Mr. Paul Savage:

I will go through the questions in the order in which they were put and will defer to colleagues where appropriate. In response to Deputy Cahill, the prospect of tariffs is both difficult and unwelcome. As I said in my opening statement, in addition to the exposure of the sector to the UK market itself in terms of the volume of trade, we also face the likelihood of a further negative impact by virtue of the fact that the tariffs are highest in the agrifood sector. That is an extra hurdle and an extra immediate impact that we will see in the event of tariffs becoming a reality, which is more likely to happen in the context of a hard Brexit. These are difficulties that we have foreseen for some time and that is why we have said, in the context of our discussions with member states and with the EU institutions, that we want to have a situation in the future that is as close as possible to the current trading arrangements. In terms of the future relationship, we want to see continued access to the UK market without tariffs and with minimal other impingements in terms of customs and administrative procedures. Our preference is for a non-tariff outcome. That has also been reflected in the EU's own negotiating guidelines. The most recent guidelines from the Commission have set out the fact that when we look at what is known as the central case scenario, the Commission has undertaken to engage with the UK over the period as it evolves its position. In terms of the red lines that are set out, the basis of a future relationship will be a free trade agreement, essentially. There will be a free trade agreement between the EU and the UK and that is what the EU will be working on. That agreement will be based on no tariffs or quantitative limits on products. There is a realisation on everyone's part that ultimately, we do not want to have an outcome that will have a negative impact on trade. We do not want to see the advent of what would be serious tariffs for the agrifood sector. That is informing the approach and the Commission has taken the view that if we are going to operate on the basis of the red lines that have been set out by the UK, that confines us to a free trade agreement negotiation with no tariffs or quantitative limitations. That is the broad framework of the negotiation arrangements at the moment.

The issues of the green impact, climate change and the UK seeking to import products from other parts of the world are key concerns. The climate change impact can be viewed as a knock-on issue in terms of the outcome of the Brexit process. We have been acutely aware of this issue in the context of our own engagement with the Commission on trade agreements with third countries and the EU 28. In the context of products coming from distant markets, we are concerned with the impact of production processes and long-distance transport on emissions, particularly as our domestic production processes are relatively carbon efficient. We are very aware of these issues and are focusing on minimising the risks from UK trade agreements with third countries. That said, our primary focus is on the economic and regulatory impacts of products that are produced to different standards coming into the EU after Brexit.

The Deputy also asked, in the context of export specifications, what will happen if standards deviate. In such a scenario, there will be a need for greater controls in the movement of goods between the two jurisdictions. On Brexit day plus one, the two blocs will be operating on the basis of the same regulatory environment, but if standards deviate over time that increases the risk of and potential need for import controls. That is informing our position and we want to try to have arrangements in the future that are as close as possible to those prevailing currently. That also feeds into the preparedness debate in terms of having the relevant structures in place for import controls and, potentially, export certification if the UK decides to go that route. The UK has said in the past that it wants to have a common rule book in terms of how products will move back and forward between the UK and the EU but it qualified those remarks subsequently by referring to different kinds of regulatory alignment or divergence, depending on circumstances. It might keep to alignment in the case of smoothing movement through borders but it might look for divergence in other areas. Once we get into looking at divergence in other areas then we are talking about a greater need for control on movements between the two jurisdictions.

Reference was made to Food Wise 2025 and whether the targets therein are relevant any more. Some have argued that Brexit is a game changer and that Food Wise 2025 should be reconsidered in that context but the Department and the sector generally has made a deliberate decision not to throw the baby out with the bath water. A wide range of actions are being implemented under Food Wise 2025, some of which are key and necessary in the context of our response to Brexit.

We will focus on those. That is why the high level implementation committee is now looking at Brexit as a standard item on its agenda. There is an increased focus on the kinds of follow-up measures that are necessary to deal with Brexit in the broader context of Food Wise 2025 being implemented. It is not a case of saying the targets are not relevant anymore. It is also worth pointing out in the context of Food Wise 2025 there is a focus on how we are doing things. It is not so much about the headline targets. In Food Harvest we talked a lot about targets for increasing production. In Food Wise it is more about how we do things. It is about sustainability underpinning everything we do. It is about using human capital, focusing on competitiveness, developing markets and bringing innovation to bear on the sector so we can develop new products and generate new possibilities in new markets. There is very much a focus on how to do things. The gist of Food Wise is if we do all those things and apply all those principles and implement them effectively, there is no reason we cannot see growth projections of the kind we have said, which is €19 billion in exports by 2025. That is the right approach. It is being done in conjunction with the sector. There is a conscious effort to try to focus on the specific requirements we need to put into place in response to Brexit.

Alternative markets and other producers being displaced were mentioned and so was our own beef sector. A question was asked about the impact on the broader European market of products from different member states being displaced as a result of Brexit. It is true and it is a point we have emphasised in the context of our discussions with member states. We have been doing a lot of work over the past 18 months to two years. The Minister has met most of his colleagues formally in bilateral meetings in capitals and in informal Council meetings of agriculture Ministers. We have stressed the point. From an Irish perspective, it is not just about the bilateral trading relationship that each of the individual member states may have, particularly those in north-western Europe that have close trading relationships with the UK. It is about the broader knock-on impact on markets generally and, from our point of view, on the European beef market. We have 250,000 to 270,000 tonnes of beef going to the UK that will now look for another home. If the first choice of another home is an EU member state, it will have a destabilising effect across the entire European market. We have talked to other member states. They have come to the realisation that it is something that affects their own sectors. Poland exports a lot of poultry to the UK, and when we mention that to its representatives in the context of the beef market, they could see it is an issue that could give rise to concerns for them also. There is a danger. There is a shared appreciation among member states that it is a potential impact if we do not get the right outcome and if product is being diverted from the UK market. That is why we have asked for the kind of outcome we have and why we have taken the approach of trying to achieve arrangements that are as close as possible to those that prevail.

If one is looking at destabilisation or changes in the European market and if one looks at the efforts we have been making over the past number of years to try to develop other potential markets, our focus has been on non-EU markets. There has been much attention focused on third countries in Asia, America, Canada, Mexico and other areas. We are trying to follow up on EU trade agreements with Japan, Korea, Mexico and Canada. We very much tried to develop those markets in response to and following up on progress that has been made by the Commission on free trade agreements. Our focus is very much beyond Europe in terms of the possibilities and growth opportunities that are there. It is very much a focus of Food Wise 2025 to try to reduce the potential impact on that front. It is not done overnight and it requires quite a long investment of time and effort. That effort is ongoing. We are hopeful it can continue to bear fruit.

In terms of costs to businesses and the sector, costs and delays at borders were referred to. We are trying to keep the trading arrangements close to the current ones. The point of doing that is to try to minimise the costs or delays that might be associated with the movement of goods. Whatever trading arrangement there is in the future, it will not be the same as what we have now in the customs union and Single Market so there will be inevitable frictions that are not there at the moment. All of our efforts are focused on trying to minimise those and bring about arrangements that are as close as possible to those that prevail.

Processing and the movement of product from North to South was mentioned. A question was asked about the difficulties if the EU operates different standards and what the difficulties or impediments might be in terms of North-South movement. It came up again in another question. In the context of the current state of the negotiations, we are very much focused on achieving and agreeing a backstop in the context of allowing the withdrawal agreement to take shape and move into the next phase. The focus is on avoiding a hard border on the island of Ireland. The discussions on the backstop are aimed at doing that. We are operating on the basis there will be no hard border on the island of Ireland in accordance with the commitments the UK has already given. That means we will have a common regulatory area on the island so the movement of product from North to South will continue as it does in the context of that common regulatory area being in place as a result of the backstop being in place. In that context, if the backstop is working and if we have that common regulatory function, those issues do not arise with regard to frictions in terms of North-South movement.

That covered a little bit of Deputy Kenny's question on veterinary standards North and South and animals and products going up and down and what will happen if there are different standards. The reason for the focus on the backstop is to provide assurance on the avoidance of a hard border on the island of Ireland. If we have that and a common regulatory area in place, it avoids the divergence between the situations North and South.

Deputy Kenny also asked about the UK trade deals and the idea of leakage into the EU. That happens on a couple of fronts. There is the issue of the economic impact of trade deals that might be done with third countries with product coming in more competitively than might be the case in terms of Irish exports. There is a second element which is if product is coming into the UK from third countries, it raises issues with regard to standards and controls that might be required in terms of UK trade with the rest of the EU. The more we have products which may be produced to a different standard coming into the UK, the more divergence there is between the UK and the EU and us which then gives rise to the potential for further import controls. It is a possibility. That is why we have sought to have the minimisation of those customs and administrative procedures as well as minimising the risk from UK trade agreements with third countries.

UK food deficiency was mentioned. It will have to get it from somewhere. There is an issue with how much time it will take for the UK to produce a product it is getting from Ireland or to get it from elsewhere. I do not think any specific assessment has been done of precisely how long it might take or what the likely developments in that area will be. At present, the UK is about 60% self-sufficient in food. It is importing a lot of food from other countries, including Ireland. As part of our approach, we are very committed to making sure the relationships we have in place in terms of trade with the UK continue after Brexit. There will be changes regardless of what happens here. Hopefully we will avoid tariffs and there will not be any limitations in terms of traded volumes. We are also trying to minimise the other non-tariff related restrictions or frictions that might also arise. We hope relationships continue. There is a lot of work being done by Bord Bia and others on advising companies on how to maintain customer relationships with UK counterparts. The continuation of those relationships will be much easier if we can achieve what we want here which is a tariff free and volume free trading arrangement into the future. The prospects are much better if we can get that.

Hauliers were mentioned and how the land bridge to the EU might operate and what sorts of checks or facilitation there might be. We are acutely aware of the land bridge issue. It will potentially have a significant impact. Many Irish agrifood exports to the EU are going via the UK land bridge. There is good reason for that in terms of short shelf life and the perishability of products. The journey times across the UK to those continental markets are much shorter using the land bridge than would be the case in the event of direct sea transfer. It would be up to three times longer in some cases. It is crucial to try to make sure the land bridge continues to function effectively. There are two dimensions to that. One is what we can do from an EU perspective in terms of facilitating the movement and smooth transit of goods at either end of that journey.

There is also the issue of how the journey of products across the United Kingdom will be facilitated. We have been engaging with the Commission initially and other member states on how those arrangements might work. Obviously, much will depend on what the United Kingdom does. It has indicated its intention and is formally going through the process of joining the customs transit convention, or common transit convention, which allows for smoother, more electronically based movement of product across the UK between two member states. The fact that it has committed to that arrangement means the prospects for limited intrusion or interference with product going across the landbridge are improved. However, we will have to engage with the UK on how that will work. From our point of view in the EU, we are looking at how we can facilitate product coming from other member states across the landbridge into Ireland at our ports here. We are looking at arrangements that would facilitate that and the extent to which other member states could work along the same lines in terms of facilitating our exports across the landbridge. It is a key issue from our point of view. It is addressed in the exit negotiations because the European guidelines acknowledge the unique difficulties relating to the geographic location of Ireland. It is being considered in that context and that is why it is under discussion.

On fisheries, Deputy Martin Kenny raised the issue of access to waters and the effect on Irish waters if that is lost. I think the Deputy was referring to extra fishing or greater fishing effort being displaced into Irish waters. He mentioned the renegotiation of the Common Fisheries Policy. We are acutely aware of the overall concerns relating to access to waters. The Commission has been linking the issue of access to waters with the broader trade and future relationship negotiations. That is what we will continue to do. We will seek a solution through those overall discussions rather than allow the fisheries issue to be treated as a separate issue outside the negotiations. We are aware of it. Among the issues in question are access to waters, the sharing of fish stocks and the impact of increased fishing effort in Irish waters. We are trying to avoid a negative outcome on those issues and to maintain the sharing arrangements currently in place. Ms Kelly may comment further on this issue when I have finished my initial response.

Deputy Penrose asked what I agree may be an unfair question on the prospects for the extension of a transition period. It is difficult to call at this stage. We are operating in a very uncertain environment. I would rather not comment on the prospects for an extension of a transition agreement. It will depend on how the negotiations evolve in the coming weeks and months. We hope that the transition period will be as long as is necessary to agree on the future relationship between the EU and the UK. As the Deputy stated, it can take a considerable period of time to agree trade agreements or arrangements. We do not know how long it will take to agree this complex agreement because we are trying to disentangle one party from a trading arrangement and that has not been done before. I do not know what are the prospects for an extension of the transition period. We all hope that we can get things done in the time available to us.

Deputy Penrose also mentioned concerns in regard to cheap food policy and the effect on standards of imports from third countries. I have responded on that key issue. We want to avoid it because of its potential to intensify or increase the implications in terms of controls.

The Deputy referred to the Department and Ministers opening up markets and the success of trade missions. There has been some progress recently in the development of markets as a follow-up to trade missions. We combine political, business and economic components in trade missions. Often, progress is facilitated by the high-level political contacts which are engaged in on trade missions. For instance, developing political relationships is particularly important in China. We have visited China frequently in recent years and that has helped us develop relationships which have led to trade possibilities. The Chinese market opened for beef this year as a result of many years of engagement with the Chinese authorities as well as strategically placed trade missions to try to push those agendas forward at crucial times, particularly when there is a political dimension to the discussions.

A point I mentioned earlier and wish to emphasise is that we very consciously tailor and examine our trade missions in the context of European Commission engagement with various trading blocks and countries around the world. The Commission is trying to push ahead with a more open trading agenda and develop possibilities and reduce market access obstacles in various markets. We have tried to follow on from that. In recent years, as members will have seen, trade agreements have been reached with Korea, Japan and Canada, as I mentioned. We have followed up on those agreements. Trade missions led by the Minister and involving a large number of agrifood companies have tried to establish partnerships with companies in those sectors of those economies to try to leverage what the Commission achieved in free trade agreements. We have made a conscious effort to try to target the areas of potential. In addition, a significant amount of money has been invested in Bord Bia in recent years to fund market development activities, particularly in the context of Brexit. A Bord Bia study examined which markets we should prioritise in terms of potential across various sectors, including seafood, meat, dairy and prepared consumer foods. It came back with a market prioritisation report which identified 15 key markets across each of those product categories where there is significant potential for us to get in and develop the markets. It is now conducting a deeper dive into five key markets in each of those sectors on which we can focus a greater amount of resources to try to develop possibilities. We are using the available data, the analysis and the research of Bord Bia, combined with what is going on at Commission level, and using those to target our trade mission destinations.

The Deputy mentioned the issue of tariffs which I addressed in response to Deputy Cahill.

Deputy Penrose referred to the Mercosur threat. We are taking it very seriously. As members are aware, for many years we have been fighting any development on Mercosur, particularly an agreement or tariff rate cut on beef. In the context of the Commission's work, we continue to emphasise the very serious implications Mercosur would have for the Irish and European beef sectors. We remind the Commission and others not just of the threat that arises from Mercosur, but also the broader context of the cumulative impact of concessions that the EU has made or is considering across a range of trade areas and agreements in which it is currently involved. We view Mercosur as a serious threat and continue to oppose it. We continue to insist that it is taken account of in the negotiations. As members are aware, there has been something of a hiatus in the negotiations recently, related to the Brazilian elections and other matters, but we continue to make that point in the context of the negotiations.

Senator Paul Daly addressed the issue of preparedness and budgetary allocations. I think he asked about the €25 million made available in budget 2018 and the impact of various measures. As stated by the Minister for Finance, Deputy Donohoe, that allocation has been incorporated in the future growth scheme that will come into place in early 2019. It is a new product and arrangement which has backing from the European Investment Fund and is being operated by the Strategic Banking Corporation of Ireland, SBCI. There have been several players and steps in the process of getting that product into place which are now coming together. We expect it to be in place in early 2019.

On the direct impact of or follow-up on other schemes, the €150 million low-cost loan scheme announced in budget 2017 is now fully subscribed by farmers and others availing of the opportunities it provided. In 2018, we had the joint €300 million loan scheme run by our Department and the Department of Business, Enterprise and Innovation.

That was launched formally in March of this year and it is in progress. Companies are applying for loans as part of it and approvals are ongoing. Effectively, we had a fully subscribed scheme from 2017. There is an operational scheme in place processing loans for companies as a result of the 2018 allocation. The €25 million we talked about will come on stream as part of the future growth loan scheme in early 2019.

Reference was made to fisheries and to the United Kingdom losing access. I covered this in an earlier answer. Reference was made to policing or patrolling our own waters. I might ask Ms Josephine Kelly to comment on that if she wants. Again, it is a matter of the resources that we would require to deal with whatever happens as a result of Brexit.

On new markets, I was asked about Food Wise 2025, the ambitions in this regard and the amount of emphasis we are putting on the programme. I probably covered that in my earlier response. We are putting a lot of effort into it. There is a market prioritisation exercise by Bord Bia and there are trade missions. I mentioned in my opening statement the fact that we now have a market access portal in the Department. On the Department's website, companies and exporters can examine the requirements and issues they have to deal with in gaining access to different markets. That is the practical follow-up we are doing in conjunction with some of the more high-profile stuff that occurs on trade missions.

On the query about a soft Brexit and whether a fall in the value of sterling, which could fall in any case, would have a big impact. It may well have a big impact. In the short term, we have been focusing in our base response on dealing with the impact of the fall in the value of sterling against the euro. I do not know the extent of the fall or the impact after Brexit. It may take time to see that impact but it is important that we be ready to try to respond to the sterling fluctuations in the same way as we have done over the past two years. It difficult predict the currency movements. One could argue a soft Brexit might have the opposite effect and strengthen sterling. I do not know. Markets might decide it is a good outcome from a UK perspective also, and it might have a limited or no impact. We will have to see how this develops. Our track record on responding to these kinds of changes is pretty strong.

The Chairman asked about the hole in the CAP budget and the position on that. I have not been as closely in touch with my colleagues on the CAP side and the negotiations on the direction of the reform, or the multi-annual financial framework discussions. There have been discussions on how the hole might be filled. We and the Minister have indicated readiness to contribute more to the CAP budget, obviously in regard to securing future funding. There is a debate on this ongoing at member state level in the context of the multi-annual financial framework. I am not entirely sure about the current progress in that debate but our position on it is clear, certainly in terms of where we are going.