Oireachtas Joint and Select Committees

Monday, 22 February 2021

Seanad Committee on the Withdrawal of the United Kingdom from the European Union

Impact of EU-UK Trade and Cooperation Agreement on Ireland: Discussion

Dr. Martina Lawless:

On the question of the existence of uncertainty raised by the Senator, that is certainly the case. There was possibly an expectation that the signing of a trade and co-operation agreement would bring an end to all of the uncertainty that we have been talking about in relation to Brexit over the last few years. It really only brought an end to uncertainty about tariffs. Issues concerning the recognition of standards and so on still largely remain in the decisions made by each individual partner in respect of how much they are likely to diverge. That is something that will continually be under review and will evolve as time goes on.

The issue of services was almost entirely absent from the agreement, for example, in respect of details of recognition. Therefore, there is much still to be negotiated. There also remain some issues on which unilateral decisions can be taken by one side or the other but which would have implications for trade by both sides. One of the ironies of the entire Brexit process, which aimed to take the UK out of the EU, is that it has led to much more discussion between the UK and the EU.

One of the ironies of the entire Brexit process, the aim of which was to take the UK out of the EU, is that it has led to much more discussion between the UK and EU. The trade and co-operation agreement set up something in excess of 30 committees to oversee various elements of the arrangement and the practical issues that would arise as it was implemented. I believe we will see the EU dominating much UK economic and political discussion for several years to come because there are still so many areas where details need to be made clear or discussed further or where changes made by one side or the other will have implications for trade between both, particularly if new trade agreements are signed by the UK that might have an impact on the standards of products being brought into the UK. That would have a big impact on the EU and the level of checks and so on. That is a major issue in terms of how the standards will evolve.

As the Senator noted, Northern Ireland is in a unique position. The Northern Ireland protocol relates to trade in goods rather than trade in services. That puts it in a quite an attractive place in which to undertake production considering its access to both the UK and EU markets. I am quite hopeful that it would increase the productivity and output of the Northern Ireland economy, perhaps quite considerably. In this regard, we should consider the extent to which firms currently trade across the Border along the Border counties. There are a very strong supply linkages between firms on both sides of the Border. We have examined these a little over the past couple of years because there could be a very positive spillover effect. The greater the growth in Northern Ireland, the greater the spillover effects on Border counties. It is good news for the island as a whole. There is much positive work to be looked at in terms of all-island economic integration. This is a matter on which the ESRI is planning to do quite a body of work over the coming years.

Regarding the economy of Great Britain specifically, because Northern Ireland is in a quite different position given its access to both markets, many commentators have come up with different forecasts. In general, it is partly driven by politics because every economist, perhaps with a very small number of exceptions, expects that leaving the EU will have negative impacts on the UK economy. How negative those impacts will be is obviously a source of considerable debate but pretty much every forecast suggests the effects will be negative. While it may be possible to become a global trader, pretty much every analysis of international trade, including trade in goods, which obviously entails transport costs, but even trade in services, regarding which one might believe there is a lower cost associated with trade over long distances, has found it is much easier and cheaper and more convenient to trade with close neighbours. Removing oneself from a big trade agreement with a market the size of the EU is likely to have negative consequences for the UK's external trade and economy as a whole. Does Dr. Barrett want to add anything?


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