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Address by Minister Michael Creed T.D. at the Killarney Economic Conference Gala Dinner 12 January 2018

I am delighted to be here this evening for this Killarney Economic Conference Dinner, and I want to thank Dr. William Sheehan and his colleagues for the invitation to speak to you.

I know this is the Conference’s first venture into the public arena, and I wish you well. I want to congratulate you, Dr Sheehan, and your colleagues, for gathering together such an impressive array of national and international speakers, covering a wide range of political, legal and economic views. I also want to compliment the Killarney Convention Centre, The Brehon Hotel and the Irish Times for supporting the event. I am sure that it will become an influential annual gathering that will facilitate healthy dialogue among our economic, civic and political leaders from Ireland and the UK.

In Brexit, you have certainly selected a wide-ranging topic to start off with, given not only the many challenges that it poses for the day-to-day conduct of business right across Ireland and the UK, but also its likely influence on the shape of our future politics.

I think it is fair to say that very few policy, business or financial decisions will be made over the coming months and years that will not be affected by Brexit in some way, either directly or indirectly. For obvious reasons, my concerns revolve around the agri- food and fisheries sectors, where it is universally accepted that there will be very significant impacts if a hard or ‘no deal’ Brexit ensues, but I think all walks of Irish life will be affected.

My understanding is that, notwithstanding the continued strong growth in 2017, Brexit has impacted on the number of British visitors visiting Ireland, which is down about 6% on 2016. Whilst our overall numbers were up, the Government is conscious that the decline in British visitors is having a disproportionate effect in some areas, particularly in border areas and in high tourist areas like here in Killarney.

In response to these challenges, Tourism Ireland is targeting the marketing effort in GB through a Brexit lens, whilst at the same time seeking to build on the successful strategy of market diversification implemented since 2014.

In the medium term, other Brexit associated risks will threaten tourism. Aviation related risks will reduce air access if they materialise. As you know, air access is critical for tourism in Ireland.

The Government’s on-going commitment to tourism was reflected in the recent Budget when the 9% VAT rate on tourism services and the 0% air travel tax were retained. In addition, a further €2 million was allocated to Tourism Ireland to invest in strengthening its digital marketing infrastructure. Budget 2018 also included increased funding for signature experience brands as well as introducing a €300m low-cost Brexit Loan Scheme for SME’s including Tourism enterprises.

As has been said on many previous occasions, Brexit is a British policy, not an EU policy or an Irish policy, and we believe it is bad for the UK, bad for Europe and bad for Ireland. It presents challenges to our peace, and challenges to our prosperity. However, we are where we are, and we must now get on and deal with the matter in a way that causes the minimal possible disruption.

Indeed, we are now at a very interesting juncture in the process. Based on the joint report from the negotiators, presented by Prime Minister May and Commission President Juncker on Friday 8 December, the European Council Meeting of 14 December declared that the required ‘sufficient progress’ had been achieved on the three priority Phase 1 issues, namely, citizens’ rights, the UK’s financial settlement and the Ireland/Northern Ireland issues.

The EU negotiating team are now mandated to move on to the next phase of the negotiations, which involve tidying up some outstanding Phase I issues, establishing agreed transitional arrangements, and finalising a framework for the future relationship discussions. 

From an Irish perspective, we have achieved the goals we set out to achieve in phase one, including the maintenance of the Common Travel Area, the protection of the Good Friday Agreement and North/South cooperation, and the protection of EU citizenship and other rights.

On the border issue, we have secured a commitment from the UK Government that, in avoiding a hard border, they will maintain full regulatory alignment with those rules of the Internal Market and Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the Good Friday Agreement.

It is important now for Ireland that the discussions on the framework for a future EU-UK relationship start as soon as possible.

Draft Negotiating Directives in relation to transitional arrangements are currently being considered by Member States, with a view to reaching agreement at the General Affairs Council on 29 January. We very much welcome the fact that a transitional arrangement based on the status quo is what is envisaged. This is of critical importance in providing certainty for businesses and citizens, which will remain at the heart of Ireland’s approach to the forthcoming discussions with our EU27 partners. The objective is that the transitional arrangement will allow the necessary time for the EU and the UK to finalise the details of the future EU-UK relationship.

I also welcome the fact that the draft directives confirm that issues relating to the island of Ireland will continue to be dealt with as a distinct strand of the negotiations. This will be important in ensuring a continuing focus on Ireland’s unique issues throughout the second phase.

Of course the Government’s approach to Brexit, coordinated by my colleague, Tánaiste and Minister for Foreign Affairs and Trade, Simon Coveney, operates on the basis of a ‘whole of Government’ approach.  This has facilitated a high degree of consistency and clarity in preparation for the exit negotiations which has stood us in good stead, and has allowed us to feed very effectively into the work of Michel Barnier’s Task Force as it has conducted the exit negotiations with the UK. This has been most evident, of course, in relation to Ireland/Northern Ireland issues, where the need to avoid a hard border has informed the Task Force’s approach to dealing with Ireland issues. 

However, during this time we have also worked hard at maintaining our close relationships with Britain, and with Northern Ireland, reflecting our unique economic, political, cultural and people-to-people links.

It is our aim, and it will continue to be in all of our interests, to emerge from the overall Brexit process with the closest possible relationship between the UK and the EU. This is particularly the case in the agri-food sector, where we see the highly integrated nature of trade between the UK and Ireland that has been built up over decades.

The agri-food sector is of critical importance to the Irish economy, and its regional spread means it underpins the socio-economic development of rural areas in particular. The sector employed approximately 173,000 people in Ireland in 2016 which was about 8.6% of all employment. The total value of our agri-food exports across the world was almost €12.2bn in 2016, and figures released by Bord Bia earlier this week show a further significant improvement in 2017, and generally positive prospects for 2018, notwithstanding the potential threats from Brexit.

The UK is a critically important trading partner for the Irish agri-food sector, with almost 40% of our exports going to the UK in 2016. The Bord Bia figures for 2017 indicate that, while there has been a further increase of 7% in the value of exports to the UK, the overall proportion of exports going to the UK is slightly lower than in 2016. This  demonstrates the success of our efforts to expand into new, non-UK markets while at the same time continuing to build on our longstanding and valued UK markets.

The most immediate impact of Brexit on the sector over the last eighteen months has been caused by the drop in the value of sterling, resulting in serious financial losses for many sectors, particularly the horticulture and forest product sectors. In order to help mitigate this, and to assist in reducing costs and improving competitiveness, thereby allowing the sector deal effectively with the more long-term challenges, I introduced a range of budgetary measures last October in the 2018 Budget aimed at helping reduce farm gate and business costs.  These complement the suite of measures I introduced in the 2017 budget.

The measures cover the introduction of low-cost loan schemes for farmers and SMEs, as well as new agri-taxation measures and increased funding under the Rural Development and Seafood Development Programmes.

I have also provided significant additional funding for Bord Bia to support their investment in market insight and development of market prioritisation initiatives, and to Teagasc for the development of their new National Food Innovation Hub in Fermoy.

While some have suggested the contrary during the Brexit debate, we believe it is vitally important that Ireland remains a full participant in the European Union and, by extension, the global economy.  Membership of the EU has been key to our progress, in that it has provided the peaceful and secure external environment most conducive to economic growth. It has provided a policy framework within which we have framed our consistent and effective domestic policies, and it has been the cornerstone of our participation in the international trading system.

It is therefore very welcome that, following the declaration of ‘sufficient progress’ at last month’s European Council, we can shortly move to discussing the framework for the future relationship. And when the actual future relationship negotiations begin a little further down the road, the asks which I and my Department have made clear from the outset will continue to be:  

  • Continued free access to the UK market, without tariffs and with minimal additional customs and administrative procedures;
  • Minimisation of the risk from UK trade agreements with third countries; and
  • Maintenance of current access to fishing grounds in the UK zone in the Irish Sea, Celtic Sea and north of Donegal and protection of Ireland’s quota share for joint fish stocks.

I can assure you that my focus will continue to remain on the need for a robust, status-quo transition period, and our approach to the future relationship discussions will be informed by the need to keep future trade arrangements in particular as close as possible to those that currently prevail.

I wish you all well tomorrow in what is sure to be a very informative and enlightening exchange of views.

Thank you.