Mr. Phil Hogan:

I thank the committee. It is a pleasure to be present this afternoon. I point to the appointment of Mr. Kiely as head of the EU office, which is based on Lower Mount Street. It used to be on Dawson Street at the corner of Molesworth Street.

People on this committee are welcome to use those offices at any time. As you have said, Chairman, it is an interesting time for all of us in the European Union. As a Commissioner I can say there is never a dull moment. Circumstances are changing at home and abroad. In the same way as the election this year in Ireland dramatically changed the political landscape, so too is the political landscape changing in Europe. New elections or referenda bring new challenges and it is becoming topical to claim that the European Union is in crisis, or even an existential crisis, something the EU Commission President, Mr. Juncker, acknowledged recently, at least in part. Commentators lay all the problems on top of one another, such as terrorism, refugees, the euro, poor economic performance, high unemployment and Brexit, and they look for solutions. The Prime Minister of France, Mr. Valls, did it recently when he argued for an approach to Europe by our politicians and citizens that emphasises our European identity, shared values and European patriotism. This is an opinion I share, for it is high time we stopped blaming the Union for everything that goes wrong while taking credit nationally for everything that goes right. In his state of the Union speech Mr. Juncker also spoke of the European way of life, something he said was worth preserving. What we often do not realise is that the European Union is the people of all the member states. Blaming the European Union for all of Europe's ills is a lopsided attitude which has caused disconnect with the people. It has done a great deal to erode their confidence in the European Union and fuels some wrong-headed opinions we hear today. It is also a lazy narrative that does not stand up to scrutiny.

Yet it is naive to argue that all is well with the European Union. To echo the words of Mr. Juncker, we must start with a sense of realism and with great honesty. First of all, we should admit that we have many unresolved problems in the European Union. Today I am keen to discuss some of the issues that feed the narrative, one at a time. This will help us to see that perhaps we are on the way to sorting some of them out.

Brexit is a special case. It is a headache for the Union but a full-blown crisis for the United Kingdom with the high risk of collateral damage for Ireland. I will come to that at the end of my remarks. Mr. Juncker has acknowledged that the Union has problems. He has acknowledged that the Union has work to do to improve its management of the economy and the currency, to accelerate inclusive growth and to raise employment levels. We are making progress from the darkest days of some years ago. I will outline three or four initiatives under way. These actions are intended to help improve some of the fundamentals of our economy, as well as correct some of the faults that have emerged and persisted in the course of the current economic slow-down.

Jobs, growth and investment are the Union's top priorities. There are signs that our efforts are beginning to pay off. Europe is delivering on youth employment. The performance of young people in the Union's labour market overall has surpassed expectations since 2013. There are 1.4 million fewer people under 25 years of age unemployed and 900,000 fewer young people not in employment, education or training. These trends suggest the Union's actions are beginning to make a difference with the help of member state programmes. Approximately 9 million young people took up an offer, the majority of which were offers of employment. The youth employment initiative has had an impact in Ireland. Since its entry into force in 2013, the youth employment initiative has mobilised €68 million in additional EU resources. When combined with matched European Social Fund moneys, this means we have seen €136 million in targeted EU assistance to tackle the problem of youth unemployment in Ireland. We still have a long way to go before we reach a satisfactory position on youth employment in Ireland and the Union as a whole. Similarly, we have a way to go on other issues.

The investment plan for Europe is delivering clear results. The European Fund for Strategic Investment focuses on removing obstacles to investment, providing technical assistance to investment projects and making smarter use of new and existing financial resources. It has already raised €116 billion in investments in the first year of operation.

Economic growth is picking up in the EU, investment is increasing and unemployment is down. The trends are positive, thanks in part to this new Juncker fund. Another example of the ongoing efforts to increase our economic opportunities is demonstrated by our ongoing efforts to conclude trade deals that are good for Europe. One such trade deal is the deal proposed with Canada. The deal, known as Comprehensive Economic and Trade Agreement, CETA, is a good deal. It stands to benefit European Union exporters, especially small businesses and the food sector, through new protections and new opportunities. As the most globalised open economy in the Union, Ireland will benefit. Indeed, the benefits will be more certain bearing in mind our strong historical, cultural, linguistic and economic ties with Canada. I was surprised, therefore, when the Seanad rejected CETA recently. Such an event was widely reported by media sources in Europe. Is rejection of a good trade deal a view Ireland should be conveying to the world? This is relevant not only in terms of our being open for investment but also in terms of our relationship with a country that gave an outlet for many of our young people during the recent economic crisis. It is difficult to see how rejection of this trade deal is in the interests of the citizens of Ireland.

Raising the proposed trade agreement provides a relevant bridge to Brexit. As I have said, the leaving arrangements and the future UK trade arrangements are critical to Ireland. It is no exaggeration to suggest that Brexit concerns Ireland almost as much as it concerns the UK. I will set out some examples. Since the UK Prime Minister, Ms May, announced that she will give formal notice of the UK decision to leave by the end of March things have begun to clarify. The pound has weakened. We have also seen signs of how Brexit will raise food prices in the UK. One example was the Marmite spat between Unilever and Tesco. Unilever sought to put up prices and Tesco has resisted, at least for the time being.

The land border is another question. Until 1973 the trade or economic aspect of the Border was an Ireland-UK affair. Then, when both countries joined the European Economic Community, it became an EU-affair. Now, for the first time in history, the trade or economic aspect of the Border is about to become an EU-UK affair or an EU-Ireland-UK affair. Committee members should reflect on how important the European Union aspect will become if the United Kingdom turns again to a cheap food policy as part of its drive to become more competitive in international markets. North of the Border will be cheap food and a different way of supporting farm incomes, while south of the Border will operate under the Common Agricultural Policy of the European Union.

There is not a great deal we can say about it at this stage because no one knows exactly how it is going to finish. However, we must get used to the salient facts. Last week the EU Council President, Mr. Tusk echoed the words of Commission President, Mr. Juncker, from the week before: the choice of the United Kingdom is between a hard Brexit and no Brexit, and only no Brexit can give us the Border we have now. This is something to which I, as European Union Commissioner for Agriculture and Rural Development, am giving attention, and I know that Ireland is doing the same.

These three issues justify the claim that Brexit concerns Ireland as much as the UK, but there are many others. I predict that conversations between Dublin and Brussels will be almost as significant as those between London and Brussels. The first public estimates are as high as €40 billion for the UK debt to the EU for past promises. Reflecting EU accounting rules, unpaid promises have built up in recent years and now the United Kingdom must make good its share of this backlog. How is this going to be resolved? To the extent that the UK escapes this commitment, other member states, including Ireland, will have to stump up extra contributions. This is another reason for Ireland to be wary.

I do not intend to speculate further. The position of the European Commission remains as it has been since the referendum. Until Article 50 notification is received, the negotiations cannot begin, although a great deal of preparatory work is in hand. The Commission's Article 50 task force is operational and is being led by Michel Barnier, a former French Minister for Agriculture and Fisheries and a former European Commissioner. He is preparing and conducting the negotiations. It is no coincidence that one of Mr. Barnier's first visits was to Dublin last week.

The extent of economic integration on the island of Ireland is unmatched anywhere else in the European Union. Thus, the level of potential disruption from a so-called hard Brexit will be considerable. This is already acknowledged by the Irish Government in the recent budget. Before the referendum vote, I made clear some of the mutual risks in a speech at Queen's University, Belfast in May. My position remains the same: there are serious potential negative outcomes. For example, 40% of all Northern Irish milk is processed in the South. More than 50% of Irish beef and cheese goes to the United Kingdom. A total of 40% of Ireland's exports go to the United Kingdom. Ireland's all-island energy market, cross-Border health care, fisheries and aviation will all be potentially affected by a hard Brexit.

On the other hand, a hard Brexit might bring some opportunities for Ireland. What will happen to Britain's financial sector if it loses its all-important passporting provision? Will inward investment choose Ireland rather than the United Kingdom? Although these possibilities do not, for the moment, seem to offer a consolation for the difficulties Ireland is already experiencing due to the decline of sterling, they raise unanswered questions.

There are other delicate political issues not least of which is the status of the Good Friday Agreement, which is underpinned by reference to European Union law. There are questions over the future of the common travel area and the status of Irish citizens in the United Kingdom - this is of concern given the present weight of opinion against European Union citizens working there - as well as British citizens resident in Ireland, of whom there are more than 250,000.

Ireland and the United Kingdom are joined together in many ways and that is not going to be changed by Brexit. However, the fact remains that Brexit is going to throw many old issues into a new light.

Ireland and the European Union must be quick to understand this and find ways to deal with it because it is vital for our future and for the future of the United Kingdom, UK, not least in a 21st century globalised economic system where geographic proximity still matters.

Why does Britain trade more with Ireland than with China, Japan, Russia and Brazil combined and why are we so linked together in Brexit? Time zones still matter, the ability of professionals in the services sector to travel freely and easily by short-haul air travel is still important for the professional services sector, one of the most important sectors in the UK economy. Britain and Ireland are trading nations and the UK's departure presents challenges to both. We still do not know what kind of post-Brexit relationship the UK and the EU will have, but the EU is clear that it wants the UK as a close partner and we look forward to the UK confirming its intention in this respect in March. Ireland has developed an almost disproportionate trading dependence on the UK and must now seek to increase its contacts with the rest of the EU.

What is clear above all, is that any deal, by its nature, will be inferior to the deal that the UK currently enjoys due to its membership of the EU. The UK is going to learn a hard lesson, it is not going to have its cake and eat it. The posturing and fancy talk of Brexit is already beginning to collide with reality. Brexiteers in Britain argue that strong industrial interests in France and Germany will lean on their governments to conclude a quick deal with the UK. We shall see. All I would observe in this connection is that the referendum discussion was characterised by half-truths and some outright lies. We already see some features of Brexit becoming evident, even though they were dismissed in the referendum debates as scaremongering.

In conclusion, Chairman and members, I repeat that the EU is working its way through its problems. There are positive signs. As I said, the President’s state-of-the-union address showed how the Union is prioritising jobs, growth and investment. This blueprint is bearing fruit. I want to leave committee members under no illusion but that the Union is clear-headed when it comes to dealing with the United Kingdom in its Brexit negotiations. With patience, solutions can be found to the issues that will arise, particularly in respect of the island of Ireland.

I want, however, again to underline that these negotiations are almost as much about Ireland as they are the United Kingdom. I know the Irish Government is working hard to bring this home to the EU institutions and to Michel Barnier, the chief negotiator but time is short.

Ireland must use the days from now to next March to make its case clear and heard; and ensure it is taken into account. As a member of the European Commission I want to reassure the committee and the Irish Government that the Commission understands the difficulties Ireland faces. We are in this together as we fight for the best possible outcome for Ireland and the EU as a whole.