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Minister Creed's remarks at Food and Brexit seminar, Armagh, 19 April 2018

Address by Minister Michael Creed T.D. at the Brexit Agri-Food Event at Armagh City Hotel 19 April 2018

Opening remarks

Good morning, Ladies and Gentlemen.

I am delighted to be here at this Brexit event in the Armagh City Hotel. I want to sincerely thank Margaret Ritchie, both for the invitation and for organising this very worthwhile discussion.

Margaret has asked me to talk to you about the importance of the agri-food sector in Ireland, and about the Irish Government’s position in relation to Brexit.

Brexit – general

Firstly, I think it is clear 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.

As has been said on many previous occasions, Brexit is a UK policy, not an EU policy or an Irish policy. In addition to other potential impacts, it presents challenges to our peace, and 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. 

For obvious reasons, my concerns revolve around the agri-food and fisheries sectors, where it is universally accepted that there will be very significant negative impacts if a ‘hard’, or ‘no deal’, Brexit is the outcome. Many research studies, including, most recently, from Copenhagen Economics, confirm this.

Ireland’s Agri-food sector

I think all of us here this morning understand the critical importance of the agri-food sector to the Irish economy, and indeed to the island of Ireland as a whole. The regional spread of the sector means it underpins the socio-economic development of rural areas in particular, and nowhere is this more the case than in the border regions.

In Ireland the sector employed over 173,000 people in 2016, accounting for about 8.6% of all employment.

The total value of our agri-food exports across the world increased for the eighth consecutive year, to reach €13.6bn last year. Some 38% of this was exported to the UK.  Within those figures almost 50% of our beef, 22% of our dairy products, 47% of our cheddar cheese, over 60% of our prepared consumer foods and almost 100% of our mushrooms went to the UK.  In addition, some 47% of our agri-food imports came from the UK.

Trade with Northern Ireland represents about 14% of our overall trade with the UK in both directions. Beef, dairy products and live animals are the main components of North-bound trade, while milk and dairy products, animal feed, and fruit and vegetables are the main products imported from Northern Ireland.

The dairy statistics clearly reflect the ongoing de facto all-island milk market that currently exists. As many of you know, significant volumes of manufacturing milk are taken in by a broad range of Irish processors from Northern Ireland. Likewise, significant volumes of milk and dairy products go from Irish farmers and processors to processors located in Northern Ireland. In some cases, the production chain can involve several movements back and forth across the border.

In addition, there are large movements of live animals both ways across the border.

A significant component of the sheep and lambs slaughtered in Irish processing facilities are of Northern Irish origin. Similarly, large numbers of pigs produced in Ireland are sent to processing facilities in Northern Ireland.  Over 80% of all live cattle exported from the South to the UK go to NI.

The extensive and highly integrated nature of the trade in both directions, North and South, magnifies the potential impact of a ‘no deal’ Brexit on the agri-food sector on this island. That is why the Irish Government wants the EU-UK negotiations to work, and to ensure that a hard border on the island of Ireland can be avoided while also ensuring that we have as close as possible a trading relationship with the UK in the future. Regulatory alignment in relation to sanitary and phytosanitary issues will be vitally important in this regard.

Referring briefly to Fisheries, there is no doubt that Brexit poses serious potential threats to our seafood industry.

My position and that of other affected Member States is absolutely clear – we cannot accept any change in the current and long standing reciprocal access and sharing arrangements to the detriment of Ireland’s and the EU’s fishing communities. 

We would all like higher quotas, but the way to achieve that is to grow the stocks through sustainable management for the benefit of all.

Impacts of Brexit

More broadly, we have seen in the South that the most immediate impact of Brexit on the agri-food sector has come in the form of the fall in the value of sterling against the euro. In order to help to mitigate against this and other impacts, and to assist in reducing costs and improving competitiveness, I introduced a range of measures in the two most recent Budgets. These were aimed principally at helping reduce farm gate and business costs. 

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 its 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.

Markets

I am also of the view that an equally effective way of mitigating the potential effects of Brexit is to expand our international trade opportunities and reduce our exposure to the UK market.

Consequently the identification of alternative markets for Irish agri-food exports within the EU and elsewhere has been a key priority for me and for my Department.  

This task requires a focused effort on developing new, economically viable markets. While our record to date has been impressive, we now have to raise the bar even further.  We are, however, fortunate in that we have an excellent industry-led strategy for the growth of the sector in Food Wise 2025, which provides a clear road-map for its development. 

Also to that end, I recently returned from a Trade Mission to Canada and the USA, having already led successful trade missions to Saudi Arabia and the United Arab Emirates in Feb/March 2017, to the USA and Mexico in June 2017, and to Japan and Korea last November. I plan to undertake further missions in 2018, including to China next month.

Of course we don’t want to give up on our hard-won UK market, and for that reason I have had meetings with the CEOs of the three major UK retailers (Tesco, Sainsburys and ASDA) to impress upon them the value of their continued relationships with the Irish agri-food sector.

NI/UK engagement

Strong North-South engagement at both political and official levels has always characterised our relations in the agri-food area. This was the case in the lead-up to the UK referendum and in the months following the decision. For example, I had regular contacts with my counterpart Michelle McIlveen, through the North South Ministerial Council and in other fora. This was mirrored by close engagement at official level. And indeed I have spoken with you, Margaret, and other colleagues as opportunities to do so have arisen.

These contacts have of course become more difficult in the absence of the Northern Ireland Assembly, although informal discussions such as today’s event do still allow us an opportunity to highlight issues of concern. 

Negotiations

Ireland’s approach to the EU-UK negotiations has been conducted on a ‘whole of Government’ basis, and is coordinated by my colleague, Tánaiste and Minister for Foreign Affairs and Trade, Simon Coveney. This approach has facilitated a high degree of consistency and clarity in preparation for the exit negotiations, and has allowed us to feed very effectively into the work of Michel Barnier’s Task Force as it has dealt with the Ireland/Northern Ireland aspects of the negotiations.

Indeed, we are now at a very interesting juncture in the negotiation process. You will know that the European Council, on 23 March last, noted the current draft of the Withdrawal Agreement which, among other things, contains proposed arrangements for a transition period. Under those arrangements the full range of EU legislation would continue to apply to the UK until 31 December 2020.

However, the Council was also adamant that “nothing is agreed until everything is agreed” and referred to the fact that a number of important Phase One issues are still outstanding.

These include governance, cooperation in criminal matters, data protection and, most importantly, the steps necessary to give effect to the so-called “back-stop” that is needed to avoid a hard border on the island of Ireland, as agreed in the joint EU-UK report last December.

It should also be noted that an agreed transition period is not a given because the final Withdrawal Agreement still has to be negotiated to its conclusion and then placed before the European Parliament, the EU27 Member States and the UK Parliament for ratification late this year or early next year.

From an Irish perspective, it is good to see that agreement has been reached on some elements of the draft Protocol on Ireland/Northern Ireland. While the exact set of actions necessary to avoid a hard border on the island have not yet been finalised, both the EU and UK negotiating teams are involved in discussions to progress this issue.

The March European Council also agreed guidelines on a framework for the discussions on the future relationship, which will be negotiated by the EU and the UK over the coming months. I welcome the fact that the EU intends to take an open and constructive approach to these discussions. Based on UK red lines, the discussions will be aimed at achieving an ambitious free trade agreement. However, the Guidelines also make it clear that the EU stands ready to reconsider its offer if these UK positions evolve. Again, I think this is a sensible approach, and one which provides us with the best chance of agreeing a mutually acceptable outcome.

It is intended that the framework for the future relationship negotiations will also be agreed over the coming months, and will be added as a political declaration to the Withdrawal Agreement to be concluded in October. This will then provide the basis for the detailed negotiations that will take place following UK departure from the EU in March 2019. 

Closing

Again, I want to thank you for the invitation to attend today’s event.  In conclusion I want to reiterate my focus on the ‘asks’ we set out from the very start of the negotiations, namely

  • 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 look forward to participating in the Roundtable discussion later.

Thank you.