the EU and the UK, a relationship which recognises and supports the vast extent of our common interests, whether economic, security or political. The UK will remain our close neighbour and partner in many areas.
The other key strategic objective for us has consistently been to ensure that the outcome of Brexit does not in any way undermine the Good Friday Agreement and the hard won gains of the peace process. The EU played a pivotal role in this achievement, together with Ireland and the UK and the people of Northern Ireland. We therefore all share the same ambition to protect the Good Friday Agreement. With that comes the need to avoid a hard border on the island of Ireland.
In the recent weeks, there has been much talk about customs and trade, to the point where we have all become experts, whether we wanted to or not! But while this is an important element of how we avoid a hard border, I think it is very important to recall why the Irish Government and the EU has been so insistent on the need to avoid a hard border.
Trade is of course an important element of the overall question. Today, cross-border trade represents the first export market for some 73% of Northern Ireland’s small and medium-sized companies. More than 7,000 businesses trade across the border from North to South supporting over 160,000 jobs.
But the importance of the border is not just about trade. It is about much more.
The invisible border in Ireland means that people as well as goods travel freely throughout Ireland. People can move back and forth across the border without let or hindrance, whether to shop, work, be educated, receive medical treatment, or visit friends and relations. This is particularly important for those who live in the border region and those whose lives and livelihoods bring them across it on a daily basis.
The absence of a border is, perhaps the most immediately visible – or should I say invisible - outcome of the peace process for the island of Ireland. It has allowed relationships to be rebuilt, communities to develop, services to be shared and the natural flow of daily life to evolve. For many, the border is not only invisible but is “irrelevant”.
The achievement of making this border invisible cannot be underestimated. And it was here that the EU’s Single Market and Customs Union had a critical role to play. The removal of customs posts followed in turn by the removal of hard security installations and checkpoints - led to a situation where the border could quite simply disappear from view. This was of course also supported by the long standing Common Travel Area between Ireland and the UK which allowed for free movement of people.
While, the European Union is not, in fact, mentioned much in the Good Friday Agreement, the membership of both Ireland and the UK, and therefore of Ireland, North and South, was taken as an absolute given.
Our common membership of the European Union also currently enables Strand Two of the Good Friday Agreement which provides for North South co-operation.
North-South cooperation – supported by a shared EU regulatory framework - has flourished in these circumstances, both in areas covered by the Good Friday Agreement, such as agriculture and the environment, and in other areas like energy, telecommunications and broadcasting. And our all-island economy has also prospered.
Similarly, the protection of fundamental rights in the Good Friday Agreement has been supported through EU law and practice, particularly in the area of protection against discrimination.
The European Union has also supported the building of peace financially. This is most evident through the PEACE and INTERREG programmes administered by the Special EU Programme Body – another of the North-South Implementation Bodies, which have supported projects from grand infrastructure such as the peace bridge in Derry to community level programmes – all of which are designed to embed peace, break down barriers and rebuild relationships.
In overall terms, the EU has helped the balance struck in the Good Friday Agreement to be implemented and to hold.
That is why the Irish Government is firm on our position of seeking a solution that is as close to the status quo as possible.
In short, EU membership and the Good Friday Agreement have brought immeasurable benefits to the people of Ireland, North and South and helped the normalisation of relationships between the people across our island. We want to ensure that this is not impeded by Brexit. I know that the British Government shares this objective.
It is because of this shared objective that we were able to reach an agreement between the EU and the UK at the end of last year that provides the commitment and guarantees on protecting the Good Friday Agreement in all its parts and the gains of the peace process, including avoiding a hard border.
In the Joint Report of last December it was agreed that delivering on these guarantees could either be achieved through the wider future relationship agreement between the EU and the UK, which is our first preference, or though specific solutions. However, if these routes fail to deliver, we would have to have a fall back on a default that would ensure full alignment with those rules of the EU’s internal market and customs union necessary to protect North South cooperation, the all island economy and the Good Friday Agreement, which includes the overarching guarantee on avoiding a hard border.
The draft Protocol on Ireland and Northern Ireland sets out in a practical and legal way this commitment, which has become known as the backstop. This backstop is the insurance policy, the certainty that in any circumstances and no matter what the outcome of the negotiations on the EU-UK future relationship, a hard border will be avoided. It is the certainty needed at the end of the withdrawal process to re-assure people and communities that the hard won achievements of the past 20 years will be protected.
And now it is vital that we use the time between now and the European Council at the end of this month to drive forward our efforts to resolve all outstanding issues as soon as possible. I welcome that the UK has now presented written proposals on the customs elements. Importantly, it also acknowledges that there are important regulatory requirements that will also need to be addressed.
Last Friday, Michel Barnier confirmed that the EU will reflect on these proposals. He raised some very significant concerns and doubts about the UK’s proposal: is it sufficient in itself to avoid a hard border? Will it protect the integrity of the Single Market and Customs Union? It is an all-weather solution? In order words it must provide certainty in all circumstances. These are very important questions and it is clear that further intensive work will be required in order to make the progress needed on the backstop before the June European Council.
Future EU-UK Relationship
While I have focussed here so far on the question of the border, it is important that we don’t lose sight of everything else that has to be addressed before October, including agreeing a framework for the future relationship between the EU and the UK. It has been Ireland’s consistent view that any EU-UK future relationship should be comprehensive and ambitious, and as wide as possible in scope.
Ireland stands firmly with our EU27 partners, and with Michel Barnier and the EU Taskforce, in working to secure the closest possible relationship with the UK in the future, which at the same time protects the integrity of the Single Market and the Customs Union. This will not be easy, and further difficult discussions lie ahead.
There will be a particular emphasis on trade, but there is a wide range of other questions to be settled too. These include areas like data flows, aviation and fisheries as well as security and of course the difficult issue of mobility.
And there will be some fundamental overarching elements to negotiate. If the UK is indeed to enjoy the closest possible relationship with the EU, its own regulatory rules and structures will need to be, at a minimum, closely aligned with those of the Union. Can this be achieved? How will it be monitored and enforced? How will disputes be settled?
The European Union has made clear that in the negotiations it will not compromise on the integrity of the four freedoms of movement – of capital, people, goods and services – which are the basis of so much of what it does. Nor can the United Kingdom enjoy privileges and flexibilities outside the EU which it does not have within. Being outside cannot be the same or better than being inside. Within those parameters, the Union will be as imaginative and as open as possible.
Future of the European Union
We fully respect the decision of the British people to leave the EU; however, Ireland will not be joining the UK on that journey. Our future lies in Europe. For those here living Brexit day in day out, and those of us in Ireland deeply concerned by Brexit, it may be hard to believe but Brexit is not top of the agenda for the vast majority of EU Member States. The European Union, while of course working to ensure an orderly UK withdrawal, is looking to the future, a future that Ireland will be part of and be active in shaping.
There are many priorities that Ireland is pursuing as part of the EU. First, we need to complete the single market. It is already the world's biggest tariff-free and barrier-free market. But there is no reason why it cannot grow exponentially. Services account for 65% of the EU’s gross domestic product and 70% of total employment. But the single market in services is only 40% complete. Cross-border services account for just 5% of EU GDP.
Completing the single market in services will add at least €300 billion to the EU's GDP and completing the digital single market would add a further €415 billion. So work is already underway on packages aimed at delivering on this agenda.
We are also vigorously pursuing trade negotiations around the world. The EU-Canada agreement entered into force last year on a provisional basis and we have reached a political agreement with Japan. The EU has just concluded a new trade agreement with Mexico and negotiations with the Mercosur countries are ongoing. Negotiations with other partners, including Australia and New Zealand commence in the near future.
The Euro is the second most important currency in the world. Avid readers of the Financial Times will already be aware that sixty countries and territories around the world have pegged the euro to their currency. We will complete economic and monetary union and, in pursuit of that objective, work is already underway on completing the banking union and creating a capital markets union.
This is an auspicious time to be a fully-fledged member of the European Union, especially if you are part of a new talented generation that wants to live in a socially responsible and sustainable environment with a global reach.
Huge investments are being made to ensure our young people have the skills they will need in the future. Many of you will be familiar with successful European programmes such as Erasmus+ and Horizon 2020. Horizon 2020 has supported research and innovation across the Union.
These will continue to serve the needs of Member States after Brexit. The European Commission is proposing, for example, that we spend one and a half times more in the next multi-annual financial framework on research, innovation and digital and the Commission is also proposing a doubling of spending on youth.
Ireland has had the fastest growing economy in the euro area for the last four years. The unemployment rate has fallen below 6% and there are over 2 million workers in the labour market. We have beaten our EU fiscal targets for seven straight years and we have an ‘A’ grade from all of the major credit rating agencies.
Research has shown that our membership of the European Union is a key factor when investors look at Ireland. The fact that we speak the same language as US investors is important too. They like our common law legal system and the pro-business environment. We also have a stable and competitive corporation tax system, which is internationally recognised as one of the most transparent in the world and our 12.5 per cent tax rate is, and will remain, a core part of our offering.
Not surprisingly, the Irish people see their future in Europe and want Europe to be at the heart of their future. This is borne out by opinion polls which show that 92% of the people want to remain a part of the European Union and the figure rises to 97% for 18 to 24 year olds. Their focus is on moving and prospering freely across our continent and enjoying to the full their rights under the treaties to study and to work there and even to benefit from Europe’s rich cultural heritage.
Of course the EU faces challenges, not least migration and the threat of international terrorism as well as global challenges such as climate change. But more than ever, the EU and its Member States are convinced that it is better to tackle these challenges as a Union rather than individually and this is of course particularly true for a small country like Ireland.
This sense of partnership must also guide our approach to the future relationship between the EU and the UK, a relationship that will also be important in shaping the future development of British-Irish relations. This is no doubt that the past few months have not been easy for this relationship as we navigate the challenges of Brexit. But our relationship is far deeper than events of the last few months. Our lives are interwoven. We have a complex and multifaceted past, and a shared – if at times difficult – history and geography.
Britain and Ireland work well together as equals and friends. This relationship has been helped and underpinned by our common membership of the EU.
Around meeting rooms in Brussels, Luxembourg and Strasburg, and in the corridors and margins of Councils, our Ministers, parliamentarians and officials got to know, understand, and indeed like each other! We learned to respect each other, work together and, although we didn’t always agree, we became close allies on many issues. Without a doubt, we are going to miss this ‘habit of cooperation’.
Therefore, with the UK outside the EU, we need to find ways to ensure that this familiarity is maintained so that our cooperation can grow. Existing channels for ongoing dialogue and cooperation between the Irish and British Governments will, of course, continue. Of course, we will also explore other avenues to maintain the “habit of cooperation” that currently exists due a common EU membership.
We have always said that a prosperous Britain is good for Ireland. Although the UK is leaving the EU, we still want many of the same things – as close as possible economic relationship, a peaceful Northern Ireland, and continued ease of movement for people and business between our islands. We have a €65 billion per annum trading relationship which is vital to our economies. We are both each other’s suppliers and consumers.
We should remember that we are in the middle of what was always going to be a difficult negotiating period - it was always going to present challenges. But I believe that the relationships between Britain and Ireland are strong, the foundations of our friendships are solid, and that we can emerge on the other side of the Brexit negotiations with these intact. As in the past, this will require hard work, patience, mutual respect and understanding, and perspective.
So as we continue to work through these complex and at times difficult Brexit negotiations, let us not lose sight of what we must work for beyond Brexit. A future that sees a prosperous UK working in close partnership with a prosperous EU and an Ireland that is secure at the heart of the European Union and working hand-in-hand with our closest neighbour.
12 June 2018