Monday 16 September 2019

Ireland should be ready to jump ship from EU after Brexit

Too many people who know nothing much about business are talking up new markets that don't exist, writes Bruce Arnold

'The main and determined figure leading us all towards this disaster is the Taoiseach, Enda Kenny. He is anti-Brexit'. Photo: Reuters
'The main and determined figure leading us all towards this disaster is the Taoiseach, Enda Kenny. He is anti-Brexit'. Photo: Reuters

Bruce Arnold

From the Taoiseach down, we are being exposed to a facile campaign coming from politicians, trade advisers and civil servants. They are stating simply that, because of Brexit, Irish exporters "have to find new markets outside the UK". Most of the people from this class have no understanding of what they are talking about, have never done any selling in their lives, and don't realise the vital importance of long-established trade links with Britain. If they did, they would speak differently.

Historically, the great Irish trading companies of the past half-century, and there are few enough, have transcended the bedrock of their achievements - between Ireland and Britain - and now operate on an international stage. This, if they are shrewd, they are constantly expanding.

Good examples would be Kerry, Glanbia and Kingspan, among others. There are not enough of these companies, but they started in Ireland and are proud of it. By prodigious luck, enterprise and initiative, they created export opportunities. They made the bridgehead between Ireland and the United Kingdom.

Their Irish markets are now, relatively speaking, insignificant, but this is because our home market overall is so small. Within the British Isles, these growing companies are exceptional. This is because these average and small Irish companies developed virtually the only export market in which they had any reasonable chance of success. This was the UK.

If that is closed, either by the EU or by our compliant government, or both, then in the opinion of those who have created and expanded that market, there will be a huge raft of Irish company failures. The real situation is that there are no alternative markets in which to operate. Businesses that trade more widely know from experience that one can make sales in Germany, Italy and France. But these are often, if not always, one-offs. In addition, in two of these countries getting paid is usually a nightmare.

The vital differences include language and the fact that most UK firms are favourably disposed towards buying Irish products. This is unique in our trading relations. In trade terms we enjoy a wonderful springboard towards making the vital initial sale and maintaining good relations.

Virtually no businesses have unique products. The Germans, in particular, are keen to buy German products as opposed to imports. That is why they have a huge trade surplus every year.

Commentators - those I quote above - who blithely say, "We have to find new markets outside the UK" are engaging in wishful thinking. That means they are not traders at all and are not even talking the real language of trade. One document I read covered dialect in Germany and the extent of language in places such as Saxony and Bavaria in governing habits about market-place trade. This is a long way from the advice referred to above.

The different contribution made by the politicians, public servants, civil servants, and trade advisers, with their glib and superficial advice from the sidelines - "find other markets" - have no idea how much luck, effort and resourcefulness is required to make initial sales and build up a long-term partnership with good, lasting customers.

I am advised by those I trust - perhaps understandably nameless - that the odds against a small Irish company establishing the secure sales they need, in any of the three countries I have mentioned, are 100 to one against. Apart from dairy products, we have no endemic realities out of which a set of lasting trading opportunities can be created. There is a blank look on the faces of people asked to think of any Irish company having long-term success in any European country.

The success of the IDA is envied all over Europe and, with some considerable justification this success is linked with our favourable company tax rules. These, as we know all too well, are being criticised and are likely to be undermined by the EU. Ireland already faces attempts to do this.

At the moment, through the efforts of the IDA, foreign direct investment companies employ more than 190,000 workers, an attractive addition to our economy but only 10pc of our total workforce. The turnover of these businesses dwarfs all other trade figures, skews our GDP numbers and takes focus away from the possible plight of the remaining 1,800,000 who work in other areas. It is argued that membership of the EU Common Trading Area is vital to keeping these foreign direct investment companies within our trading strategy. But when you look at how much of their turnover is to the United States and countries outside the EU and even outside Europe, the assumption has to be queried. It will remain to be seen how many jobs will be lost anyway, but, whatever happens, keeping the UK markets remains vital.

What is happening now? And what is likely to happen?

These questions need to be the subject of hard and serious analysis, with emphasis paid to the loss of Irish jobs resulting from a hard Brexit. I have heard of no Government institution estimating these vital statistics. Instead they say time and again we are now members of a club of 27 and we have to abide by the rules laid out by 'the Club'.

This is foolish and irrational thinking. If a large tree or skyscraper cannot move in high winds, it falls down. We are in a high wind and we badly need the EU to bend. We would be lunatics to allow Hungary or Poland to have any say about the border in Ireland or about our trade relations. They don't give a damn about the subject any more than we care about Poland's relationship with the Ukraine. I don't imagine it is this that keeps our ministers awake at night.

Any trading restriction from Brexit that puts up barriers to indigenous exports to the UK would be a massive threat to a high percentage of those among the remaining 1,800,000, who work for indigenous Irish exporting businesses.

The main and determined figure leading us all towards this disaster is the Taoiseach, Enda Kenny. He is anti-Brexit. He is opposed to sustaining the most important trade links we now have, or have ever had, the ones with Britain. He characterises Brexit as a "strong external force buffeting our country" and he says it is facing us with "unprecedented political, economic and diplomatic challenges". These are his words from the speech he made on Wednesday, February 22 in Dublin. Yet he does not identify the challenges nor does he give any credit for Britain's strengths, nor its achievements.

He claims we can rely instead "on the EU market and for this reason we must remain in Europe". We may, of course, remain in Europe, geographically speaking, as will Great Britain. But there is no EU market. The markets, as I argue above, are national ones, not EU ones.

We need, but appear to lack, leaders who will tell the EU, and tell them without equivocation, that if the EU imposes conditions on Britain that would make trade and travel between our countries difficult, then we will leave the EU immediately. Of course that has to be on the assumption that there will be any EU to leave.

We face, on the way into the future, the French Presidential election. We need to confront the vital needs of the Italians. They need to devalue.

Then there is the election in The Netherlands. And Greece is confronting financial disaster. It is beginning to look as though we might be the first people to jump into the lifeboats before the ship blows up.

Sunday Independent

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