Shane Ross (Dublin Rathdown, Independent) | Oireachtas source

I thank the committee for asking me to address the second part of the agenda today. There was a unified EU reaction to developments last Tuesday in Westminster. President Tusk reiterated that the backstop is part of the withdrawal agreement and the withdrawal agreement is not open for renegotiation. He reiterated that again today in even stronger and more colourful terms. In a debate held by the European Parliament the following day, President Juncker emphasised that the withdrawal agreement was the best and only deal possible. He said the Commission would continue to support member states’ work on preparedness. Michel Barnier repeated that the withdrawal agreement, including the backstop, would not be renegotiated and that it offers the only realistic solution to the problems created by Brexit.

The Government remains firmly of the view that the best and only way to ensure an orderly UK withdrawal from the EU is to ratify the withdrawal agreement. My Department and indeed all Government Departments have intensively advanced their preparations and planning for a no-deal scenario given the ongoing uncertainty in the UK. I and my Department have been fully engaged on the very wide range of Brexit related transport issues, and tourism issues, ever since the UK invoked Article 50. This includes working closely with other Departments and EU member states, meeting and working with the European Commission, and participating in technical EU level meetings in the area of transport. Stakeholder engagement has also formed a very important part of our preparations and contingency planning. I have met a number of my EU counterparts over the past two years, including recently my French opposite number, with whom I share many concerns. I have also met the UK Secretary of State for Transport, Chris Grayling, on a number of occasions and most recently late last year, as I said during the earlier session today.

I cannot emphasise enough that it would be impossible in a no-deal scenario to maintain the almost seamless arrangements between the EU and UK currently facilitated by our common EU membership. If the UK becomes a third country on 29 March without having ratified the withdrawal agreement with the EU, a very wide range of EU rules in the field of air, road, rail and maritime transport will no longer apply to the UK. Of course, if the withdrawal agreement is ratified before 29 March, many of the preparations and contingency measures that I am about to detail will not be required.

We have already spent the first portion of this afternoon discussing cross-Border rail and bus services. While there are many other Brexit implications for the transport sector, I will focus this statement on the other key risks that have been identified in a no-deal scenario. These are our continued aviation connectivity; the ability of our international road haulage sector to move to and through the UK; the potential impacts on our ports and airports as a result of the significant increase in the control requirements of the Department of Agriculture, Food and the Marine, the Department of Health and HSE, and the Revenue Commissioners to carry out checks on imports at ports once the UK becomes a third country; and the impact on the UK landbridge. We identified our issues early on and have been preparing for a no-deal scenario in parallel with our preparations for the central case scenario. We have made significant progress in recent weeks on some of our biggest and most serious challenges.

Ireland is heavily dependent on aviation links with the UK for trade and tourism. Some 44% of all flights to or from Ireland, approximately 113,000 flights a year, are to or from the UK. The sector contributes more than €4 billion directly to Ireland’s GDP. The tourism sector is critically reliant on aviation connectivity and spending by overseas visitors is approximately €5 billion, of which just over €1 billion is from visitors from Great Britain. Ireland would therefore be uniquely exposed by a no-deal scenario due to our heavy reliance on the Ireland-UK air transport market. Ireland along with a number of other member states strongly made the case to the European Commission for action at EU level to ensure continuity of air services in the event of a no-deal Brexit. The European Commission last year put forward a draft legislative proposal aimed at ensuring basic air connectivity in a no-deal scenario. This proposal is progressing through the Article 50 working party and will ensure continued air access between the EU 27 member states and the UK. It is drafted on the basis that the UK will reciprocate the level of services, albeit for a limited period of 12 months. The measures proposed will, subject to reciprocity, provide a large degree of certainty to the Irish aviation sector and the travelling public. The proposals will help to minimise disruption to air services for business, trade and tourism and have been welcomed by our key aviation stakeholders.

As with all contingency measures that the Commission has put forward, these measures are not intended to, and cannot, mitigate the overall impact of a no-deal scenario, nor can they replicate the full benefits of EU membership or the terms of the transition period as provided for in the withdrawal agreement, but we continue to convey our key concerns through the Article 50 working party. The aviation industry is fully aware of the position that has been reached. While not everything the industry would wish for will be possible, the very real fears that aircraft might not be able to fly are being addressed.

A fundamental legal principle of EU aviation is that air carriers wishing to operate in the single aviation market must be majority owned and effectively controlled by EU nationals. Airlines which may not be majority owned and effectively controlled by EU nationals post Brexit, when UK shareholders are excluded, could lose their European operating rights. The European Commission has been very clear that it is essential for companies that wish to be recognised as EU air carriers to take all necessary measures to restructure and to ensure that they meet this requirement in time for 29 March. My Department has continually advised our aviation stakeholders of the need to examine their corporate structures to ensure they will comply with the provisions on ownership and control when the UK leaves the EU. That said, it is recognised that the timeframe in a no-deal Brexit scenario is very limited and it will be challenging for community airlines to complete this restructuring as necessary in the time available. In view of these circumstances, it is envisaged that the EU contingency regulation for air connectivity will provide an extension of seven months to allow airlines impacted by the ownership rules to implement their restructuring plans, subject to certain conditions.

Ireland, together with a broad range of other most affected member states, is seeking to address all aviation related issues so that difficulties for community airlines and inconvenience to their customers are minimised to the greatest extent possible while recognising that a no-deal Brexit cannot mean the maintenance of the status quoand the advantages that would bring to the UK and its aviation sector without the obligations of EU membership. Since the UK triggered Article 50, the Department has been engaged in extensive consultations and meetings with other Government Departments and agencies, and other public and private key stakeholders, in particular with the National Civil Aviation Development Forum, NCADF. This increased and regular engagement with the NCADF has assisted both the Department and the industry in planning for and mitigating the risks associated with Brexit for the aviation sector.

Roll-on, roll-off traffic between Ireland and the UK accounted for 966,549 freight units in 2017. Currently this trade into and through the UK by road is facilitated by the EU’s community licence, which allows international hauliers from EU member states to move within EU member states. In a no-deal scenario, up to recently, the Commission had maintained that the European Conference of Ministers of Transport, ECMT, multilateral quota system would be the only fall-back for journeys between the UK and the EU 27. This system would only provide sufficient ECMT licences to cover between 5% and 10% of current UK-EU journeys, which would be wholly inadequate. Following very strong representations from Ireland and a number of other member states, the European Commission announced on 19 December a proposal to temporarily adopt measures for a nine month period from 29 March to allow access for UK hauliers to the EU to ensure basic road connectivity. This is also subject to the UK recognising EU licences and allowing access into the UK for EU hauliers. The proposal represents prudent planning and is very welcome. Ireland is very supportive of the Commission’s proposal and is working closely with other member states and the European Parliament to ensure it is adopted in good time for Brexit. There has been a lot of uncertainty about the legal framework for road haulage in a no-deal scenario. Bringing the Commission’s proposal into force in advance of 29 March would remove much of the uncertainty that has surrounded this issue to date.

While the proposed aviation and road haulage EU Commission measures are only temporary, they eliminate the immediate risk from March and allow time and space to find alternative and more permanent arrangements.

The establishment of the additional controls at ports and at Dublin airport is being co-ordinated by an interdepartmental group under the chairmanship of the Department of Public Expenditure and Reform, with representation from a range of stakeholders across Government. The group has focused on three locations for which we are heavily dependent on connectivity to the UK, namely, Dublin Port, Dublin Airport and Rosslare Europort. The Office of Public Works has been tasked with delivering the required facilities for agriculture, health and customs checks at these locations. Work is ongoing in respect of both a no-deal and a central-case scenario.

I am concerned about the potential for disruption to, and our reliance on, the UK landbridge. A substantial proportion of our exports and imports, including many time-sensitive or perishable goods, are transported by truck on roll-on roll-off, RoRo, shipping services to and from the UK for direct UK trade, but a significant proportion of our goods make their way onwards through the UK road network or landbridge to reach EU ports. It is estimated that 16% of the RoRo or heavy goods vehicle, HGV, traffic between Ireland and Great Britain is landbridge traffic. Of course, this all takes place at present in a relatively frictionless manner, as is the case across the entire Single Market. However, if the UK becomes a third country from 29 March and there is no agreement in place, then additional customs, agriculture and sanitary and phytosanitary, SPS, controls will be required at EU continental ports that trade with the UK. There has been much speculation that French ports may become congested and that there may be significant delays on the much-relied-upon Dover-Calais maritime route.

The Irish Maritime Development Office, IMDO, carried out a study for my Department concerning the implications of Brexit on the use of the UK landbridge. The study, which was published last year, indicates that 3 million tonnes of merchandise trade with the EU moves between Ireland and the Continent via the UK landbridge. The IMDO estimates that this equates to approximately 150,000 HGVs each year, which constitutes a weekly average of approximately 2,880 HGVs moving between Ireland and the Continent via the landbridge, although there are peak times both weekly and on a seasonal basis. The total value of our trade using the landbridge is estimated to be €21 billion.

Certain sectors are very reliant on the landbridge route - this trade is largely time-sensitive products such as agrifood where the shorter journey times and high frequency of sailings allows a quicker route to market than direct sailings to continental EU ports. The IMDO study concluded that the landbridge is a strategically important route to market for many Irish importers and exporters, including but not limited to agrifood, seafood and other sectors trading in time-sensitive produce. These sectors would be particularly adversely affected by any deterioration in transit times or increase in costs, particularly in a no-deal scenario, and these sectors may not be able to opt for the direct maritime routes to the Continent given the longer journey times involved. Many of these exporters are likely to continue to use the landbridge unless additional delays on this route are such that the route would become unviable. Others may opt instead to transport goods from Ireland on direct shipping services to EU ports. Existing available capacity on direct maritime routes to continental EU ports will mitigate somewhat our reliance on the UK landbridge. This will of course depend on the nature of the product.

The Department of Transport, Tourism and Sport, through its own work and through participation in the landbridge project group, chaired by the Department of Foreign Affairs and Trade, continues to monitor the extent to which Government agencies at the port of Calais in particular are stepping up preparedness for checks on products from and flowing through the UK, which is critical for products that need the time advantage offered by the landbridge. Last month, as part of the Government's preparations for a no-deal Brexit, I updated Government on the potential implications for east-west transport connectivity with the UK and our wider EU and international trading partners in the event of a no-deal Brexit. I set out my concerns relating to the landbridge and I also assessed the maritime capacity for direct sailings between Ireland and continental EU ports as a potential alternative route for trade currently using the landbridge, while recognising that the longer journey time on direct routes may not offer a viable alternative. Based on consultations with those in the shipping sector and others, I consider that sufficient capacity will be available on direct routes to continental ports from the end of March. If demand for further capacity arises, the shipping sector can respond quickly. I am keeping this matter under review and will report back to Government with a further assessment.

There are many other important issues which the Department continues to address and in respect of which it continues to prepare. I think the ones I have covered are the most pressing, but I welcome questions on everything. I thank the committee.