Thursday 16 August 2018

Ivan Yates: Why we need to think about joining Commonwealth

Britain’s Jacob Rees-Mogg’s flippant solution to the Irish Border issue appears to be to just shrug it off. Picture: PA
Britain’s Jacob Rees-Mogg’s flippant solution to the Irish Border issue appears to be to just shrug it off. Picture: PA
Ivan Yates

Ivan Yates

A sunny spot in a glum week was the elevation of Evelyn Cusack to a much-deserved promotion as boss of Met Éireann. We can anticipate weekly "weather events" morphing into multi-coloured national dramas.

Evelyn's humorous no-nonsense candour makes her a national treasure. Met Éireann's early 'Beast from the East' alerts preparing us for prolonged icy temperatures and heavy snows put us in good stead to combat hazardous conditions. Emergency planning also helped stave off Hurricane Ophelia's worst.

How we could do with the same unerring long-range forecasting one year from now. The last weekend of March 2019 is the Brexit deadline. This means no Britain at EU Council meetings or summits.

It will be judgment day for the Brexit deniers who will face the full ferocity of the Brexit Beast.

Recent weeks threw up some seriously scary scenarios. The December "deal" of full alignment North-South melted like snow - a Theresa May mirage.

In reality, nothing is agreed. Current negotiations centre on the Withdrawal legal treaty - it is supposed to be completed by October and ready for ratification in all 27 member states.

Cutting through the confusion of green, yellow and white text - used to depict the agreed/unagreed segments - our exposure to extreme economic isolation is startling.

The EU and Britain have cut deals on €39bn budget contributions up to the end of the transition period in December 2020. There are also European Court of Justice safeguards on mutual citizenship rights.

The small matter of our 500km land border still looks totally unresolved.

Jacob Rees-Mogg's Tory Brexiteers' flippant Border solution is to shrug it off, maintaining Britain won't police it.

The truth is that Britain's exit from the single market and customs union means the EU frontier cannot be frictionless from our side. The latest London thinking is that associate EU membership, like that of Norway in the European Economic Area amounts to mere "vassal state" status.

Instead of being lawmakers in Westminster, they would see themselves unconditionally accepting Brussels' rules. A wholly untenable political position, as they would see it.

A regime of agents with customs documentation for pre-registration clearance seems inevitable to comply with EU treaty rules, and this, along with CCTV screening, can be expected. Ireland Inc cannot survive on its own consumption with just 4.8 million people - so it's export or die.

Read More: A year to Brexit: so much to do, so little time to do it

It's time to start planning for worst-case scenarios North/South and East/West as the December "backstop" is far from bullet-proof.

Britain benefits from 57 EU trade deals across the globe. But the UK presumption that it will do better by exiting the customs union is fantasy. It is the sixth-largest economy in the world and could make for a disruptive neighbour. But not half as disruptive as the EU could be as the second-largest global economy.

The EU will stymie Britain's trade terms every step of the way, leaving us here well and truly up the creek logistically.

Today, annual Anglo-Irish mutual trade amounts to €65bn. Some 38,000 Irish companies, employing more than 200,000 people, depend on sales to Britain.

Even worse, 80pc of our EU single market access to €45bn of sales goes through the land bridge of the UK. If marooned, alternative routes to the ports of Cherbourg, Zeebrugge, Antwerp and Rotterdam mean 36-hour deliveries. Any prospects of continued haulage within 16 hours to continental Europe will be gone.

Opportunities of insulating ourselves from Macron/Merkel as they set about their integration project within the EU without our traditional UK back-up will be severely weakened.

The Franco-German juggernaut is driving towards making sure that 19 member eurozone states complete a European banking union, budgetary compliance and a single finance minister.

It will also insist on the establishment of a European Monetary Fund.

All of this is to be legalised by a sub-group of the European Parliament, comprising MEPs from eurozone countries.

The European Commission (disregarding the OECD) unilaterally proposes a digital tax which combines a new 3pc levy on transactions and fundamentally reforms tax liability from the host supplier country of the tech giants to the customer invoice country of payments received. This transformation principle means diverting revenue to larger states at Ireland's expense, and is potentially applicable to all sectors. Up to €4bn of our multinational corporation tax receipts could shift to continental coffers.

Tentatively, we may form opposition alliances with the Netherlands, Sweden, Denmark, Estonia, Finland, Latvia and Lithuania.

However, some of these states oppose our strategic objective to increase the total European budget from 1.1 to 1.2pc of GNP. Our natural ally, Britain, is irreplaceable.

Smart, creative government thinking is vital to meet the unprecedented constitutional challenges.

Remember, it is not just Britain severing single market mobility with the EU.

Similar consequences arise for the 53 member states of the Commonwealth of Nations. Australia, South Africa, New Zealand, India, Pakistan, Singapore and umpteen African and Asian states face consequential trade barriers to selling their goods into the EU - previously via the UK.

The commerce of these countries is all conducted through English. Ireland and Malta will be the only English-speaking states in the EU post-Brexit.

Ireland should apply to join the Commonwealth. Our platform can facilitate former British colonial states access to EU markets. Ireland's future unique selling point is as an open trading hub that pivots on our Siamese twin, the UK. Over recent months, there have been considerable upgraded diplomatic/business enquiries about using the Republic as a strategic EU partner.

We must establish ourselves on the global stage as the most convenient commercial conduit.

As a tiny peripheral Atlantic island with 1pc of the EU population, realistically we won't impede EU destiny.

Any Irish red lines will inevitably fade as the EU continues with deepening defence, security and migration goals. While remaining committed to eurozone obligations, we can't detach from our history, geography and culture.

As months of EU/UK arm-wrestling begin, we too may become more marginalised. Blame games have few winners. Leo could do worse than establish and embrace an advisory panel of former Taoisigh, sympathetic Anglophiles and Northern Ireland allies to assist in building a national consensus. Technical trade barriers appear unavoidable as Britain determinedly exits 'a' or 'the' customs union.

One year from now, pretending the storm won't arrive will simply leave us out in the cold.

Irish Independent

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