Mr. John Callinan:

I thank the Chairman, Deputies and Senators for the invitation to appear before them today. I am second Secretary General at the Department of the Taoiseach, where I head the division dealing with international, EU and British-Northern Ireland affairs. Brexit represents a huge challenge right across Government, involving every Department to a greater or lesser extent. My role in the Department of the Taoiseach includes supporting the Taoiseach in his capacity as chair of the Cabinet Committee on Brexit and in his role as a member of the European Council. In this context, my main focus is on the EU negotiation process where I also serve as the Irish sherpa.

Given that Brexit raises policy issues for all Departments, I have asked colleagues to join me based primarily on the areas of interest highlighted in the letter inviting me to appear here today. I am accompanied by Mr. Liam Irwin of the Office of the Revenue Commissioners; Mr. James Martin from the Department of Justice and Equality; Mr. Ronan Gargan and Ms Sarah McGrath from the Department of Foreign Affairs and Trade; Mr. Brendan O’Connor and Mr. Oliver Gilvarry from the Department of Finance; and Ms Pauline Mulligan and Mr. Eugene Forde from the Department of Jobs, Enterprise and Innovation.

I propose to give a brief overview of the Government’s approach to and preparations for Brexit before we move on to questions. The Government has been preparing for Brexit for over two years, and certainly well in advance of the UK referendum on 23 June 2016. A detailed contingency framework was prepared in the run-up to the referendum. It had been hoped, of course, that the outcome of the referendum would be different but, as we know, the people voted for the UK to leave the EU. Early on, the Government identified four headline priorities arising from Brexit - protecting the Northern Ireland peace process, maintaining the common travel area, minimising the negative impact on trade and the economy, and contributing to the future direction of the EU.

In the period after the referendum, the Government intensified its preparations, building on the work already done. A new Cabinet committee dealing specifically with Brexit was established, chaired by the Taoiseach. A significant part of the EU division in the Department of the Taoiseach was moved back to the Department of Foreign Affairs and Trade, to ensure that the latter Department was adequately resourced to deal with the challenge of Brexit. The Department of the Taoiseach was restructured, bringing the remaining staff dealing with international, EU and British and Northern Ireland affairs together under a new second Secretary General post, to which I was appointed in August 2016. An interdepartmental group of senior officials was reinforced with a number of working groups set up to look at specific issues in more detail. Departments and agencies with significant Brexit issues allocated additional resources as needed.

The work on preparing for Brexit was organised under a number of streams. The analysis done under the contingency framework was deepened. Stakeholder engagement was intensified through a stakeholder group that had been set up before the referendum and, later, through the all-island civic dialogue process, which so far has seen two plenary sessions and 14 sectoral events. Departments and agencies also used existing forums or created new ones to ensure that they were engaging with their key stakeholders.

The Government set about a detailed process of engagement in four interrelated directions, namely Northern Ireland, Britain, each of the other EU member states and the EU institutions. In Northern Ireland, this consisted of engagement through the North-South Ministerial Council, with the individual parties, and with the Northern Ireland civil service. In London, existing channels of engagement were intensified, either through the mechanisms of the Good Friday Agreement or other bilateral channels. A campaign was put in place to ensure that each of the other 26 member states was aware of our particular challenges and understood the extent of Brexit's impact in Ireland, with every member state targeted for engagement at both political and official level. Similarly, detailed engagement took place with each of the EU institutions, including in particular the EU task force led by Mr. Michel Barnier. Finally, all this work was supported by a broad-based communication effort, to ensure that the scale of the Brexit challenge was recognised, that the Government’s priorities were clear, that stakeholders were being consulted and informed, and that the complicated process that would unfold was understood as broadly as possible.

The Government realised very early that Brexit was likely to impact Ireland more than any other member state, in terms of the economic and trading links between Ireland and the UK, and due to specific or unique factors arising from the history and geography of these islands. It became clear that a major campaign would be needed to ensure that each other member state appreciated these unique or specific factors and was prepared to support Ireland in addressing them, irrespective of how significant Brexit was for their own country. This involved explaining in clear terms the history of these islands, the evolution of the peace process, the specific features of the Good Friday and subsequent agreements, the history and rationale for the common travel area, the nature of the trading relations and patterns both on this island and between Ireland and Britain, and the sensitivities and risks associated with the Border on this island. In particular, it was necessary to establish the politically sensitive nature of these issues, and the need for political solutions ahead of any rush to an overly legalistic or technocratic approach.

It was also clear that the way in which these issues would be addressed would have to fit into the evolving overall approach of the remaining member states to the Brexit negotiations under Article 50. This meant there would be a united approach to the negotiations; there would be no separate or parallel negotiations with the UK; and issues specific to the withdrawal would have to be dealt with first while issues to do with economy and trade were likely to come later. In particular, a full trade agreement with the UK could only be concluded and implemented after the UK had left, and this, in turn, would almost certainly mean that transitional arrangements of some sort would be required. In the withdrawal phase, the focus would be on the financial settlement, the rights of citizens, relocation of EU agencies and specific border area challenges.

Against this backdrop, the Irish approach was to press for maximum recognition of our particular issues and challenges in the various documents being prepared, while also pushing for discussion on the future relationship to begin as soon as reasonably possible, including economic and trade issues and a smooth transition. The overall campaign involved over 400 separate meetings with the other member states and the EU institutions at political, diplomatic and official level. The approach has borne fruit. Prime Minister May’s letter triggering Article 50, dated 29 March, contained strong references to Ireland and to our particular challenges. The resolution of the European Parliament adopted in early April makes clear that the Irish challenges are high on the agenda of the Parliament, which under Article 50 must give its consent to any withdrawal agreement. The EU negotiation guidelines, adopted by the European Council on 29 April, set out clearly the objectives of supporting the peace process, protecting the Good Friday Agreement, working to avoid a hard border and retaining the common travel area. In addition, the minutes of that European Council will include an important statement by the 27 member states recognising the provisions of the Good Friday Agreement regarding Irish unity and confirming that EU membership is assured in such instance. The draft EU negotiation directives, which are due to be adopted by the General Affairs Council next week, build on the language in the guidelines regarding Irish issues. They also recognise the particular challenges for Ireland in terms of the proportion of goods to and from Ireland that transit via the UK. These are very important acknowledgements of our particular circumstances and challenges. Of course, this is just the beginning but it is a good start. In particular, it confirms that the approach of focusing primarily on the elements most relevant or appropriate at any given stage in the process is paying off.

There have been a number of recent milestones in the Government’s preparations and actions, apart from key events on the EU meeting calendar. On 15 February, the Taoiseach gave a keynote speech at an International Institute of European Affairs event in the Mansion House, setting out the Government’s overall approach which includes reaffirming Ireland’s commitment to the EU, protecting the peace process, and minimising the impact of Brexit on our economy and jobs. The second plenary meeting of the all-island civic dialogue was held in Dublin Castle on 17 February. In March, a booklet was published explaining the Government’s four headline priorities in an attractive, easy to read manner. Following the recent European Council meeting, the Government launched a document on 2 May setting out more detail on its approach to the upcoming negotiations.

While the initial focus of the negotiations is on the so-called exit issues, a greater emphasis on economy and trade issues will inevitably develop in respect of how the future trading relationship between the EU and UK evolves, and in light of the fact that even in the most benign Brexit scenario, a negative impact on our economy is anticipated. That impact is likely to be varied across the country. While there may be some economic opportunities from Brexit, they will not make up for the overall impact that is expected. Mitigation action will therefore be required. That is why, at the time of publication of its approach to the negotiations earlier this month, the Government also made clear that over the coming weeks it will publish a second document outlining its approach to mitigating the impact of Brexit on the economy, trade and jobs.

Work on those economic impacts and challenges will be complemented by efforts to take advantage of any economic opportunities. We are already seeing significant signals of jobs moving to Ireland in the financial services sector. Other sectors may follow. The Government is presenting Dublin as a strong candidate for the relocation of the two EU agencies currently in London, namely the European Medicines Agency and the European Banking Authority.

Returning to the forthcoming negotiations, which is the area with which I am primarily concerned, it is clear that they will be complex and challenging for us. We have made a good start and the extensive campaign of engagement is paying off but we will have to continue, and intensify, this effort in the weeks and months ahead in order to identify and deliver satisfactory solutions to our specific concerns. I thank members for their attention. I and my colleagues will now be happy to take questions.