Professor Alan Matthews:

I will confine my remarks to the specific trade questions that were raised rather than the broader political issues, as the committee has heard some very helpful comments on that already and Steven Aiken will probably add to that when he speaks.

On the trade issues, I refer to the point made by Deputy Dooley to the effect that there might be a temptation among Irish businesses to think that as we have a special relationship with the UK, we can still manage to come to an accommodation which would ensure that our beef, dairy products and other products avoid any tariffs and so forth even if Britain leaves. It is important to be clear that the rules regarding trade relationships have become much tighter since the days when we had the Anglo-Irish Free Trade Agreement. Even though, at least legally, it might be possible to think of the common travel area as a type of bilateral agreement, although as Professor Mullally has highlighted there could be very practical difficulties in introducing it, the idea of a bilateral trade relationship is completely out of the question. First, the UK will remain a member of the World Trade Organization, WTO, which prohibits discriminatory trade arrangements except in the context of regional trade agreements.

It would only be possible for Ireland to have a special relationship if, from a purely theoretical point of view, there was a bilateral relationship. As we know, external trade policy is now an exclusive competence of the European Union and we are not at liberty to enter into our own trade agreements with a third country. If we want to protect our interests in a post-Brexit situation we have to do so through the arrangements that the EU as a whole will enter into with the UK, whatever they might be. It is important to scotch the idea that somehow we can have some sort of bilateral old boys' network arrangement between the UK and Ireland, at least on trade issues.

Deputy Kyne raised the important issue of the UK's relationship with the Commonwealth and so on. I referred to the matter in my opening remarks. Certainly, the UK would, post-Brexit, be entitled to pursue its own trade policy. That means it could set its own level of tariffs which would apply to other countries, including exports from the EU. The UK could also enter into its own free trade agreements. I suggested that it would be highly likely that the UK would find it easier to have a free trade agreement with New Zealand and Australia, because the world has changed since the old days of the Commonwealth, and also with Mercosur, the United States and so on. The UK would be more willing to give agricultural concessions than perhaps the EU is in negotiations with the same groups of countries. I agree with the Deputy that this is an obvious path for the UK to pursue in a post-Brexit situation. That would imply, it seems to me, increased competition in the UK market for Irish exporters, because we would have to compete with cheaper Brazilian beef or New Zealand dairy products than we do at present.

A third comment which came across from a number of contributions is the idea that if Britain were to withdraw it could negotiate a deal which would give it the benefits of access to the Single Market without having to accept the costs. It is important to be clear on the matter. Mr. O'Ceallaigh has explained the nature of the agreements with the European Economic Area countries and with Switzerland, which is a little different. Switzerland has a free trade agreement but it also has a lot of bilateral agreements which link it very closely with the Single Market. It is important to emphasise, as Mr. O'Ceallaigh did, that these countries, in return for getting access to the Single Market, commit to transposing every single EU directive directly into their domestic legislation without having any possibility of influencing it. There are some consultation rights and so on, but these are not very meaningful.

Let us consider the apocalyptic situation in which we are faced with a Brexit and are trying, two years later, to negotiate a common EU arrangement with the United Kingdom. For example, let us look at the key issue of the Transatlantic Trade and Investment Partnership, TTIP, which is no longer tariffs but has to do with regulatory co-operation. I would have thought such co-operation would also be a key area in the post-Brexit trade negotiations. At least in the case of agriculture and food, it may well be the case that the UK would be willing to continue with EU standards and might even be willing to accept, in certain limited areas, that it would simply adopt and transpose EU regulations in these areas. Due to the importance of its own trade with the EU, the UK might be prepared in some limited areas to accept that loss of sovereignty in return for the access that these Single Market arrangements would give it. Perhaps I am not as pessimistic, if we have a free trade agreement, about whether it will be possible to integrate some mutual recognition arrangements and so on.

It would imply, I think, that the UK would simply have to agree that in these areas we will follow EU legislation to ensure we keep our access.

Senator Reilly raised two questions, and she has put me on the spot. It seems to me that Brexit would not require any change in current arrangements. She raised the question of a farmer with land on both sides of the Border. I think that farmer would not notice any big difference because as members are aware one's entitlements to direct payments - let us assume the UK keeps that entitlements type system - are not transferable across borders. If one had a situation where one could transfer one's entitlements across members states in the European Union, then if Britain withdrew, that would affect it. At present one's entitlements on land in the North and in the South are completely separate. As I reflect on it, that would not be affected by Brexit. Similarly, the cattle and the voluntary food labelling is the sort of bilateral agreement that could continue. Although there could be significant disruption to trade, on both of these issues I do not see Brexit as having a major impact.