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“It’s in all our interests to get to Phase 2 of Brexit in December” – Hayes

Speech by Brian Hayes MEP to the Clearstream Banking Conference – Spencer Hotel, IFSC, Dublin, Thursday 23rd November.

“Brexit negotiations are now at a critical phase. We have about two weeks before a decision is taken as to whether or not sufficient progress has been made in the negotiation. Two weeks before a political call is made, to either move onto phase two or wait until the first quarter of 2018. The bad blood between the EU and the UK, currently so evident in the talks, is a big risk in moving onto the talks onto phase two of negotiations.

“Add in the uncertainty caused by the outcome to the recent German election and the still unresolved question as to the make-up of the next German government – and you have an unwelcome background to the task that lies ahead in December. I have always said that Angela Merkel’s re-election was not only a crucial requirement for the Eurozone’s success, but also for a positive Brexit outcome. It’s hard to see a good outcome being achieved without a strong German government.

“The real focus now is in Brussels, both in the Council and Parliament, to deliver a result for Ireland that minimises the damage to our economy and the peace process.

“Destructive political forces remain in Europe and especially in the UK would relish the prospect of the failure of talks. A breakdown of the talks now would deliver a mutually destructive outcome for both the UK and the EU. It raises the prospect of new systemic threats to Ireland’s economy just at a time of a sustained economic come-back.

“At a time of relative optimism about the Eurozone and its prospects, what is needed now is economic and political certainly. Neither of these objectives can be achieved by a failure in the Brexit talks or indeed by waiting until early 2018.

“For many, the prospect of a cliff edge – where the UK leaves the EU without any negotiated settlement – is exactly what they want to confirm their prejudices. Make no mistake, we in Ireland will suffer disproportionately from a disorderly and chaotic breakdown of these talks. It is the worst option for us.

“It’s crucial therefore for Ireland – both north and south – that a deal emerged from this process. A deal that safeguards our interests in the post-Brexit world. A deal that keeps as much of our business both east-west and north-south in place, until we transition to a new trading relationship between the EU and the UK.

“The EU and Ireland understandably want to see much more progress in phase one. We are absolutely right to demand more from the British and they should deliver. The chaotic nature of British politics right now doesn’t help in trying to work out a reasonable and workable deal.

“The bigger test for the future of the EU/UK relationship is the settlement of a new trade deal. That is why it’s in everyone’s interest to move to phase two of the negotiations as quickly as possible.

“The three critical issues that remain in phase one need much more certainty from the British side. And it is time that the British come to their senses and realise that no deal would be a nightmare scenario for the UK economy.

“Making progress towards an ultimate trade deal is the big prize now worth fighting for. Anything less than that carries enormous challenges for us as a small open economy still very dependent upon the British market. Our economy is acutely vulnerable to the new shocks that a hard Brexit might bring.

“It is entirely reasonable for the Irish government to demand firm commitments from the British on the need for no hard border post-Brexit. The Taoiseach is absolutely right to demand more certainty and more legal guarantees from the UK side that not only safeguard the Good Friday Agreement but also safeguard the all-island economy. There must also be understanding from the EU side that many of the issues in connection with the border can be resolved without negotiations on the future relationship. Both are inextricably linked in fact and reason.

“At this stage it is about a political sequencing of the outstanding issues on the exit bill, Ireland and EU citizens rights to allow the talks to proceed.

“We should not ignore that some progress has occurred in the talks. There is agreement that the Common Travel area between Ireland and the UK will be maintained. On citizens’ rights there is agreement that the terms of the Good Friday Agreement on citizenship rights will be maintained. Post-Brexit, citizens of Northern Ireland will have a unique entitlement to have full Irish and EU citizenship rights if they wish to exercise those rights.

“So it would wrong to suggest that no progress has occurred. But more needs to happen between now and early December.

“Aside from commitments on the Good Friday agreement, the British also need to commit to ensuring that the existing North/South co-operation in many economic sectors will continue and be allowed to grow and expand. There are over 100 areas of cross-border co-operation: tourism, inland waterways, energy, health etc.

“Because of the integrated all-island nature of the Agri-Food sector it would be particularly helpful if a specific deal could be done under which Northern Ireland might remain in the Common Agricultural Policy. Retaining the benefits of the CAP is very important, particularly the single farm payment system, but also continuing to apply EU veterinary and Food Safety Rules and Regulations across the whole island.

“Making the argument that Northern Ireland might be a special economic zone within the UK – having access to both the EU and UK economies – is something that I believe Brussels is open to discussion on. That would not in any way undermine the existing constitutional standing of Northern Ireland.

“While we all want the UK to remain within the Customs Union and the Single Market, the possibility of a new Customs Union relationship with the UK, something the Irish Government has suggested, must be an integral part of the phase two negotiations. As Michel Barnier has suggested already, a future EU trade deal between the EU and the UK will of necessity require agreed rules and regulations and dispute resolute mechanism. We have to start thinking what elements of a new customs union relationship might apply in the future.

“Moving on to the next phase of the negotiations and setting out what that new relationship might look like has to be Ireland’s and the EU’s priority over the next two to three crucial weeks.”

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