Published in the Irish Examiner, 22nd February 2017
Brexit negotiation will be a trilogy – Divorce, Transition and Future Relationship
“It could take up to 10 years to conclude” – Hayes
Fine Gael MEP for Dublin, Brian Hayes, said today that people need to realise that the Brexit negotiations will be a marathon and not a sprint.
“It’s now clear from the team around Michel Barnier that Brexit could take anything from 6 to 10 years to conclude. It will be the most complicated and protracted negotiation ever within the EU. In Ireland we need to be prepared and ready for a situation that will involve a number of different governments, various Taoisigh and an enormous amount of political and diplomatic effort. This is not one negotiation, but more like three sets of negotiations: divorce proceedings, transition arrangement and future relationship.
“Once Article 50 is triggered in March there is just two years to conclude the divorce proceedings between the EU and the UK. The decision to conclude the final exit deal will be done by Qualified Majority Voting (QMV), which means that no one Member State can hold it up. The decision must also be ratified by a simple majority of the European Parliament which can be no later than February 2019.
“Given that both Parliament and Council have to issue guidelines for the negotiation after the triggering of article 50, the entire negotiation on the terms of Britain’s exit can only really happen between the summer of this year 2017 and January 2019 – effectively 18 months.
“The divorce settlement will focus on who owes who money. Given the fact that around 10% of the EU budget comes from the UK, the terms of the exit could be very costly from the UK’s perspective as existing EU budget commitments stand. Despite what some politicians have said so far, this phase will also be about defining the structure of UK’s future relationship with the EU – to what extent will the UK have single market access? Will they be part of the Customs Union? Will they be bound be ECJ decisions? Equally the issue rights of EU citizens in the UK and the rights of UK citizens in the EU will have to be resolved.
“After the first phase and assuming there is a deal by March 2019, comes the next phase – a transition arrangement. We must do our best to ensure that during this phase that minimal change from a regulatory or tariff position takes place. But this phase could last between two and four years.
“Finally we have the end phase or the negotiation on the future EU-UK relationship – most likely a new Free Trade Agreement putting the final Brexit deal into practice. This will really go into the nuts and bolts of how goods and services will be traded between the UK and the EU going forward. By any measure of previous trade agreements, this could be a long-drawn out process. There will be potential problems around cherry-picking and what level of compliance there will be with EU regulations. What is clear is that a Free Trade Agreement with the UK can only be formalised once the UK has left, or once divorce proceedings have concluded. And crucially it will be a mixed trade agreement which must be adopted by all 27 Member States and will not be done on the basis of QMV. If one of the 27 said No, then the final agreement could not come into force.
“All phases of this negotiation will be subject to legal challenge and ultimate determination in the courts. What’s clear is that the only possible referendum that could take place in Ireland, if the Oireachtas decided, is at the end of the process rather than the start of it. We are definitely in for long wait to see the final terms of Brexit. The entire political system needs to be aware of this challenge for the next decade.”
During the February Plenary of the European Parliament in Strasbourg I spoke about the Greek Economy and the Eurozone. I also particiapted in a debate on the future of the EU.
You can watch my contributions below:
Ireland Must Pivot to Europe – HAYES
Fine Gael Dublin MEP speech to the Irish Society of Actuaries Annual Dinner 16th Feb 2017
Ireland has three core international relationships – with the UK, with the EU and with the United States. Yesterday, the Taoiseach set out Ireland’s strategic response to Brexit. He made it clear that Ireland will stay in the EU and stay in the Eurozone. To do otherwise would be a serious mistake. Now is to the time to pivot towards Europe and make it clear that Ireland’s future is within the EU.
I welcome the decision of the government to publish shortly, a Trade and Investment Strategy around the St Patrick’s Day celebrations. Trade negotiations will be a central aspect of the EU/UK Brexit negotiations. These negotiations will be of critical concern to Ireland.
Trade figures for 2016 published by the CSO this week make for some interesting reading. Goods exports are up by 4%, reaching a record €117 billion and Ireland has a trade surplus of €42.2 billion, which is very welcome indeed. It is worth looking in more detail at some of the trade figures.
In 2016 the value of goods exported to Great Britain was €13.3 billion – 11.4% of total exports. Exports to the rest of the EU amounted to €46.3 billion – 39.6% of total exports. The export figures also show that 49% of Irish exports are to non-EU countries; this figure reflects how international the modern Irish economy is.
The trend of exports in recent years also indicates that exports to Britain have remained static or even declined. In fact, exports to Britain declined by 4% in value in 2016. Though this might have been due to currency fluctuations. In contrast, exports to the rest of the EU have shown a steady increase since 2010, increasing by more than €6 billion per annum since 2010.
There are those who are arguing that Ireland should follow the UK into the unknown. I would like them to look at Ireland’s trade figures. I would also like them to look at the consequences for FDI in this country if we decided to leave the EU. I would like them to specifically address the issue of Ireland’s membership of the Eurozone and what might be the consequences of leaving the Eurozone.
Last year we saw the impact of the Brexit vote on the Euro/Sterling exchange on exports and cross border trading. The British have effectively seen a depreciation of about 15% in the value of sterling. As inflation takes hold in the UK with rising import costs – it is inevitable that the British economy will weaken. Ireland remains vulnerable to Euro/Sterling exchange risks. This risk will remain for the some years.
Part of the response to Brexit must be a pivot to Europe. This does not mean neglecting the British market – geography dictates that Ireland and Britain will always have the closest of trading links. Brexit does mean however, that Ireland must deepen our trade links and increase our exports to the rest of the EU. The new communities from EU countries will have an important role to play in developing trade links. In this regard, it is interesting to note that trade in goods between Poland and Ireland in 2016 was valued at almost €2 billion.
New markets in mainland Europe are particularly important for the Agri-Food sector, the tourist sector and Irish SMEs, all of which are heavily dependent on the British market. Bord Bia, Enterprise Ireland and Tourism Ireland have a huge responsibility to help and support these sectors to grow market share in mainland Europe. Even without the UK the EU will still be a Single Market of 450 million people – the largest and most prosperous single market in the world. SMEs in particular will need tax breaks, marketing and promotional support to break into European markets.
Younger people in all survey opinions are more pro-European. We have to improve language proficiency in our schools and colleges. Students need to be encouraged to work and live in non-English speaking countries. Our universities and third level colleges should be setting targets and supporting students to take up Erasmus exchange programmes. I also believe the government should introduce a new scholarship programme, jointly with business, wishing to sponsor young graduates willing to spend a year in mainland Europe on a mixture of work experience and job training placement.
CSO figures show that exports to the United States reached just over €30 billion in 2016, an increase of 12% on 2015. The dollar has been strong against the euro and is likely to remain so during 2017. Despite the tough talk of Tariffs and Protectionism from the Trump administration, a strong dollar provides great opportunities for Irish exporters of goods and services to a key export market. The passing of CETA this week in the European Parliament opens new opportunities with Canada.
Brexit will be challenging but it will also provide opportunities. It will be a marathon rather than a sprint. The outgoing US ambassador, Kevin O’Malley, made the point in his final speech that post Brexit Ireland will become even more attractive for investment. There will also be opportunities in the financial services sector and in higher education.
We are living in a period of political struggle and profound technological change. Success will depend on our capacity to respond to change, to be flexible and to identify opportunities. Nevertheless, let us remember this; the EU has transformed Europe and has transformed Ireland – economically, politically and socially. Ireland is now an open, dynamic, progressive country. Ireland is one of the top ten most developed countries in the world, according to the UN Human Development Index.
The EU is not just about economics; the EU is also about values. The EU value system is about democracy, freedom of the press, the rule of law, equality, workers’ rights and above all respect for the dignity of individuals in all their variety. These are values worth defending. Next month we will be celebrating the 60th anniversary of the Treaty of Rome.
In many respects, the EU has been a Peace Process for Europe. In the first half of the last century historians estimate that perhaps 80 million people died violently in Europe. Since 1950 apart from the violence in the former Yugoslavia, Europe has been relatively peaceful compared to previous generations.
But what happened in Yugoslavia in the early 90s and what happened in Ukraine more recently is a reminder to us of Europe’s violent past and a warning to us of what Europe could again be. Ireland is a small country with an economy integrated into an increasingly globalised world. Our future is with the EU – it is something we should proclaim openly and with pride.
The four Irish EPP Group MEPs (Fine Gael) Seán Kelly, Mairead McGuinness, Brian Hayes and Deirdre Clune, today (Wednesday) voted in favour of the EU-Canada Comprehensive Economic and Trade Agreement (CETA) to boost trade and job creation, in a final vote of the European Parliament in Strasbourg.
“After 7 years of negotiations, with the full inclusion of various stakeholders including trade unions, NGOs, governments and more, an advanced, extensive trade agreement was achieved between the EU and Canada. Today, we will vote in favour of its implementation.”
“We know that every €1 billion in exports supports 14,000 European jobs. Let’s not forget that Ireland is an export-led economy, selling 80 percent of all products abroad. Put simply, more trade means more jobs. CETA presents a trading opportunity with a trusted, democratic country where almost 15pc of citizens claim Irish ancestry.”
Overall, the agreement is expected to raise the level of the EU’s annual GDP by around €12 billion per year and increase bilateral trade by €26 billion. There are particular benefits for Ireland and especially for small to medium sized businesses with clearer rules for SMEs and a more competitive trade and export environment, with the Irish services sector set to benefit from free access to the Canadian services market too.
“Currently, EU food and agricultural exports face between 10-20pc tariffs with Canada. CETA will eliminate almost 92pc of tariffs meaning agricultural and food products to Canada will be duty free. However, it is also important to note that certain sensitive sectors, such as beef and pork will have limited quotas. CETA will also not open up the market for poultry and eggs in the EU or Canada. And of course, only hormone-free produce will be allowed into the EU,” added Mr Kelly.
The Investor Court System (ICS) in the CETA agreement will ensure protection for investments while enshrining the right of governments to regulate in the public interest. Extensive consultations with the general public and relevant stakeholders are ongoing on this issue within the EU, and will feed into the negotiation process for the creation of a new multilateral investment court.
CETA will be provisionally applied from April 2017 and then ratified by Member States.
Travellers set to be able to access online subscriptions to Netflix and other online services across EU – Hayes
Travellers set to be able to access online subscriptions to Netflix and other online services across EU – Hayes
Europeans travelling within the 28 EU member states will no longer be cut off from online services they have paid for back home, such as films, sporting broadcasts, music, e-books or games, Brian Hayes MEP has said.
“An agreement has been reached this week between the European Parliament and Malta, which acts on behalf of all EU States in its role as the bloc’s current holder of the rotating presidency. The new measures will apply only to online fee-based services. Free-of-charge services will be exempt and it will remain up to the provider to decide if they will be made available across the EU.
“This agreement is a first step towards modernising copyright rules in the EU, and comes after the abolition of roaming charges for mobile phones came into effect last year.
“While this agreement still must be formally approved, this is another step towards breaking down barriers in the single market of 500 million people and good news for people travelling to other EU countries on business, holidays, or to study” concluded MEP Hayes
We cannot put up a wall around UK Financial Services after Brexit – Hayes
“Punishing the UK from an EU perspective would be destructive and self-defeating”
Brian Hayes MEP, during the first European Parliament delegation to the UK since the Brexit referendum, said that the European economy will suffer if there are major barriers for the City of London. Punishing the UK after Brexit would be a destructive and self-defeating game that the EU must not play.
Mr. Hayes, along with EPP MEPs on the Economic and Monetary Affairs Committee, met with Chancellor Hammond, Bank of England Governor Mark Carney and key representatives of the UK financial services industry.
“The UK holds for 40% of Europe’s assets under management and 60% of its capital markets business, and UK-based banks provide more than £1.1 trillion of loans to the other EU Member States. Essentially, the City of London is the biggest financier of the European economy. The reason that these funds can be channeled into the EU economy is because of passporting rights and single market access.
“A hard Brexit would put in jeopardy the way we fund the EU economy. This means that European banks, SMEs and manufacturers could find it difficult to access capital.
“Putting a wall up around UK financial services will be detrimental to Ireland especially. Over half of Ireland’s exports in financial services to Europe goes directly to the UK every year. Ireland has serious opportunities to attract financial services firms in light of Brexit. However, we do not want to see a whole swath of the financial services industry pull out of the UK. We need a strong City of London as both of our financial services centres are interlinked.
“I made these points to Chancellor Hammond yesterday when he met with our delegation of EPP MEPs. The issue of financial services is one key area that Prime Minister Theresa May left relatively untouched in her recent speech on Brexit.
“I’ve been very impressed by the clear interaction between the IDA, Irish government Ministers and our diplomatic mission in making the case for Dublin and Ireland in the City of London.
“A bad tempered divorce and protracted divorce is in no one’s interest. What is needed now is certainty. In fact were no deal to emerge it could present a new risk to the fragile and interconnected financial markets that exist in the UK and the EU.
“Britain is leaving the EU and the EU needs to establish after Brexit a solid new relationship with the UK especially in the area of financial services. Equally the UK must show good faith in applying regulation that cannot be interpreted as a race to the bottom. It is clear from my conversations with the Governor of the Bank of England to the Chancellor that the UK will not be applying light touch regulation. A clear commitment to the post financial crisis legislation remains.
“The issue of what type of access the UK gets to the single market is an issue that will likely be decided by the end of 2018 through the divorce settlement. It is in Ireland’s interest to ensure that the City of London remains strong and retains the ability to fund the European economy. Whatever the ultimate deal, I believe we need to look for a formal cooperation agreement between the EU and the UK on financial services.
“No other financial services centre in the EU has the same capacity to fund the European economy. And we must recognise that, as it stands, the City of London is key to the growth of the whole Union.”