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Minister Coveney Dáil Statement on Update on EU-UK Negotiations on Brexit

Minister for Foreign Affairs, Simon Coveney TD

I am grateful for the opportunity to update the House on developments in recent months with respect to Brexit. As I have said previously in this House, despite the continued focus of the Government, and the country, on the unprecedented challenges posed by the Covid-19 pandemic, Brexit also poses an unprecedented challenge for Ireland.

The Government’s focus and strategy, with regard to the implementation of the withdrawal agreement and the protocol on Ireland and Northern Ireland, the future of the relationship between the EU and the UK and the future of our bilateral relationship with the UK, has not wavered.

In the past two weeks, there has been much attention on the publication of the UK Government's internal market Bill. Its publication caused grave concern, as I will discuss in more detail later. Time is short now, as we all know, and serious issues remain outstanding. Despite noise, and despite setbacks, this Government’s focus remains on the implementation, in full and in good faith, of the withdrawal agreement and the protocol, and on achieving a successful conclusion to the future relationship negotiations.

I will now seek to address in more detail the state of play with regard to EU-UK negotiations, implementation of the withdrawal agreement, including the Government’s discussions with UK and EU interlocutors in recent days, the readiness in Ireland for the end of the transition, and Ireland’s bilateral relationship with the UK, on which we must always focus.

On negotiations on the future EU-UK relationship, the EU has been engaged in intensive negotiations with the UK over recent months to try to agree a broad and comprehensive future partnership agreement. This remains the goal. Ireland supports the closest possible relationship between the EU and UK. However, what can be achieved will also be determined by the scope of the UK’s ambition in this area and its willingness to engage seriously with the EU's red lines. We want an agreement, but it must be one that respects the EU's long-term economic interests.

Eight formal negotiating rounds have now taken place, with additional informal contacts between the chief negotiators and their teams outside the formal setting. These talks continue to address a broad range of issues, from trade in goods and services to transport and energy, from law enforcement to mobility, and so on. The ninth round is due to take place next week. Unfortunately, nowhere near sufficient progress has been made.

Significant gaps remain on key issues, in particular on the level playing field, governance and fisheries. These fundamental issues must be addressed to secure an overall agreement. As set out in the political declaration agreed in October of last year, the EU-UK future relationship must encompass "robust commitments to prevent distortions of trade and unfair competitive advantages". We want this commitment followed through. Level playing field provisions must reflect the proximity and depth of the trading relationship between the EU and the UK. These are necessary to protect fair and open competition and to prevent diverging standards in areas such as environmental protections and workers' rights

State aid is a key consideration in the EU-UK future relationship talks. The political declaration agreed by the EU and UK clearly sets out state aid as one of the critical areas to ensure a level playing field and open and fair competition between both parties. Progress on fisheries has also been disappointing so far. The original intention was to resolve the area of fisheries by midsummer. Fisheries is an important priority for Ireland. We are seeking to protect the interests of the Irish fleet in terms of both access and the quota share it currently enjoys in British waters. From the outset of the negotiations, Ireland and our EU partners have been clear on our level of ambition in this area and on the fact that progress on an overall trade deal is linked to progress on fisheries. This is reflected in the EU mandate and the draft EU legal text. The two sides are still very far apart, however. The task force is continuing to push for increased UK engagement on this area, and affected member states, including Ireland, are continuing our very close engagement with the task force on the EU approach. I spent some time speaking to Michel Barnier on this issue this week.

The next negotiating round will begin next week, on 28 September. Time is growing very short, but we should not forget that it is in everyone’s interests for a deal to be reached. Michel Barnier and his team have done enormous work representing the interests of all member states. They have our full and unequivocal support. For our part, Ireland will continue to work as part of the EU27 to ensure that our collective approach to these negotiations reflects our values and interests.

The withdrawal agreement, of which the protocol on Ireland and Northern Ireland is an integral part, was agreed by the EU and the UK, just less than one year ago, in October 2019. It was approved by all EU Heads of Government and received the assent of the European Parliament. It was signed and ratified by the UK Government. Legislation implementing it was passed by the UK Parliament at the beginning of this year. It is a legally binding international agreement.

From the beginning, Ireland's approach has been guided by the principle of securing a deal that worked for Northern Ireland and the island as a whole. The protocol includes provisions that avoid a hard border on the island of Ireland, that recognise the common travel area, protect continued North-South co-operation and protect the integrity of the Single Market and, as important, Ireland's place in it.

It also affirms that Northern Ireland is part of the customs territory of the UK and its place in the UK's internal market. It maintains commitments to ensure no diminution of rights, safeguards and equality of opportunity, as set out in the Good Friday Agreement. It maintains the single electricity market and reaffirms the commitment of the EU and the UK to the PEACE PLUS programme.

The protocol is designed to operate in all circumstances, including the absence of an agreement on the future relationship between the EU and the UK. Some commentators forget that. The negotiation of the withdrawal agreement and the protocol was lengthy and detailed and the protocol represents a fair and balanced outcome for all parties, with compromises on all sides. It is specifically designed to protect the Good Friday Agreement and the gains of the peace process, including avoiding a hard border on the island of Ireland.

Clarity on and stability in all aspects of the protocol are vital for businesses and people in Northern Ireland. The protocol allows them to be fully assured that the peace and prosperity delivered through the Good Friday Agreement will be protected in all circumstances. A vital component of this is protection of the all-island economy, which is important to businesses across the island of Ireland, now perhaps even more than ever. We have always been clear on the need for the protocol to work for the people of Northern Ireland and for the business community there. Throughout the Brexit process, I have maintained close contacts with leaders in Northern Ireland, including contacts today and yesterday. I have also continued to engage intensively with its farming and business representatives and other key stakeholders. I recognise the importance of east-west trade for Northern Ireland businesses. I welcome that the EU is already engaging closely with the UK to find appropriate and agreed solutions, but they must fall within the framework of the agreed protocol.

The withdrawal agreement affirms in black and white the constitutional status of Northern Ireland as set out in the Good Friday Agreement. This is set out in the very first operative article of the protocol. It is vital that the protocol be implemented now in full and in good faith.

The UK published the United Kingdom Internal Market Bill on Wednesday, 9 September. The British Government's approach in this legislation is deeply concerning. The Bill, if it were implemented in its current form, would undermine the withdrawal agreement and the certainty and stability that is so vital to protecting the Good Friday Agreement. It would seriously erode and damage trust in Northern Ireland and between the EU and the UK. Injecting uncertainty and confusion at this point of the process is not helpful on any level.

The Taoiseach raised our concerns directly with the British Prime Minister on the day the Bill was published. He also discussed these issues with the EU's chief negotiator, Mr. Michel Barnier, and Commission President von der Leyen. We raised the same points during the extraordinary meeting of the joint committee on the implementation of the withdrawal agreement, which met on Thursday, 10 September. At that meeting, Commission Vice President Šefovi urged the British Government to remove the problematic measures from the Bill by the end of this month.

I attended the General Affairs Council in Brussels on Tuesday of this week, where the state of play on Brexit was discussed and the full unity of the EU in support of Mr. Barnier, our chief negotiator, was expressed strongly. I also had a range of meetings and contacts while there on Brexit-related issues. I met Vice President Šefovi, the co-chair of the EU-UK joint committee, and Mr. Barnier. We agreed that our collective focus should continue to be on achieving a successful conclusion to the future relationship negotiations and continued engagement through the mechanisms provided for under the withdrawal agreement to resolve outstanding issues. Let us see what progress can be made in the coming short weeks, but in any final trade deal, we will have to be clear and fully certain that the withdrawal agreement will be implemented in full.

Even if we get an agreement on a future relationship, I do not believe it will be ratified if there is still a threat by the UK to legislate to undermine the withdrawal agreement and break international law. Why would the EU ratify a new agreement with a country that is threatening to break an agreement that is not even 12 months old? As with everything in politics, trust and relationships are what matter in this context. I continue to try to remind the British Government in particular that, when all of this is done and we are on the other side of the transition at the end of this year, the relationship between the EU and the UK will be important for many of the global challenges that we face together and many of the mutual interests that we have and on which we need partnership. As we try to close out a future relationship agreement that puts in place a basic trade agreement and makes the end of the transition as acceptable and implementable as possible in terms of the change and disruption that are coming, we must bear in mind that, after all of this, the relationships between the EU and the UK need to be protected so that, for many reasons, we remain close in future.

The next meeting of the joint committee will take place on 28 September and Ireland will participate as part of the EU delegation, as always.

As Members of the House know, we have urged the British Government to step back from its deeply concerning approach in terms of legislation and to work to repair the trust that has been damaged and implement successfully and faithfully the withdrawal agreement and protocol that we agreed together. A positive resolution to this issue is in all of our interests in the short and medium terms. We remain in close contact with all of our EU and UK colleagues.

This Tuesday marked 100 days until the transition period ends on 31 December. Irrespective of the outcome of the ongoing EU-UK negotiations, there will be substantial and lasting change for citizens and businesses from that date. The Irish Government has been planning for Brexit since the UK's referendum. We had made significant progress as we faced no-deal cliff edges in March and October 2019 and again in January 2020. While this earlier work stood to us as we moved into the transition period, we were also conscious that the end of the transition period was a different proposition from a no-deal scenario. It was necessary to recalibrate our work to address the immediate challenges and the long-term permanent changes that would arise on 1 January. As with every other sector of the economy, we had to do this while responding to the Covid-19 pandemic.

Ireland has always supported the closest possible relationship between the EU and the UK, but the limited progress we are seeing in the negotiations requires us to plan for a less ambitious outcome than that. In May, the Government agreed to intensify its readiness planning on the basis of two possible scenarios: a limited free trade agreement with a fisheries agreement and with level playing field and governance arrangements intact; and a hard Brexit with the EU and UK trading on WTO terms after being unable to agree a future relationship and trade deal.

In the first scenario, the EU and UK would agree a limited free trade agreement with level playing field provisions, providing for zero tariffs and zero quotas, and finalise a fisheries agreement in parallel. This outcome would bring substantial challenges for supply chains and trade flows and would require checks and controls in both directions on EU-UK trade. In practice, this will mean that every time Irish companies or individuals import from or export to Great Britain, they will need at least to complete a customs declaration. A limited free trade agreement would not address the full range of the EU's relations with the UK. Far from it, unfortunately.

In the second scenario, if the EU and UK fail to reach an agreement, we will be faced with a hard Brexit and an immediate and disorderly change in the way the EU and UK trade and engage with each other.

In such a scenario, from 1 January 2021, the EU and UK will trade on WTO rules. In addition to the implications for traders in terms of the added administrative burden, this outcome will also see the introduction of tariffs and quotas on trade, in both directions, with significant impacts on Irish trade. The effects of this will be particularly acute in the agri-food sector, where we could see an estimated tariff cost in the region of €1.35 billion to €1.5 billion per year. When one considers that we export some €5.5 billion worth of food and drink to the UK each year and import some €4.5 billion worth of food and drink from there, one sees just how significant that tariff would be in term of the cost competitiveness of that market for Irish products, particularly dairy products and beef. Either scenario will be highly disruptive and will have profound political, economic and legal implications, first and foremost for the UK but also bringing significant and lasting impacts for Ireland and the rest of the EU.

The Government published its Brexit Readiness Action Plan on 9 September. The plan focuses on preparing for the change we know will arise at the end of the transition period. For each challenge arising, the action plan sets out the concrete actions Government, business and individuals must take now to address the changes and mitigate the risks that will arise regardless of the outcome of the negotiations between the EU and the UK in the weeks ahead. While Brexit will bring many changes, one of the greatest will be that, from 1 January 2021, the UK will no longer be part of the EU's Single Market or customs union. This will happen regardless of the outcome of the negotiations. Any businesses that move goods from, to or through Great Britain need to be ready for the range of new procedures and paperwork that simply do not apply today to such trade. These include customs, VAT and excise duties and rules of origin requirements. These processes have consequent cash flow implications and logistics considerations. Consideration needs to be given to certifications, authorisations and accreditations as well as specific issues relating to importing or exporting animals, plants, and products of animal and plant origin.

Every business owner who trades with Great Britain, no matter how small the operation, needs to understand the impacts any new rules or processes will have on his or her operations and supply chains Failure to implement these new requirements will prevent businesses from trading with the UK or could lead to significant delays in moving goods. It is important to note that these changes will not apply to trade between Ireland and Northern Ireland. The protocol on Ireland and Northern Ireland will apply from the end of the transition period, ensuring Northern Ireland will have full access to the EU Single Market in goods.

The Brexit Readiness Action Plan is the platform from which we will deliver concrete supports to businesses and citizens in the coming weeks. We are taking this work forward in three distinct but overlapping streams. The first involves work on which the Government can lead directly, such as infrastructure at ports and airports, introducing new legislation, which will come before the House in the coming weeks, and engaging with the European Commission on contingency planning and much else. The second concerns communicating with and supporting sectors and businesses most directly impacted. We are doing that every day. The third stream will involve helping to prepare for wider societal and citizen-focused impacts.

Supporting supply chains and trade flows remains a key priority. We are carrying out this work with the twin aim of ensuring trade can flow as smoothly as possible while also maintaining food safety and public health. The infrastructure required at Dublin Airport is now in place, while work continues at Dublin Port and at Rosslare. We will certainly be ready on 1 January for the challenges that lie ahead. Provision has been made to facilitate the deployment of some 1,000 staff to ensure compliance with import and export customs and sanitary and phytosanitary, SPS, regulations. The capacity of ICT systems has been significantly increased to deal with the expected growth in transactions post Brexit. Revenue estimates that as many as 20 million declarations could be lodged per annum, compared with a current figure of some 1.7 million.

Ensuring the efficient and effective functioning of the UK land bridge is also a key priority. Ireland has been working closely with our EU partners and the European Commission to ensure Irish and EU traders can continue to use this vital route between Ireland and the rest of the Single Market. The UK has acceded to the Convention on Common Transit, which is an important facilitating step. However, new procedures will apply. These will include a requirement for new paperwork as well as the need for each consignment to have a financial guarantee in place to cover the potential customs duties and other taxes at risk during the movement. Traders and hauliers will have to prepare for these changes if they wish to continue to use the land bridge.

We must expect delays at key ports immediately after the end of the transition period. The Dover-Calais route has been identified as a particularly likely bottleneck. That was confirmed yesterday in the House of Commons by what Michael Gove had to say. Of course, goods that are moved directly between Ireland and elsewhere in the EU will not be subject to any of these new procedures. Traders moving across the UK land bridge might consider direct maritime services as an alternative route to market, particularly in the short term. Operators have indicated that capacity is available on direct routes. I encourage early engagement between all parties, including traders, hauliers and ferry companies, to discuss needs and options. The Government will be part of that discussion.

We have put in place a range of financial supports such as the Brexit loan scheme and the future growth loan scheme. We will all hear a lot of marketing and advertising information on radio and elsewhere in regard to these supports. As part of the July jobs stimulus, we rolled out the €20 million Ready for Customs package. This allows businesses to claim grants of up to €9,000 per employee hired or redeployed to a dedicated customs role. Skillnet Ireland's free customs training programme, Clear Customs Online 2020, is open for applications. Both these programmes are a response to a need identified by the business sector. We continue to provide upskilling and advisory supports through Enterprise Ireland and the local enterprise offices, LEOs. A wide range of webinars are being hosted by Departments and agencies for affected sectors. Revenue has written to 90,000 businesses to advise them on the steps required and has followed up with 14,000 telephone calls to provide further advice. We continue to host a range of sectoral stakeholder events for the transport, retail, construction and agri-food sectors, among others. As Minister, I chair the Brexit stakeholder forum, which brings together a number of business and NGO groups as well as political parties. At the last couple of meetings, the Opposition parties were not represented. I understand why that is the case in the current Covid environment but it would be good to have their input at the upcoming meetings. Such engagement contributes significantly to a sense of togetherness in respect of the political effort. Further targeted measures to support business and affected sectors to prepare and adapt will be considered in the context of budget 2021.

The Government is also working to pursue supports at EU level. I met Commissioner Hahn in Brussels earlier this week to discuss the special Brexit adjustment reserve, which provides funding of up to €5 billion aimed at countering the adverse consequences of Brexit in the member states and sectors worst affected by it. I highlighted to the Commissioner that economic studies have consistently shown that Ireland and, in particular, certain sectors of the Irish economy will be disproportionately affected by Brexit. We will continue to engage with the Commission as its thinking on the reserve develops in the weeks ahead.

To underpin the required readiness measures at the end of the transition period, further legislation is required. On 29 May, the Government approved the preparation of a scheme for a new Brexit omnibus Bill. Some Deputies will remember the previous Bill we introduced. The overarching aim of this legislation is to address the wide range of issues that could arise post transition, seek to protect citizens and consumers, facilitate the functioning of key sectors and ensure our businesses are not disadvantaged.

The Bill will also support aspects of the common travel area and North-South co-operation. I expect to bring the Bill before the Oireachtas later in the autumn, probably in three weeks.

The launch of the readiness action plan is accompanied by a whole-of-government communications campaign under the Getting Ireland Brexit Ready banner. The campaign includes advertisements in national and local media, social media outreach and direct outreach by Ministers to stakeholders. I would welcome the assistance of Members in getting the key messages out to their networks to reinforce the message that action is required now to address the profound and immediate changes that are on the way. The Government will assist Oireachtas Members in playing any supportive part in giving information and timelines around what we want to do, including any technical assistance that Members may want.

It is fundamentally important for Ireland, and in our interests, to work to maintain a strong and constructive bilateral relationship with the UK. We want to strengthen this relationship, which is one between neighbours, trading partners and co-guarantors of the Good Friday Agreement. Our bilateral trade with Britain is worth over €1 billion per week and our people-to-people relationships are close to being unique in international terms. Close co-operation into the future remains clearly in the interest of all our citizens.

Just as the future shape of the relationship between the UK and the EU will be decided in the coming months, we need to continue to develop Ireland’s bilateral engagement with the UK now that they are outside the EU. We need to develop a new framework for British-Irish engagement for the coming years. A new framework may include developing structures for regular meetings at heads of Government, ministerial and senior official levels. It will be important to enhance the role of the British-Irish Council and British-Irish Intergovernmental Conference. Working through these institutions will help to ensure that our interests are protected and advanced. In this regard, the continued effective operation of the common travel area and the safeguarding of reciprocal rights in social protection, education and healthcare will remain high on the agenda. Ongoing contact across Government with the UK on our responses to Covid-19 will continue to be essential over the coming months.

We are investing in the British-Irish relationship and specifically our presence in the UK. The Government is committed to opening a new consulate in the north of England, a region linked to Ireland by history and our diaspora and which offers significant commercial opportunities. Ireland will work also to ensure the closest possible future relationship between the EU and the UK in the time remaining. Ireland’s place remains at the heart of the European Union. I will continue to inform the House on developments in the weeks ahead.

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