RiskBrexitIreland – Europe’s new cultural frontline?

Ireland - Europe’s new cultural frontline?

Ireland is a potential beneficiary as businesses relocate from the UK post-Brexit, but this is undermined by the threatened disruption and complexities that increasingly appear to be a likely consequence.

Here in Dublin, we welcome Britain’s recently acquired aspirational outlook on a border between Ireland and the UK that is unhindered by border posts and other physical infrastructure.

I agree that such paraphernalia would be completely unacceptable. I am also inclined to welcome the so-called Partnership Paper on frontiers and customs arrangements between Brexit Britain and the European Union (EU), with its optimism regarding ‘frictionless trade’ and even a ‘new customs partnership’.

In neither instance, however, are these aspirations a matter for the British government alone. There are negotiations between two parties, the UK and the EU-27. While they share a common goal of an eventual agreement, subject to a mandate for the negotiations, Britain has refused openly to indicate acceptance of either the sequencing or the mandate generally. The two British initiatives we have seen so far in recent days leave me regretfully agreeing with one commentator who wrote ‘Britain shows only a glimmer of Brexit sense’.

That is why I cannot help but think that the British approach differs so markedly from the path (sequencing) and the mandate adopted by the EU that it suggests a distinctly disruptive intention in the British government’s calculations.

Irish enterprise and Irish citizens are as one in wishing Britain had voted to remain in the EU, rather than leave the single market and the customs union. One of the overlooked reasons is that Ireland has lost a friend in Europe. While we do not necessarily trumpet it, the Irish business culture – rooted as it is in common law and similar legislative and commercial frameworks – has much in common with the Anglo-American approach to business.

Ireland may find itself in a position where our approach may be at odds with the Franco-German way of things. This at a time when these two markedly different cultures are now in a battle to win over a third, the Chinese, in their quest for new hubs, with an entirely different culture of their own.

Without doubt, Brexit business is looking hard at Ireland as a favourable destination. Alongside our much-discussed taxation regime, we have the tech hubs, the skills base, the dynamism and the international population with which to beat competition from Frankfurt, Paris and Eastern Europe. But how Brexit plays out for Ireland in the longer term is a different question, as we decide which cultural path to follow and weigh up the unquantifiable cost of disruption.

Ireland has no say in the UK’s departure from the EU, and I wonder how much our approach to doing business will change in a Union without the UK. As celebrated judge Lord Denning observed many years ago: “European Law is …. like a tidal wave bringing down our sea walls and flowing inland over our fields and houses.” Europe without the UK may well take a different direction. In this sense, while Ireland may benefit from Brexit in the short term, it might come at a cost over the longer term.

Will Brexit strengthen our historic bonds with the UK, linked by trade and a common language. Will it succeed in acting as a broker for EU and US cultural understanding? I fear it may not.

Weighing up the cost of Brexit

For Ireland, the version of Brexit expounded by its chief protagonists means significant disruption and added complexity to doing business in Northern Ireland and Britain. As an EU member state, it may even disrupt certain access points to the rest of Ireland’s single EU market. Far from aiding frictionless trade, it introduces new frictions and complexities to everyday commercial life beyond even Britain’s retention of sterling, to which we have adjusted.

With its implications for customs arrangements (including taxes and documentation), Brexit – and especially a hard Brexit – affects Irish business to a greater degree than that of any other commercial community in the current EU.

Our merchandise trade (exports plus imports) between Ireland and the North in 2016 was €2.77bn and this year to May, €1.22bn. These may be modest figures compared to Irish trade with Great Britain and with the rest of the EU and the wider world, but the figures belie a more complex reality, when we factor in the importance for Irish firms of their involvement in the domestic Northern economy; for indigenous businesses and traditional sectors such as agriculture of the Northern market, and of the North as a source of supply.

Add to which we have the critical role of both the North and Britain in Ireland’s logistics (the ‘land bridge’ as it is called), its trade routes to the continental side of its single European market. And all of this before the even more important political questions surrounding the border.

So, while British businesses need clarity on Brexit, so do Irish business need clarity on the nature of Britain’s frontiers with the EU-27. We would welcome a fast track to such clarity, but, from a business perspective that is not what we have seen in the this week.

The EU’s shifting border is now an urgent matter for trade policy and trade talks, but the EU’s chief negotiator for Brexit, Michel Barnier, has called the UK’s bluff: last month he told the European Economic and Social Committee, the EU’s consultative body, that “trade talks will not start until [the UK] is willing to make concessions on a financial settlement”.

He also put paid to notions of leaving the single market and building a customer union while achieving ‘frictionless trade’. Not possible, he said. Rather than cave in to UK ministers pushing for early guarantees for a transition, he stressed such measures will only be discussed in 2018 once the framework for a future relationship is agreed. Britain’s position seems to ignore Mr Barnier’s every word. It is unclear whether that policy is designed to enhance or to divide.

Ireland is transforming into a cultural bridgehead. The only English speaking EU member, the only culturally aligned meeting point between the US and Europe, the bridge between Anglo American and Franco German cultures. This new role could be as beneficial to the UK as it might to Ireland, but to realise it, we need workable, not mythical frontier arrangements.

Britain should accept sequencing, a financial settlement (even in outline) and the principle of the detailed mandate, not the risk of appearing to be removed from reality or the impression that it is attempting to disrupt the EU, no longer from within, but from without.

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