Dáil Speech By Jackie Cahill, TD
I am amazed that some Members believe we should not be focusing on the consequences of this vote in the United Kingdom. Our entire economy is intertwined with the UK economy. We are seriously dependent in many sectors. The consequences of the vote on 23 June are bound to impact on us if the UK people vote to exit. I hope they will not but if they vote to exit we would be negligent in our duty if we have not prepared and discussed the options and a plan to lessen the impact on our economy.
I intend to focus on the agri-food sector and the implications for our agri-food sector and the food industry in Ireland. At the moment our agricultural industry is in chaos. Our primary producers are being asked to produce food under the cost of production. It sends a shiver up my spine to think about what would happen if our access to the UK market was reduced. It is our nearest customer with a population of 64 million that is forecast to grow to 75 million within a generation. If we have reduced access or if tariffs were put on us because of entry into that market, the consequences would be too frightening to contemplate.
Therefore, given where our industry is at the moment the consequences following a British exit from the EU must be fully understood. Actions must be prepared to save our industry from the possible outcomes. The Irish agri-food sector is far more linked to the UK than it is to the rest of the EU. The EU accounts for 62% of UK exports and 70% of UK imports of agri-food products are Irish. However, the UK takes only 8% of the agri-food exports of other EU member states while it supplies just over 3% of imports. These figures are far smaller than the figures for this country. We exported €5.1 billion to the UK in 2015. Some €970 million of that figure was dairy produce and €1.1 billion was beef product. We imported €3.8 billion from the UK. Therefore, there is an extraordinary amount of interchange and trade between the two countries. More than €70 million of these imports were dairy products and €100 million were beef products. Some 55% of our total meat exports go to the UK and they are worth €2 billion per annum. A total of 54% of our beef goes there. Indeed, 61% of our pigmeat, 84% of our poultry and 28% of our sheepmeat goes there. Fully 30% of our dairy products find a home there. We import 400,000 sheep from Northern Ireland and 500,000 of our pigs are exported live to Northern Ireland. A total of 1 billion litres of milk are imported from Northern Ireland. These figures clearly show our remarkable dependence on each other and the amount of trade between the two countries.
In light of these figures alone the Irish agri-food sector stands to be adversely affected far more than other member states within the EU if Brexit becomes a reality. Further complications could arise if border controls become necessary in respect of trade within the EU and given the nature of the Border between Ireland and Northern Ireland. If the UK does exit I would be concerned about our live trade. We use the UK as an avenue to get to mainland Europe. If the UK exits, further restrictions could be put on our live export business. This is an area we have neglected in recent years. It is something we have to develop and expand. If the UK is not part of the EU I envisage serious complications in our access to mainland Europe.
The UK contributes 12% to the EU budget. It is a major net contributor to that budget. In 2013 the UK contribution to EU resources was €17.1 billion. EU expenditure in the UK amounted to €6.3 billion. Therefore, the UK was a net contributor of €10.8 billion. In an Irish context, 37% of that budget is spent on agriculture. This means if there is €10.8 billion to be made up following a UK exit, the agriculture budget would come under serious scrutiny. It has already been cut significantly in recent years. If the UK left and €10.8 billion had to be found, I imagine the agriculture budget would come under pressure again.
In the Council of Ministers, under the double majority qualified voting system in place since November 2014, it has 12.3% of the votes based on population. An exit would obviously affect different voting majorities in the Agriculture and Fisheries Council and this may compromise Irish interests on the Council.
If we accept then that our agrifood sector is much more vulnerable than that of any other member state, there is an onus on us to prepare properly and to prepare for the worst. The UK will have a number of options for a trade policy with the EU post-Brexit. Will it take the option of the EEA agreement, similar to the relationship that Norway has with the EU? The EEA option would provide the least disruption to trade flows. This is because the EEA extends the Single Market legislation to EEA countries. However, agricultural trade and policy is not a part of the EEA agreement, a worrying thought for our agricultural sector. Only the non-agricultural component of custom duties for processed agricultural products is eliminated, although bilateral agreements provide for some liberalisation of trade in basic agricultural commodities, usually limited by tariff rate quotas. This option would clearly hamper Ireland’s future development.
The second option for the UK is similar to the relationship that Switzerland has with the EU. While Switzerland is a member of the EFTA, Swiss voters rejected the opportunity of joining the EEA in a referendum in December 1992, but, following negotiations, Switzerland agreed ten treaties, one of which deals with agriculture and, in real terms, Switzerland enjoys the same economic relationship with those countries that are part of the EEA such as Norway. This is again not a palatable option for Ireland.
A third option for the UK would be to create a customs union with the EU along the lines of Turkey. The customs union does not give Turkey access to the Single Market, but it foresees that Turkey will align its trade-related legislation with the EU in several areas essential for market access. This option would still leave our agriculture industry at a disadvantage.
The final option for the UK would be free trade agreements with the EU, that would be governed by WTO rules, as both parties would be WTO members. Tariffs would apply to the agrifood trade and the economic relationship between Ireland and the UK would be no more important than between any other two states around the world, despite our proximity and long trading history. It is safe to say then that whatever option the UK chooses, if it decides to exit the Union it will leave the agrifood sector in Ireland in a worse position. The generations of agricultural trade between our two countries, a trade that has been regulated and cemented through our mutual membership of the EU over the past 15 years, can only disimprove if the UK decides to exit.
The agrifood sector is under extreme pressure and 23 June will be an important day for us. I hope our nearest partner and largest customer decides to remain within the EU.