The Irish Government quickly spotted the potential dangers of a British withdrawal from the European Union. The first internal analysis was prepared in late 2014. This work was refined during the eighteen months before the referendum. Enda Kenny was thus able on 24 June 2016 to set out the broad lines of his Government’s strategy. Objectives were defined in more detail before the EU-UK negotiations began in 2017.
The focus was on the protection of the Good Friday Agreement, and in particular the avoidance of a hard border on the island of Ireland. The consequence of Ireland’s negotiating success was the Ireland/Northern Ireland Protocol. But there were other priorities too, which preoccupation with the Protocol has tended to obscure.
There was concern about Ireland’s interests inside the EU. The UK was by far the largest member of a group of economic liberals, including Ireland, The Netherlands and the Nordic and Baltic states, which often made common cause on trade, competition policy, taxation and the Single Market. Since the UK’s departure, the centre of gravity has shifted in a more protectionist and interventionist direction, under the rubric of ‘strategic autonomy’. France, with Germany, has been able to lead debate without the UK as a counterweight. However, the pandemic, the rise of China and greater US protectionism have all contributed to a changing zeitgeist. So Brexit is a factor, but not the only one, in creating challenges to Ireland’s economic philosophy. Of course the departure of the UK is a loss for Ireland, but it is to some degree being mitigated by the hard work being done to maintain and develop relations with the remaining twenty-six Member States, individually and in like-minded groups.
The dog which didn’t bark in negotiations was the Common Travel Area. We were afraid that partners might balk at an arrangement which would continue to privilege Irish citizens in Britain as against those of other Member States, and indeed British citizens in Ireland. However, despite perplexity at the absence of a single authoritative basis for the CTA, they didn’t object. Nor was there any proposal to rewrite or abolish Ireland’s opt-out from the Schengen area. In consequence, widely-voiced fears that Brexit might mean restrictions on people travelling between North and South, including for work or study – which would have created a truly hard border – were not realised. The CTA has indeed been strengthened by the first comprehensive statement by the two Governments, in 2019, of what it entails.
In getting Irish business ready for Brexit, the focus was overwhelmingly on exports to Britain. So far, they have remained steady, though this may well change when the UK finally introduces its own checks and controls, recently postponed once more. However, British exports to Ireland fell sharply in the first half of this year – by 40% compared to 2019. There are conspicuous difficulties in retail supply chains. For the first time, the value of Ireland’s exports to Britain is exceeding that of its imports. One-third of goods shipped from Ireland now go directly to mainland Europe, as against 13% in 2019.
It is too early to be definitive. Some of these trends may stabilise or even reverse somewhat over time, as economic operators adjust. But much of the change seems likely to be permanent.
Trade flows between North and South have increased dramatically, with Southern exports in the first half of 2021 rising by 21% compared to 2019. Trade from North to South has risen by a remarkable 58%. Depending on the political perspective, these figures have been hailed either as showing that the Protocol is galvanising the all-island economy, or that it has created immense trade diversion – one of the factors which could justify its suspension. But caution is needed here too. Firm conclusions would be premature. Some changes in statistical methodology may make the increases seem even greater than they really are. It seems logical for Southern goods to substitute in the North for some from Great Britain. But it is hard to see how the North/South boom could be the result only of increased activity in the real economy. Might some British-sourced goods now be moving into Ireland via the North? Much more information is needed over time, including on trade between Great Britain and Northern Ireland. Likewise, there is no information on trade in services – which are not covered by the Protocol.
The politics of the Protocol remain poisonous. It has understandably spooked the unionist community, many of whom object to it in principle – just as those who opposed Brexit object in principle to losing their place in the EU, and as nationalists would object in principle to a hard border on the island. Naturally, businesses affected by burdensome new rules would like them to be eased, without new ones being introduced. At the time of writing, Jeffrey Donaldson’s threat to bring down the GFA institutions stands.
The British Government cites these problems as requiring major change to the Protocol, the effects of which it implausibly says were not to be foreseen. It may think that it will wear down the EU side, or it may want to continue to be seen domestically to be battling Brussels, or both. But its previous dishonesty about the inescapable consequences of the kind of Brexit it chose, its graceless rhetoric now, its highlighting of the views of only one part of the community, and its failure to explain how the Protocol could benefit Northern Ireland have all exacerbated the situation and damaged stability and trust – including among those very unionists whose fears it purports to be representing.
Reports suggest that the European Commission for its part now appreciates how the context of East-West trade is different from that of trade between the EU and third countries, and that the scale and geography of the Northern economy limit the risk of serious harm to the Single Market. It has suspended legal action against the UK. The Commission is adamant that it will not negotiate a new text, but is prepared to show flexibility. While France may lead some criticism of concessions, there is little interest in prolonging a tedious dispute which most believed had been solved two years ago. The Irish Government, while it does not have the power to change things by itself, must continue to explain the politics of Northern Ireland to its partners, and to demonstrate to unionists that it understands their concerns and is arguing for reasonable and achievable changes.
A compromise is certainly possible if it is genuinely sought. The British Government must be prepared to operate within the parameters of the Protocol and to abandon the thought of a radical recast, and the EU needs to demonstrate real pragmatism. At this stage it is the UK which has more to do to show good faith. Issues around the future transparency and democratic accountability of the workings of the Protocol need to be addressed.
For his part, Jeffrey Donaldson must prepare to welcome an agreement as a victory sufficient to calm his supporters, and allow him to retreat back along the fragile branch on which he now sits. Northern Ireland, the Republic, the UK and the EU all have much greater problems to solve.