Ireland’s core worry over Brexit is likely to be a UK departure from the Customs Union…

Really insightful presentation from Paul Mac Flynn of the NERI Institute on why we should really worry about the effects of the Customs Union, rather than the single market (which is likely to be far more amenable to bargaining)…

Do take the time to listen to it over the weekend.

  • SDLP supporter

    Truly scary.

  • Sean Danaher

    Yes that seems to be about right. Prof Michael Dougan (University of Liverpool) but from NI has also produced a short video on the border, a bit more technical than some of his others but also worth a look: https://www.youtube.com/watch?v=iEY1WlsAR1I

  • runnymede

    Well departure from the customs union is absolutely going to happen. But we’ve been here before. Ireland did 40% of its trade with the UK in 1970 without a customs union in place.

  • Georgie Best

    The volume of trade was a fraction of that today and in any case this was against the background of the Anglo Irish free trade agreement of 1965.

  • GavBelfast

    Message to Republic of Ireland: get yourselves special status, as a very particular EU member state with very individual and special circumstances with what is going to be a non-EU member state. Special status can clearly mean anything – it is, after all, ‘special’.

    I don’t urge this in any arrogant or trite way: I didn’t vote for the UK to leave the EU and I don’t want it to harm the UK, or the Republic. Even if I was thinking selfishly, which I’m not, I wouldn’t wish any harm on the Republic because of what I was believe was mistaken decision taken by the majority of the voting population of the UK 13 months ago – not least because what wouldn’t be good for the UK, either, and Northern Ireland in particular.

    ‘Special status’ for the Republic would maintain the reality of the constitutional integrity of the UK – and, after all, Northern Ireland’s aspect of that was endorsed by 85% of the island’s population in 1998. Imaginative thinking to protect all progress – laboured as it has sometimes been and continues to be – is needed now, too, in the light of Brexit.

  • aquifer

    Clear enough. The DUP want the South Armagh IRA back in business.

    The price of having one ‘Unionist’ party to destroy the Union seems a bit steep.

  • mickfealty

    It’s a continuum RM. In the 1930s, when Dev launched his ill fated economic war against Britain, the dependency on trade with Britain was closer to 90%.

    In 2015, the CSO reported the Republic’s UK exports were 12.3% of which 1.6% to NI. Imports were 24.1% from the UK, of which 1.6% from NI.

    The Republic’s entry to the EU in 1973 was part of a long journey, begun in the late 40s and quickened under Lemass and Whitaker’s far sighted plan.

    It’s hard to underestimate the effects: investment in infrastructure, in rural communities, and hugely increased access to external markets.

    Despite the dreams of some Tories, people in the Republic understand this only too well. What hasn’t hit them yet is the depth of the disruption coming.

    Ireland needs Brexit to work (failure would push the UK to extreme means), and should be allowed (by the EU) to benefit from UK success.

    That’s a tough ask. Independence has been a very long and hard road, but ultimately it’s been a highly successful one.

  • mickfealty

    Paul’s advice that we need to get through the seven stages of grief is pertinent here. Personally, I’m far more concerned about the likely economic effects on the Republic. The downside risks are much more varied, and a key reason why I voted to Remain.

    It now has to walk a line between its communitarian duties as a member, and getting enough wriggle room to continue to have access to valuable markets in GB (which, after 20 years of our politically orphaned N/S bodies still dwarf the value of N/S trade).

    Of the three scenarios Michael outlines above only the third is being actively considered in London.

  • John Collins

    Slight disagrement. The journey actually began in 1938, at the end of the Economic War, with the agreement hammered out between Dev and the GB Administration.

  • runnymede

    But that wasn’t a customs union.

  • runnymede

    Mick – yes, there are degrees of trade openness.

    We are probably going, at the end of this process, to go back to something like the situation around 1990 between UK and Ireland, formally i.e. in terms of there being a customs border (worth remembering even in the EU, customs checks were not actually abolished until around then) and (probably) a zero-tariff situation, but not with the UK in the single market.

    With expedited customs and technological change, the reality will probably be a bit smoother than then, although over time regulatory divergence might add a small amount of friction back.

    Trade patterns will change, of that there is no doubt. But the apocalyptic scenarios some Irish politicians are putting forward are pretty fanciful. It’s not ‘customs union or nor trade’ or ‘single market or no trade’. A quick look at Ireland’s own history and trade patterns shows that (on the latter point, Ireland’s huge export trade with the US – despite no free trade and no customs union) is a case in point.

  • Sean Danaher

    Indeed Mick
    Irish exports to the UK dropped even further as percentage in 2016 to 11.2% I think and still seems to be dropping in 2017, so may fall below 10% for the first time, and will almost certainly do so by the end of the decade on its current trajectory.
    However many of the exports are from multinationals, particularly in the pharmaceutical and chemical sectors and the agribusiness sector could be very badly hit as this depends very much on the UK.
    Dublin could do quite well; it seems that many of the “City” banking jobs will be going there. However just as London is too dominant in the UK, I would like to see more growth going to rural Ireland; including the border region.
    I still find it very difficult to see how Brexit will be good for the UK as a whole but it likely to be very good for the ultra rich top 1%; I have not seen a convincing economic case. There is no evidence that the gravity model of trade is getting any weaker in the 21st cent. I am also not convinced by the UK Brexit team or its policy, which seems designed for a domestic audience.
    The future to me is very unsure, I don’t have Runnymedes’s ceartainty.

  • runnymede

    The gravity model of trade doesn’t explain Ireland’s trade structure that well, in fact. The large share of exports going to the USA for example.

    More generally, you need to be very careful about using gravity models as small changes in the way they are specified can alter the results a lot. There are many problems beyond that too, in particular with the inferences made from the results (e.g. the model says trade with country X is 30% higher thanks to EU membership so outside the EU all that excess will unwind – that just isn’t realistic).

    I’m not certain about anything. But I am of the view, based on many years studying international trade, that trade tends to adapt and shift rather than collapse in response to shifts in incentives.

  • runnymede

    Mick I don’t think Ireland has done itself any favours over the last year in this regard.

    Why did the Irish government not publicly reject the extreme negotiating guidelines adopted by Barnier – on the ‘exit bill’, on ECJ oversight, on a lack of parallel trade talks?

    Why did the Irish government start frothing about the potential for Brexit to lead to a UI?

    I have a suspicion that the doom scenarios the Irish government has been peddling are not really believed even by themselves, and to the extent they are there is a faction that sees them as an opportunity rather than a threat,

  • Roger

    Special status; mumbo jumbo; hocus pocus.

  • mickfealty

    I’d site it in that mad ’48 coalition, taken on immediately by FF.

  • mickfealty

    It cannot openly undermine Barnier. It doesn’t have to adopt the Barnier position, but it has to accept he’s negotiating in Ireland’s national interest and then do what it can influence internally.

  • Sean Danaher

    Indeed there are exceptions but I found Paul Nightingale’s (SPRU University of Sussex) blog on gravity models: Ice-cream selling in Egg-land quite informative and easy to follow https://medium.com/@Nightingale_P/ice-cream-selling-in-egg-land-10c4419f89d8

  • Georgie Best

    The ROI hasa dynamic economy, it will do fine generally and nobody is claiming otherwise. The issue here is damage done in border areas which are already disadvantaged and the much greater damage done in NI, both to the economy and the political process.

  • ElamLayor

    Brexitting pensioners yearning for 1970 explains a lot

    http://blogbloodyblog.blogspot.co.uk/2010/11/hotpants-19701976.html

  • runnymede

    Hmmm but if Ireland had refused at the outset to go along with negotiating guidelines given to Barnier, this problem might have been headed off earlier.

    I almost think Ireland is trying to do some kind of ‘good cop, bad cop’ act all on its own here. Certainly if Ireland’s main interest was to minimise the risk of a damaging outcome (for them) from the negotiations the approach taken so far doesn’t seem the right way to go about it.

  • runnymede

    Gravity models are a popular fad in economics today in the same way as the Philips curve was some decades ago, or output gaps. They have their uses, and misuses, We have seen more of the latter than the former over the last 18 months.

  • runnymede

    Well I can’t say I remember 1970 too well.

  • Georgie Best

    In 1998 a new era was supposed to be introduced in which NI would be run on behalf of all its people and not just unionists. It is up to British government, and not the EU, to ensure that this happens.

  • mickfealty

    But it’s still a member.

  • Sean Danaher

    Macroeconomics is a very interesting subject (but not like Astrophysics) and opinions seem very divided between the advocates of Neoliberal (Reganism/Thatcherism) theory, Kaleckian-Keynesian theory, Modern Monetary theory or various other theories. Neoliberalism definitely has the upper hand at present. Sometimes economics seems more like a religion than a science.
    Regarding the Phillips curve it seems largely discredited see for example Prof Richard Murphy http://www.taxresearch.org.uk/Blog/2013/04/17/the-end-of-the-phillips-curve/
    I think the debate is more outgoing on output gaps. I think the gravity model is vastly more robust than the Phillips curve but in the UK mainland at least pro/anti Brexit dividing lines remind me of the NI Unionist/Nationalist dividing lines. We need to think more scientifically than religiously,

    https://s-media-cache-ak0.pinimg.com/originals/51/84/a7/5184a722bccf87c472b5bca7c7b2c2cf.gif

  • 05OCT68

    “Half the pain now & half the pain later” Je$us!

  • Gavin Crowley

    What would you propose?
    We are already out of Schengen and the Justice elements that allow the CTA to continue.
    Perhaps be outside of the Customs Union in specific sectors like Agriculture and Energy?

  • John Stafford

    I find some commentators on this site don’t understand the difference between country and market.
    Ireland is a country of 4.75 Million people with a market of over 450 million people post Brexit.
    The UK is a country of 65 million people with a market of 65 million people post Brexit.

  • ElamLayor

    I’m not surprised – a young fogey wouldn’t.

  • ElamLayor

    “Anyone who can remember the seventies wasn’t really there” (Robin Williams). So then, you WERE there runny!

  • Kevin Breslin

    The Republic of Ireland has special status already, it’s called EU membership.

  • Kevin Breslin

    That’s the problem, the UK side is so ignorant that the Republic of Ireland is a separate state. It somehow assumes the best solution for the Republic of Ireland is that it hands over its sovereignty to London the second Westminster decides what it itself wants out of Brexit unilaterally.

    Deep down Westminster doesn’t trust the Irish, nor the Northern Irish if we are being honest here. Frankly the distrust is reciprocated.

  • Kevin Breslin

    Mick, you don’t grieve the living, that border is open and will remain open until the UK find a way to close it. Custom checks are going to happen, that’s acceptable, how bad they are depends entirely on how obnoxious the British government want to be about it.

  • Kevin Breslin

    A better question is why the Irish government have publicly rejected the extreme negotiating guidelines from Fox and Gove and Boris.

    The reason is that if they didn’t Britain would completely hold Ireland to ransom and act against the Irish nation’s best interests.

    Ireland is not Britain two. It’s called national sovereignty between independent nations. Ireland has a right to protect its internal market and its customs autonomy.

  • Kevin Breslin

    The reality is that the United Kingdom doesn’t know what is best for the Irish people, and to be honest they don’t really know what is best for their own people in my honest opinion.

    Actions have consequences. The European Union has been Britain’s mudguard for far too long. A Republic of Ireland better off out of the United Kingdom and the Brexit ideological dogmas.

    The markets have already been harsh on these empty inconsistent and delusional platitudes around Brexit already.

  • Kevin Breslin

    Despite the dreams of some Tories, people in the Republic understand this only too well. What hasn’t hit them yet is the depth of disruption coming.

    Ireland needs Brexit to work (failure would push the UK to extreme means), and should be allowed (by the EU) to benefit from any UK success.

    Ireland may need or want Britain to work, but it doesn’t need Brexit to work. Ireland has enough problems without having to save the British from themselves, especially rude given that they haven’t asked us yet.

    Ireland cannot wait on Brexit’s want-to-be peripheral motion machine to work, because it’s not going to happen, there’s going to be a “hard Brexit” and greater friction and resistance for trade within the border areas.

    There will still be a path of least resistance if that resistance increases, but Ireland should not be held hostage by Britain’s diplomatic ineptitude and ignorance.

    The United Kingdom is already being pushed to extreme means, what they need to do is take some responsibility and ownership of their own actions and their consequences. That’s the REAL Extreme thinking they need. It’s the Extreme thinking we need in Northern Ireland too.

    The whole being an adult thing that comes with independence is lost on the likes of Rees-Moog who’s been raised by his nanny into his fifties.

  • puffen

    Given the travels of Greece , Portugal, Italy , the Deutch Bank, and god help us France, fiat currencies, the demise of the Petro Dollar, as long as you can buy a posh house in Dublin 😊

  • puffen

    What i cannot understand is why ,? people believe that the answer to Irelands problems is the EU, a sparsely populated Island should build a fortress mentality, and keep Europeans out including the English, for once i can see where Devalera was coming from.

  • GavBelfast

    Yes, and the UK has had a special type of status within the EU, including no requirement to adopt the Euro/join the Eurozone, and several opt-outs, too – but the referendum has happened and the ship has sailed.

    The reality is that the Republic of Ireland has a population of under 5 million while the UK’s is over 60 million. The size of their economies matches that disparity, give or take.

    ‘Special status’ can mean anything – there are at least 20 examples involving the EU, and it can mean a variety of things and be called different names.

    I believe it would be more beneficial for the Republic of Ireland for it to be enabled, by the EU, to have special dispensation in dealings with the UK – all of it – maintaining arrangements with the UK that long pre-dated the EU (Irish citizens have much better settlement rights in the UK than citizens of other EU member states), as well as its dealings with other EU member states as a continuing member state itself.

    It’s holiday season, parliaments and politicians are in recess and away from their desks, so we can’t expect much to be happening until September.

    I am confident that something along these lines will be agreed in the end – for there will be an agreement, there has to be, so there will be.

  • Kevin Breslin

    The European Union would have no say on what citizenship rights Irish people have, given the mass panic around foreigners I think the threat largely comes from Britain anyway. It’s the British government that wants to introduce red tape to deter Irish nurses from working in the NHS. The European Union won’t care too about the .3 million Brits living in the Republic though, there’s around nine times more living in the Schegen area which would be easier to retaliate.

    With regards to trade the issue is not about Ireland getting a special dispensation but the UK recognising the logistical problems between a EU member state and what the EU would call a third nation.

    For fourty years the UK and Republic of Ireland have had difficult border management before the EEC effectively began and eventually did solve the problem. Owen Paterson’s remarks that the Irish border is nothing to worry about compared with say the Pakistan-India border on Kashmir does not inspire confidence.

    Frankly none of the solutions from the island across the Irish Sea would ever win a referendum in the Republic of Ireland. It’s clear that the UK’s bad diplomacy and laissez faire attitude is going to lead to a Hard Brexit.

  • Georgie Best

    Indeed, De Valera had no dealings with foreigners, was he ever even abroad.