Mr. Shane O'Dwyer:

I thank the Senators for inviting us here to discuss our concerns about the withdrawal of the United Kingdom from the European Union. I will begin by giving an overview of the thoroughbred industry for the benefit of anyone who is unfamiliar with the industry.The thoroughbred industry in Ireland is highly successful and globally competitive. It directly employs approximately 17,000 individuals and thousands more indirectly. It makes a direct contribution to the Irish economy of approximately €1.3 billion.There are 6,777 registered breeders in the Thirty-two Counties. The breeders account for 14,617 mares and their mares produced 8,563 foals in 2016. There were 246 registered stallions in Ireland in 2016. Ireland is an international leader in racing and breeding. We continuously punch above our weight and breed the best horses in the world. Irish stallions are the best and attract many foreign mares to be covered by those stallions.

At a time when other forms of rural employment are under threat from the consequences of Brexit, the maintenance and expansion of activity in the thoroughbred industry is important. Brexit creates concerns for the thoroughbred industry, which I will deal with.

The Irish thoroughbred industry has great economic significance. As much as 65% of Ireland's annual foal crop is exported, 80% of which are exported to the UK. The UK is the single biggest market for Irish bloodstock and is a major source of overseas revenue for Ireland. In excess of 10,000 horses were exported or imported between Ireland and the UK in 2016.

Ireland has two major sales companies - Goffs and Tattersalls. They both have sister companies in the UK and there is a significant presence of Irish vendors at all UK sales every year.

In terms of Goffs, approximately 33% of sales in Goffs are to UK buyers, which equates to between €33 million and 35 million per annum. Approximately 10% of sales in Goffs are by UK vendors and equates to €10 million per annum. When the impact of Irish business in Goffs UK is added then another £27 million is threatened. Therefore, I conclude that €75 million of Goffs's business is threatened by Brexit.

If the UK introduces a form of tax for UK buyers buying outside of the UK then it will discourage UK buyers from travelling. It would also threaten up to €80 million each year in inward investment for both sales companies. Ireland's exports of thoroughbreds to Britain are worth approximately €225 million each year. That business would be at risk due to reduced trade flows following the vote in favour of Brexit. Exchange rate volatility will also make Irish exports more expensive.

I will discuss the movement and transport of thoroughbreds and people within Europe. To a large extent, the horse racing and breeding industries of the UK and Ireland operate as one with all stakeholders ranging from horses to trainers, riders, agents, stable lads, owners and vets regularly travelling between both jurisdictions. I will outline a typical example. In the industry there is something called day walk-in covers. In such cases a mare is transported to Ireland from the UK or vice versato be bred within a 24-hour window, a practice that has become increasingly popular. This is also very popular between Ireland and Northern Ireland. There are 687 mares in Northern Ireland who are bred and almost 90% of them would be brought to the South of Ireland to be covered by stallions. A hard border would restrict the free movement of horses and could have an adverse effect on trade. British breeders would also be more inclined to cover their mares in the UK rather than risk delays at ports due to customs procedures, veterinary requirements, etc. Another issue is the free movement of EU nationals and the employment of UK citizens in the EU and vice versa.

The thoroughbred industry is extremely well regulated. Ireland and the UK operate as a single entity for stud book purposes. Basically, British and Irish foals are registered in a single stud book controlled by Weatherbys, which has an office in Naas. We maintain, as would our counterparts in the UK and further afield, that Weatherbys should continue to maintain the ongoing stud book for both countries. The situation is further complicated by the fact that horse racing and thoroughbred breeding have always operated on an all-Ireland basis. For example, foals born in Northern Ireland carry the IRE suffix, rather than GB. As Elizabeth Headon will outline later, two of Ireland's 26 racecourses are based in Northern Ireland.

Crucial to all of this is the high health of the animal. There is a tripartite agreement in place in that regard. Together with France we have historically had a tripartite agreement between the respective Departments with responsibility for agriculture to facilitate the movement of thoroughbred horses between the three countries. This agreement predates EU law. The ability of EU member states to use such flexibility was incorporated in subsequent EU laws on equine movement. This is now at risk. The UK leaving the EU might be used to revoke the tripartite agreement on the premise that it only has validity in the context of an EU directive, that the UK is no longer a member of the EU and that France and Ireland cannot make bilateral agreements with non-EU countries. It is vital that this agreement is retained.

The introduction of tariffs and regulations would increase the cost of business and reduce the free movement of labour and horses. Without an EU 27 and UK trade agreement on tariff and non-tariff barriers, it is possible that up to the standard World Trade Organization, WTO, 11.5% tariff might apply on racing animals, particularly geldings. As mentioned, the industries in Britain and Ireland are also in competition for investment, sale of media rights for racing, location of bloodstock and training operations. Our concern is that once Britain leaves the EU it could offer a raft of taxation and other incentives which Ireland would be unable to match. I can give an example. The rise of good stallions standing in Britain since the removal of the stallion tax exemption in Ireland is a bellwether of what can happen. We would have to mark their move in the event of a hard Brexit. The industry and the Government would have to examine incentives that could be offered to keep the Irish bloodstock industry competitive.

I will now discuss various solutions. We wish to maintain the long-standing trade relationships that worked together on harmonised approaches long before the creation of the EU. As an industry, we are working with our EU and UK counterparts to ensure that the close relationship with Ireland and the special case for Ireland extend to thoroughbred breeding and racing, given our common stud book and close racing relationships. We wish to avoid reciprocated barriers to trade and the dangers and costs of non-tariff barriers of health certification, temporary admission requirements and restrictions by requirements to use only border inspection ports being reciprocated between the EU 27 and the UK. UK and EU 27 legislative equivalence already exists through the zootechnical and equine identification regulations. Much work was done in the last number of years by the industries in all countries to ensure these regulations are in place. The Irish Government should work with other member states to ensure that this equivalence is implemented after the UK leaves the EU. On that note, the Irish Thoroughbred Breeders Association has just assumed the chair of the European Federation of Thoroughbred Breeders Associations. At a meeting involving 15 European countries last weekend it was agreed that Brexit is high on our agenda and that lobbying should take place between EU countries to ensure that legislation and so forth are in place and that Ireland retains its special position.

Innovation is another solution to promote and develop as reassurances how high health status with high levels of control are implemented for thoroughbreds by EU and UK competent authorities for animal health. Animal health and welfare are crucial. We wish to evolve existing controls of thoroughbred identification to deliver real time digital identification and movement controls for tripartite and real time reporting in the 21st century. Animal movement through border checks could be facilitated through enhanced chip technology and dedicated lanes at key ports. We must work co-operatively with all stakeholders, not just within the industry but also at Government and EU level, to get the message across that Ireland must maintain its status quowith the UK post-Brexit. The licensing of medication could be harmonised. For example, there are products available in the UK that are not available in Ireland. Horses are sometimes moved to the UK to access treatment. This must continue with minimum disruption. At EU level the thoroughbred sector could be better classified as agriculture in the application of state aid rules. It is a rural industry with all the characteristics and social impact of agriculture.

That gives the committee a flavour of the industry. The single message we wish the committee to take from it is that we are an important global leader in this industry, with an economic input of approximately €1.3 billion to the economy. It must be maintained and passed on. Any negotiation or papers on Brexit at Government level should include our industry. I thank the Members for their attention.