Monday 24 October 2016

Explainer: How will Europe go about untangling a complex web spun over 43 years?

Published 25/06/2016 | 02:30

European Parliament President Martin Schulz (L), European Commission President Jean-Claude Juncker (C) and European Council President Donald Tusk (R) attend a meeting after Britain voted to leave the bloc, in Brussels. REUTERS/Francois Lenoir
European Parliament President Martin Schulz (L), European Commission President Jean-Claude Juncker (C) and European Council President Donald Tusk (R) attend a meeting after Britain voted to leave the bloc, in Brussels. REUTERS/Francois Lenoir

Q: Is the UK gone - or will they vote again like Ireland in two recent EU referendums?

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A: Yes, they are gone. No, there won't be a second vote. Technically this referendum was 'consultative' and 'non-binding'. Political reality and the history of this most explosive topic means the result cannot be ignored. But how and when the United Kingdom exit happens will take time to unfold.

Click to view full size graphic
Click to view full size graphic

The Brexit terms and any new relationship with the EU will involve complex negotiations and require the agreement of the remaining 27 member states.

Q: What rules govern the UK's Brexit process?

A: The EU was like the Hotel California until 2009 - no one could ever leave. Then Article 50 of the EU Treaty was enacted as part of the Lisbon Treaty, approved after Ireland's second vote in 2009. Once Article 50 is invoked a two-year negotiating time frame is envisaged.

Extension of the two-year talks term requires unanimous agreement of the remaining 27 member states. Failure to get unanimous agreement would mean the exit would happen automatically. In that case the UK would fall back on the World Trade Organisation rules which basically govern EU-US trade.

Click to view full size graphic
Click to view full size graphic

Q: Does that mean the UK will be out of the EU by summer 2018?

A: Most unlikely. Everyone involved guesses it will take more than two years to untangle 43 years of shared EU laws and regulations. There is some suggestion that Britain should begin by declaring in advance that they will need an extension.

The result was barely hours old when the first row broke out about when exactly Britain will trigger the Article 50 process.

Prime Minister David Cameron, himself taking 'a long goodbye', said the process should be started by his successor, not expected to be picked until October.

EU Commission President Jean-Claude Juncker said it should happen as soon as possible to avoid continued uncertainty. That tension will continue. Britain may get some time - but not too much.

Q: What does this famous 'exit Article 50' say?

A: In practice it gives big power to the remaining 27 member states who must agree UK Brexit terms by a so-called 'super qualified majority'. That is 72pc of the remaining member countries, representing 65pc of the remaining EU population.

The European Parliament must also approve any deal. In practice there will a complex web of talks deciding Brexit terms and framing a new EU-UK relationship. Ireland must try to police as much detail as possible. But the deal requires all member states' approval and involvement.

Q: We always have and always will trade with the UK. Can't we just sort out a bilateral deal?

A: No. We must get full agreement from the rest of the EU. Ireland is fully committed to staying in the EU. Brussels and the other member governments will handle all negotiations.

This is a huge challenge for Foreign Affairs Minister Charlie Flanagan and his diplomatic team.

Taoiseach Enda Kenny must make a very forceful case on Ireland's key interests. There will be some sympathy with Ireland's case - but much will depend on how much the other large member governments want to play hardball with Britain.

Q: What about the Irish in Britain?

A: Since the Irish State was founded in 1922 we have had a Common Travel Area with Britain.

In essence, this country was an auxiliary labour supply system and Irish people got the same treatment on employment rules and welfare. Immigration was a big theme in this campaign.

But 'Leave' campaigners stressed that restrictions on other EU immigrants would not apply to Irish people. No less a person than former President Mary McAleese has cast doubt on this, also suggesting it may be against international law. Against that, Britain will be trying to organise welfare and healthcare for its own citizens living in EU states, notably retirees in France, Spain and Portugal.

Q: Does Brexit mean passport controls and customs checks at the Border being wheeled out again?

A: That is every Irish person's worst nightmare. Both London and Dublin will work hard to avoid any return of the Border.

But the 300-mile stretch from Derry to Dundalk becomes an EU external frontier. Immigration was a big referendum campaign issue and questions about identity checks must be faced.

David Cameron said the sea - rather than the Border - might be the frontier. If there are tariffs in new trade EU-UK arrangements, the question of customs controls arises.

The outcome, in which the North's voters opted for 'Remain', has fuelled tensions.

Sinn Féin wants a poll on ending partition. The DUP says the North will be more prosperous in a UK free of the EU.

Renewed calls in Scotland for a new Independence Referendum there complicates things, given close links between Scotland and the North.

Q: What about Irish agriculture in all of this?

A: This will be a huge issue. Britain buys €1.1bn worth of Irish beef, €1bn worth of dairy produce and 60pc of our pigmeat worth €3.3m per year.

A recent Teagasc study for the Agriculture Minister suggested the value of Irish farm produce could drop by €150m per year if a minimal fall of 1.4pc occurred.

In a worst case scenario the fall could be as high as 8pc, costing €800m per year.

Some rural TDs, sceptical about the EU and its bureaucracy, have described this as "alarmist".

Discussions at an EU Agriculture Ministers' meeting in Luxembourg next Monday will be interesting.

Britain contributed some €8.4bn net to EU funds and its loss will hit the Common Agriculture Policy administered by Irish Commissioner, Phil Hogan, and accounting for 37pc of the EU Budget.

Q: What about Irish business and exports?

A: Well, since we are going to have to live with this Brexit, let's note the opportunities as well as the risks.

The ESRI has projected that every 1pc fall in British GDP due to Brexit will lead to a 0.3pc fall in Ireland's GDP. UK market volatility, and a sustained fall in sterling, would be really bad news for exporters.

Business lobbyists have argued that it would hurt Irish small and medium business hardest. The multinationals may be better fixed to cope. The ESRI estimated in a worst case scenario there could be a 20pc fall in total UK-Irish trade, worth a staggering €1.2bn in total each week.

On the plus side, Ireland could get more overseas investment and jobs which would have gone to the UK. But we will not be the only ones in the hunt for these.

Much will depend on the kind of deals Britain gets as it quits the EU.

Q: So, what kind of exit terms could the UK expect?

A: Right now, the only ones who could answer that one are a handful of people like German Chancellor Angela Merkel and French President Francois Hollande. And it is unlikely that even they know just yet.

There are arguments for making a smart and reasonably generous association deal with Britain. That would certainly suit Ireland and Finance Minister Michael Noonan has said he wants just that, with full UK access to the border-free single market.

Against that, if the UK can pick and mix what they like, and discard what they dislike, why should other member states soldier on?

There are strong arguments for whacking the UK to discourage others from succumbing to their similar anti-EU elements.

As so often with the EU, there must be give and take here.

Q: What about the fallout for British politics?

A: Prime Minister David Cameron announced his own exit an hour after the official result. The outcome shows a very divided Britain, with a huge fault-line in Labour also. Calls for the replacement of Labour leader, Jeremy Corbyn, were in full cry by mid-morning. An election, ahead of the next one due in May 2020, cannot be ruled out.

Q: Can the European Union survive this shock?

A: Beware the 'domino effect'. The departure of the world's fifth largest economy from the EU comes at a time when it is at a very low ebb.

Anti-EU sentiment is very high in many mainstream countries, including France, and the anti-EU parties on the right and left will be emboldened.

But the European Union was the continent's post-1945 settlement after two horrific world wars.

If the EU is to survive it must restore growth and address other problems like the refugee crisis.

Irish Independent

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