Downing Street Declaration 23 Years On

As Pat Hynes reminded us, 15 December marked the 23rd anniversary of the Downing Street.  Pat wrote that “That year of 1993 and in particular the weeks leading to the declaration, had been particularly brutal in terms of violence, with events like the Shankhill Road Bomb, followed by the Greysteele Bar attack, as well as the daily count of murders across Northern Ireland and the United Kingdom.”  Supported by a small group of officials, the then Taoiseach Albert Reynolds undaunted and determined looked for a path from conflict to peace.  

One of those officials was Séan Ó hUigínn, a towering figure in the peace process during its formative phase.  What is often lost sight of in conflicts is the ideological or normative issue at stake.  Violence and its inevitable condemnatory political response often suggests that the violence itself is the problem.  Irish governments consistently and rightly understood that in fact the problem in Northern Ireland was political and the violence would only be ended through negotiation based on a sound understanding of the political issues.  

Séan took this to its logical conclusion, diving deep with shamanistic verve into the conflict to come to its core, namely the violation done to national self-determination by the imposition of partition.  He formulated a response that would address that wound and used that to construct a process of negotiation that he personally guided from the heartlands of the republican movement to the corridors of Downing Street.  The outcome was the Downing Street Declaration.  It produced the IRA ceasefire in 1994, less than a year after its promulgation.

The Declaration achieved this by setting out the principles agreed by the British and Irish Governments: that the consent of the people of Northern Ireland was required for unity with the South; that the British Government had “no selfish strategic or economic interest in Northern Ireland”; that it was “for the people of the island of Ireland alone, by agreement between the two parts respectively, to exercise their right of self-determination”; that both Governments would create institutions and structures which reflected “the totality of relationships” and which, while respecting the diversity of the people of Ireland, would enable them to work together in all areas of common interest; that the achievement of peace must involve a permanent end to the use of, or support for, paramilitary violence and a commitment to exclusively peaceful methods.

Even Articles Two and Three of the Irish Constitution, the doctrinal expression of nationalism’s view of Ireland’s territorial integrity, was open to reformulation in the event of a settlement, according to the Declaration. For an Irish nationalist leader, taking this on constituted political leadership of a very high order indeed on the part of Albert Reynolds.

The Good Friday Agreement and its endorsement in the joint referenda held North and South in May 1998 realised the prescription for peace set out in the Declaration.  By the time we negotiated the GFA, Séan had moved on and the talks were lead by Dermot Gallagher who formed a talks teams of experts in various dimensions of the conflict.

Before all of this, Reynolds and Major knew that they were tantalisingly close to an historic peace.  They appealed to all sides to grasp the opportunity for a new departure that would compromise no position or principle, nor prejudice the future for either community.  In the stirring words of the Declaration’s concluding paragraph: “…..these arrangements offer an opportunity to lay the foundations for a more peaceful and harmonious future, devoid of the violence and bitter divisions which have scarred the past generation.”

You can read the full text of the historic Downing Street Declaration here.

By the time we reach the 25th anniversary of the Downing Street Declaration in 2018, we will find ourselves in changed circumstances thanks to Brexit that will directly affect the architecture of the GFA which in turn is based on the principles distilled and described in the Downing Street Declaration.

We should have a clearer idea by then of what the Brexit decision will mean for the border, for our relations with the UK and with Northern Ireland.  Thanks to documents like the Declaration and the agreements that flowed from it, we have a very clear analysis and prescription to guide our response to that coming challenge.




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Eurozone Needs Convergence and Ambition

This column by the FT’s Martin Wolf offers some startling and stimulating insights about the Eurozone and its discontents.  He identifies two major failings within the Eurozone (I say ‘within’ because can we really say by whom?)

The first is low demand which has dampened both growth and inflation.  Related to this is the divergence in GDP: between 2007 and 2016, Germany’s real GDP per head at purchasing power parity rose by 11% yet it stagnated in France and fell in Spain by 8% and by 11% in Italy.

The second failure is the inexorable rise of Germany’s current account surplus, reckoned to be 9% this year.  Within the Eurozone, Germany’s surplus is someone else’s deficit.

Stepping back, it is clear that the 2008 crisis tested the Eurozone.  We in Ireland woke up to the fact that risk was going to be disaggregated as our banks faltered and we were on our own as the bond market turned against us.  Advance eight years and we find that Italy’s banks are facing serious problems with €360bn of debt, of which some €170bn is held by Italian citizens.  While the Eurozone has made strides toward a more resilient banking network, the trouble in Italian banking is disinterring some old headlines about the fate of the euro.  As Wolf writes, the Eurozone needs conference.  It also needs ambition.

“What the Eurozone needs most is a shift away from the politics of austerity”, writes Wolf.  That to me makes a lot of sense.  From a macro-economic point of view, money is cheap, inflation low, growth fragmented, and demand weak.  From a political perspective there is clearly a need for the ‘system’ to deliver: whether fair or not, the EU is seen as the system.

From another perspective we as societies need to wage war on climate change by dramatically reducing carbon, generating sustainable energy, greening our urban centres and life styles, and mitigating the effects of climate change’s Valkyries – the storms, rising tides, flash floods and droughts that warn us of what’s ahead.


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Halloween for Adults

What’s not to like about film noir: it is halloween for adults. Lovely little piece this from the Guardian, link here.  I’d highly recommend reading the comments for a fuller treatment of the subject. The role of gender needs to be surfaced in thinking about noir: any time smart women are automatically up to no good should set off alarm bells. In the Maltese Falcon, surely one of the best scripts EVER, Spade is clearly attracted to Ruth/Brigid, entertained by her lying and transparent attempts at manipulation. Nonetheless, he sends her to prison and possibly the gallows because of his honour code; because you can’t let your buddy’s death go without a settling of accounts, even if you have been messing around with his wife. Yet the snappy dialogue and the presentation of humans in all their flaws and confusion rescues and elevates film noir far above and beyond the tired clichés and tropes of Hollywood. In summing up, perhaps the best comment on the article is a single rhetorical question (Dataportal): “Aren’t we all weird detectives in a lonely city?”

Happy (?) Halloween!



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Export Trade Council looks to Asia and a New Asia Pacific Strategy

On Tuesday, the Government approved the proposal by Charlie Flanagan, the Minister for Foreign Affairs and Trade, to start work on the two cross-sectoral regional strategies, namely Asia-Pacific and the Americas. Both of these will fit into the broader trade policy, Trading Better, on which work has also started.

Last week, Minister Flanagan convened at Iveagh House a meeting of the Export Trade Council (which includes the Ministers and State Agencies involved in trade and members of the private sector). The Minister was keen that the Council focus on Asia for a number of reasons.

The Council’s discussions would usefully feed into the cross-sectoral strategy for the Asia Pacific region. He himself had travelled to a number of countries in Asia and is very aware that we have been making progress there in trade terms. Brexit has highlighted the exposure of Irish business to the Sterling market and the need for market diversification. And, as can be seen in facts and figures in the press statement attached below, Asia continues to be a global economic powerhouse.

The Minister invited our Ambassadors from Tokyo (Anne Barrington), Beijing (Paul Kavanagh) and Bangkok (Brendan Rodgers) to offer a scene setter for the discussions. Brendan could not make it because of the death of the Thai king so Maeve Collins, Asia Pacific Director General, ably filled in to brief on ASEAN, the Association of South East Asian Nations.

There is no doubt that the potential for Ireland to increase its trade with Asia is enormous. However the discussion at the Council was framed in realistic terms about what it takes to convert that potential into real gains.

Our footprint there in diplomatic and state agency presence is comparatively light, though it has vastly improved in recent years. Asia is not a monolith but highly variated by region, nation and business culture. Relationships at all levels need to be built because government and business are closely related. High level visits by Ministers are critical to confirming the relationship and opening doors. (For example, the uptick in interest in Ireland by Japanese companies follows several high level visits and that is no coincidence, as Anne pointed out.) Irish companies need to scale to meet the demands of sustaining an export drive there and in meeting market demands. Given the complexity of local business culture, Team Ireland needs to operate there cohesively. Ireland’s visibility in the region is low and we have to take very concerted efforts to raise that and to brand Ireland effectively.

We are taking Asia seriously. The Minister for Food, Forestry and Horticulture, Andrew Doyle, joined the discussion with insights from his recent trip to Vietnam and Korea. Minister for State for Financial Services, Eoghan Murphy, also contributed fresh from promoting IFS 2020 in Hong Kong, Singapore, Shanghai and Tokyo. The Minister for Jobs, Enterprise and Innovation, Mary Mitchell O’Connor was not at the Council this time because she was heading to the US (and plans to be in Asia before the end of the year). Richard Bruton, Minister for Education and Skills, was on his way to China to accept Ireland’s award as a ‘Country of Honour’ in Beijing at the China Education Expo (more details here).

With contributions from the Departments, IDA, Enterprise Ireland, Bord Bía, Tourism Ireland and Science Foundation Ireland, the ETC’s discussions last week were rich and insightful and they will feed into the formulation of the cross-sectoral Asia Pacific regional strategy. Maeve is ably leading this process, supported by a working committee and with input from stakeholders.

Brexit of course featured in the discussion on Asia with a key point being that Ireland offers certainty for business where the UK now presents uncertainty. Japan had been blunt to the UK on this point, as Anne noted, and Paul confirmed the opportunities for Ireland in China as a result, so long as we convey the message that Ireland’s future is with the EU.

At the end of the Council, the Minister Flanagan launched the New Collaborative Research Funding Partnership between Science Foundation Ireland and the National Natural Science Foundation of China. As the Minister said in his remarks: “I am delighted to announce this major partnership between Science Foundation Ireland and the NSFC, particularly on the day of an Asia-Pacific focused Export Trade Council meeting. I have no doubt that the links Ireland is forging with partners in China in the areas of science and technology will be of tremendous benefit as we strive to diversify the breadth and reach of Irish trade in years to come, and will support jobs in both countries.” More information on this high significant Ireland China partnership is here.

After such a productive exchange we were pressed for time but Minister Flanagan took the opportunity to brief on Brexit related developments closer to home, including his meetings in the UK and Europe and preparations across government, notably on identifying our core interests. Finally, addressing an issue raised by the private sector at a previous Council, Minister Murphy briefed on his work to address the issue of insurance costs which adversely affect Irish competitiveness.



DG Trade, DFAT

27 October 2016


Press Release


Minister Flanagan secures Government approval to commence work on new cross-sectoral strategies for Asia-Pacific and The Americas


This morning (Tuesday), the Government approved a proposal by the Minister for Foreign Affairs and Trade, Charlie Flanagan TD, to commence work on two new whole-of-government cross-sectoral strategies for Asia-Pacific and The Americas within the remit of the Cabinet Committee on Economy, Trade and Jobs.

Minister Flanagan stated:

“The timing for these new strategies, promised in the Programme for Government, is appropriate as, in the aftermath of the UK referendum vote, we move to consolidate our bilateral and trade relationships with established partners and find new trade opportunities with growing markets.”

On opportunities in Asia-Pacific, Minister Flanagan stated:

“I am very excited by the potential for Ireland to develop real, lasting and strong economic and social links with these growing regions. There was a keen interest in Ireland at the ASEM Summit which I attended in July.  Total exports of goods and services from Ireland to the Asia Pacific region exceeded €20 billion in 2014 and continues to grow. As a trading nation it is vital that Ireland seeks opportunities to meet growing demand for imported goods and services in the region.  In the past 20 years, China and India have almost tripled their share of the global economy and increased their absolute economic size almost six times over and become substantial contributors to global economic growth.

“Nine of the 10 fastest growing mega-cities in the world are in Asia.  In years when economic growth in the western world was muted, many countries in Asia achieved consistent average annual GDP growth rates in the range of 5% to 8% per annum. The Asia Pacific region is home to more than half of the world’s population, millions of whom have been lifted out of poverty in the last decade and a growing percentage of whom are middle class.  The region is also home to some of the youngest populations in the world. India alone is home to one sixth of the world’s population with some 1.3 billion people, more than 50% of whom are under 25.  As Europe ages, we must look East to secure our own future. 

“What happens in the Asia Pacific also directly affects the wider world, and it matters in particular to a small, open economy such as Ireland. Particularly now, in light of the UK referendum, the Government is determined to do everything possible to develop and capitalise on Trade, Investment and other potential links with the region. The rise of China has continued and China is now a key driver of global economic growth as well as an ever more engaged global player, with a population of 1.35 billion people and a GDP of over €10 trillion.  Total trade between Ireland and China was worth approximately €8 billion in 2014 and it is a key market for Irish agri-food exports.

“Japan is a mature developed economy and is still the world’s third largest, and continues to be one of our key trading partners and the largest source of FDI into Ireland from Asia.  Trade with Ireland was worth over €7 billion in 2014.  Japan as well as having great potential for Irish exporters, is an important springboard to other Asian markets. South Korea was the first country in the Asia Pacific region to have a fully operational Free Trade Agreement with the EU. Since the coming into effect of the FTA, EU exports to Korea have increased by 55%. In the same period, Irish exports to Korea have almost doubled.

The ASEAN Economic Community – established in late 2015 – aims to develop greater economic integration among ten countries in South East Asia, and presents significant potential over time for enhanced trade opportunities in a region which has a combined market of US$2.6 trillion and over 620 million people. In 2014 Ireland’s total trade with the ASEAN region was €4.6 billion. 

The Asia Pacific region also includes Australia and New Zealand, countries with which we have long standing and strong historical ties, as well as growing people-to-people, education and business connections.”

On opportunities in The Americas, Minister Flanagan stated:

The Americas region provides Ireland with some of our largest export markets and sources of inward investment.  Hundreds of thousands of visitors from the region come to Ireland each year to holiday or study.  The region – especially Canada – became home to thousands of young Irish people during the recent economic crisis, helping to refresh Irish communities and trans-Atlantic links.  Canada is also a key partner in terms of FDI, exports, education exchange and tourist numbers visiting Ireland. The US will remain one of the primary sources of FDI into Ireland, as well as a vital export market.  The US alone is also the second largest tourist market in terms of visitors to the island of Ireland.  The US is the largest single country of origin for international students in Irish higher education institutions. Students from the US comprise 19% of full-time international students studying in Ireland.

“St. Patrick’s Day provides a unique opportunity for Ireland to showcase what we have to offer to both Canada and the United States.”

“Latin America and the Caribbean also present enormous opportunities for Ireland, with a combined population of 643 million people, GDP of $US5.1tn and a burgeoning middle class. It’s a key target as part of our trade diversification agenda, and with EU trade agreements already in place with Central America, the Caribbean, Colombia, Peru, Mexico and Chile, there is a solid framework in place for Irish exporters to do business with the region.

“In 2015, total goods trade with the Latin American and Caribbean region was worth €3.59 billion, up 11% on 2014, with two thirds of this being Irish exports. Weextended our footprint in this part of the world in 2015 with the opening of a trade-focused Consulate General in Sao Paulo, adding to Embassies in Buenos Aires, Brasília and Mexico, as well as IDA and Enterprise Ireland offices in Brazil.  The Latin American region was also identified as a priority for the new commercial attaché scheme, and recruitment processes for new commercial attachés are underway in Brazil, Argentina and Mexico.

“The strategies are not only about trade, but will also look at deepening political and people-to-people relationships. Already, Ireland works closely with like-minded countries in Latin America and in the Asia Pacific region in the multilateral arena. Many countries in these regions, like Ireland, have a proud tradition in the area of disarmament, and we cooperate very closely at the UN. Ireland is currently engaged in work to support the peace process in Colombia, drawing on the lessons learned in Northern Ireland.”

Work on these Strategies will now begin in the Department of Foreign Affairs and Trade under Minister Flanagan’s direction and will sit within the broader Government strategy on Trade, Tourism and Investment.



Press Office

25 October 2016

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Trade has been the Antidote to War in Europe

Business men and women, trade officials and EU bureaucrats don’t often see themselves as peace builders. Yet that is the real outcome of their professions.

Without the trade they foster and make possible, the continent would not just be poorer but more violent. This might sound like a bold claim but let’s briefly put the achievement of EU trade and the single market in context.

Aside from the Nuremburg trials and the lesser known mass upheavals of people as nation states reorganised themselves behind new borders (a grim tale recounted in Tony Judt’s Postwar, A History of Europe Since 1945), Europe did not really focus on reconciliation and peacebuilding per se. The moral framework of the war was too obvious and the exigencies of reconstruction and then Cold War too pressing. Rather, Europe’s post-war leaders understood that a peaceful future depended on trade.

Winston Churchill led with the way when in 1946 he called for a United States of Europe: “The structure of the United States of Europe, if well and truly built, will be such as to make the material strength of a single state less important. Small nations will count as much as large ones and gain their honour by their contribution to the common cause.” The first step was the formation of the Council of Europe in 1949 with its focus on human rights and democracy.

Two of the leading post-war architects of the EU, Robert Schuman and Jean Monet, looked first to the two products that made modern warfare possible, namely coal and steel. Within the framework of the 1947 General Agreement on Tariffs and Trade (since 1995, the WTO), they forged the European Coal and Steel Community in 1951, the foundation for the common market. Its purpose was set out in the Schuman Declaration; to “make it plain that any war between France and Germany becomes not merely unthinkable, but materially impossible.”

The Schuman Declaration also made clear that a united Europe would be built layer by layer: “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity”.

Thus followed the foundational EU document, the Treaty of Rome in 1957.  The Customs Union was created in 1958. In 1993, the single market was completed by the Maastricht Treaty allowing the free movement of goods, services, capital and people.

Within the Schengen Area, people from 26 countries (22 out of the 28 EU member states) cross borders without passports. Economic and monetary union began in 1999, followed by the launch of the euro which today is used by 19 member states. In 2009, the Lisbon Treaty looked to enhance the effectiveness of EU institutions and decision making processes.

The construct that emerged has proven to be robust and attractive to other European states. The EU dealt effectively with the greatest challenge it faced since 1945 with the fall of the Berlin Wall in 1989, the collapse of Soviet Bloc and the absorption of twelve new member states as a result.

The founders of the European project certainly aspired to a supranational pooling of sovereignty. There has been progress toward this but it has been very carefully, even gingerly progressed in foreign policy and security for example. The UK has played an important role in that process and Ireland has defended its interests well.

But make no mistake about it, in terms of pooling sovereignty the greatest progress has been made in trade: the single market is the beating heart of the European Union.  And the single market is the four freedoms.  It is from this perspective that the UK wish to alter its immigration regime will be judged by fellow member states.

Nowhere else on earth have sovereign nations pooled their trade laws, tariffs and customs, regulations and standards, and binding arbitration with the depth and comprehensiveness of the European Union.

And against the backdrop of Europe’s violent preceding centuries, nowhere else on earth has shown so dramatically how trade can be used as the antidote to war.



DG Trade, DFAT

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Costing Brexit

In my last blog, I recommended some links that explored the very difficult negotiation course ahead for the UK.  It may involve six processes by one count.  It will certainly mean that the key ones are sequential.  The talks ahead are so mid-numbingly complex and interlocked, that the two year time frame looks distinctly optimistic.  Bearing in mind how long trade negotiations usually take, one has to wonder how realistic.

The two year time limit was not really based on a consideration of what was to be negotiated.  Even at this stage we’re not sure what precisely is to be negotiated.  How and what is the UK going to leave?  What will be the nature of its new relationship with the EU as a third party country?

What we do know is that the UK departure/reentry will be complex, whether you’re looking at a hard or soft Brexit.  It’s one big known unknown. There is a second very obvious known unknown: whatever shape and scale the negotiations take, they will have an immediate and ongoing impact economically.

There are two reasons for this.  As a member of the WTO trading with the EU (to take one model), British business will face tariffs, on average 4.8% but considerably higher depending on the sector.

Ben Chou, the UK Independent’s Economics Editor filed this report on the likely costs involved.  Based on the average tariff, the cost is reckoned at £4.5bn but as Chou notes this could be much higher.  You can argue that this is offset by the decline in Sterling but it is  not as simple as that: weaker Sterling means that inputs from abroad are more expensive and eventually those higher costs feed into wages and unit costs.  But tariffs have a second economic impact that is much harder to quantify.

As one businessman said to me recently the scale of the tariff is not the problem; its the form filling and port clearances.  And tariffs are not the only new bureaucracy; there are likely to be rules of origins which will complicate an exporter’s life.  To take another example, the EU refunds VAT to businesses within the single market and its all done electronically.  Third party countries have to file by paper, a lot of it according to another businessman whose company here in Ireland processes VAT claims for other businesses across the EU. The UK is looking to a future where it is third party country with the EU and its 53 bilateral partners, a total of 80 countries in all.

Which is why Heathrow’s chief executive, John Holland-Kaye, told the Financial Times (26/9) that leaving the Customs Union would mean “adding massive overhead for very little gain”.  The article in which he is quoted notes that the UK has a very lean operation with only 5,000 customs officers, compared to Germany’s 35,218.  That could easily double if new procedures are imposed on the £150bn worth of goods exported by the UK to the EU.  And putting new systems in place could take years.

Businesses are highly dynamic and thrive on certainty, including tried and tested bureaucratic routes that green light their goods and services to market.  It is generally only our Embassies outside the EU that are called on to help extricate an Irish exporter’s shipment out of some bureaucratic snafu at the port of entry. Talk to any exporter and they’ll tell you that one of the great obstacles to entering a new market is the regulatory one.

And the UK has to factor in too that the EU has some 53 free trade agreements with other countries with whom it will have reframe its trading engagement once out of the EU.

If British business faces new requirements, it will take time to smooth out the wrinkles and adjust.  That again underlines the importance of a transition agreement between the UK and EU.  For Foreign Direct Investment companies, their patience may be tested.  As Japan robustly pointed out recently, its companies had invested in the UK precisely because it was a member of the single market whose raison d’etre is getting rid of barriers to trade.

While globally trade liberalisation is under pressure, the EU is forging ahead in creating free trade with partner countries. New free trade agreements are near completion, such as with the US (TTIP) and Canada (CETA); and more planned, such as one with India. Even when trade agreements are not finalised, a whole raft of trade obstacles are cleared out of the way that free up increased bilateral business.

Looking internally, the EU the integration of the single market continues with the ground breaking single digital market and a capital markets union.  By not being part of these negotiations, the UK is incurring another cost, somewhat ineffable but very real.

Costing Brexit is in its infancy but costs both quantifiable and intangible there will be.



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The Brexit Grand National

Brexit: the UK is going to leave the EU.  But how?  When exactly? Charles Grant at the Centre for European Reform has looked into the future to see the negotiating track that lies ahead for the UK as it departs the European Union. It is a really interesting piece of work.  You can read it here and I’d highly recommend it. I found it as a link in Martin Wolf’s column this week in the Financial Times (the FT is now essential reading for Brexit watchers). Having read Grant’s article, Wolf thinks that a hard Brexit is the most likely option.

The key point in Grant’s analysis is that the UK has to sort out its relations with the EU, WTO and bilaterally sequentially. That stands to reason but its implications for the Brexit negotiation process and British trade are profound.

Taking the first part, look at the negotiation process in reverse because the ostensible economic goal of Brexit is to free the UK to do trade deals around the world. The UK cannot finalise any bilateral trade agreements unless it has an established position as a stand-alone member of the WTO, as opposed to being a bloc member via the EU. Moreover, it has to divide the world into those countries that have an existing FTA with the EU (53 countries and counting) and those who do not.

The UK cannot establish its standing within the WTO until it has first established its trading relationship with the EU whether that is via the European Free Trade Agreement (EFTA) or the European Economic Area (EEA) or a bespoke UK-EU free trade agreement.

And the UK cannot do that until it has agreed the terms of its withdrawal from the EU. (To get a sense of the possible complexities, the Swiss are a member of the EFTA but not the EEA, having opted instead to negotiate some 120 free trade agreements with the EU. Yet because of the Swiss referendum restricting immigration, their relationship with the EU has to be revised).

Getting back to the starting line, the UK cannot legally do any deals with third parties as long as it is a member of the EU. The sequential process of negotiation facing the UK is not however some mere legalistic imposition. Any country that Britain wants to do a trade deal with will need to know where Britain stands vis-à-vis the EU and WTO otherwise it cannot assess what’s on the table and what are the implications for its trade with other partners.

Brexit then is the Grand National of negotiations with each multilateral forum containing a new set of fences to jump. The tricky bit is that the UK doesn’t know the height of the fences. That will be decided by the members of each fora. Any single member can decide the height that the UK has to clear to get to the next stage. Or can red flag the process at any stage by disrupting the consensus. That applies to the EFTA (4 members) and the EEA (30) as well as the EU (27 other members) and WTO (163).

The UK has only two years to run the course once the Article 50 gun is fired. Taking into account the need to get approval of the EU Council and Parliament, you can shave a month or so that. European elections will interrupt the process as mandates are refreshed and perhaps electoral instructions generated that have a direct bearing on the negotiations.

If there is no agreed extension, then the UK will find itself out of the EU, on its own, riding across unknown country with weights in its saddle courtesy of the WTO default single status membership.

As Wolf argues for various compelling reasons, the balance of probability is a hard Brexit. I know what a hard Brexit is when I don’t think about it but I don’t know what it means when I do. I suspect is more complex that its name suggests, with at least some transition if only to avoid excessive damage to the British economy.  Indeed both Wolf and Grant point to the critical importance of the transition agreement which is needed whether the British Government’s goal is a hard or soft exit from the EU.

And I think that, faced with the longevity and complexity of a soft Brexit negotiation, the impact and unknowns of a hard Brexit, and the post-Article 50 two year timeline, the transition agreement is the where the focus of attention should and will be.

Yet like the terms of a hard Brexit, the nature of such a transitional agreement needs scrutiny. Even now analyses of either are scanty. Given the importance of the British market to its trading partners, there is certainly an incentive to do deals and reach understandings for a transition period. The EU raises much of its capital needs in London, for example. More relabeling and less substantive demands on the UK’s part will facilitate a transition agreement.

Yet there will be a limit to this facilitation. Trade talks are followed with intense scrutiny business and unions who have a very keen interest in the prospective outcomes. Each member state will be subject to their own domestic political pressures, not all of which will necessarily support an interim arrangement. The appetite for transitional arrangements will be constrained the more the UK is looking to shed regulations to improve its competitive advantage. Trade difficulties for the UK will mean opportunities for its competitors within the EU.

No one should underestimate the UK. They have a formidable system, the reflexes of a big power, a large economy, international reach, a veto on the UN Security Council, skilled and canny officials, and a deep reservoir of experience. They have been a source of great firepower within the EU on free trade issues, on justice and home affairs, on security, international relations and overseas development assistance. That list could go on.

Within the EU, we in Ireland have relied on British support and sheer capacity on issues where our perspectives converged. We’ll miss them in Brussels, no doubt about it. Yet formidable though they are, they have set themselves an unenviable task of great, even confounding complexity in leaving the comfort of the EU Jockey Club, mounting up and heading off on the Brexit Grand National.





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