The Halligan Lecture of the Irish Institute for International and European Affairs in Brussels, by John Bruton

By John Bruton, former Taoiseach, former EU Ambassador and former vice President of the EPP, delivering the Halligan lecture of the Irish Institute for International and European Affairs in Brussels  at 18.30pm on 30 September ;

 

BRENDAN HALLIGAN

I would like to start by saying a few words about the man in whose honour tonight’s lecture is being held, Brendan Halligan .

 Brendan is the founder of the Institute.

 He could see, back in 1980, when he and a few friends came together to found this Institute, that the European Union was developing fast and that Ireland needed to be an informed participant in European debates, including on issues of no apparent direct interest to our island, on the western edge of the continent.

As he saw it, it was only by understanding the problems of others and contributing intelligently to solving them, that Ireland itself could make sure it got a good hearing in Europe when it needed it.

Prior to founding the IIEA, Brendan had been from 1967 a very effective General Secretary of the Labour Party, attracting many bright people of his generation into that party.

He became a member of the European Parliament in 1983, and in 1984 was one of the MEPs who voted for the Spinelli Report which called for Federal Union in Europe. This stance earned him severe reproofs from some more cautious elements in his own party but he held his ground.

 Brendan is much influenced be  Altiero Spinelli, like him a man of the Left , and colleague in the European Parliament, and I understand from one of the co founders of the IIEA, Tony Brown, that Brendan modelled the IIEA on the  equivalent Italian Institute that Spinelli had founded.

In addition to all this, Brendan has been a successful businessman, chairing Bord na Mona for ten years, and he continues to work actively for the development of  renewable energy, a matter of ever increasing urgency.

 

THE THEME OF THIS LECTURE

The EU is a treaty based organisation.

 States are entitled to withdraw from treaties.

 But they are not entitled to so in a way that nullifies the value of other treaties that still bind them. They are obliged to take account of the effect of their withdrawal on neighbouring states.

The UK is still bound by the Belfast Agreement of 1998, and the Anglo Irish Treaty that underpins it. 

Brexit, in the extreme form contemplated by the current UK government (no customs union and no single market), poses an existential threat to the Belfast Agreement.

 Mrs May tried to face up to that contradiction. Her successor, Boris Johnson so far refuses to do so.

The Brexit saga will eventually come to an end, somehow or other, and the EU, with or without Britain, will have to face other challenges.

 Later on in this address, I will say a few words about these challenges. Notwithstanding its preoccupation with Brexit, Ireland must adopt a proactive approach to all these issues, in its own interests, and in those of the EU.

BREXIT……THE KEY PARAGRAPH IN PRIME MINISTER JOHNSON’S RECENT LETTER TO EU HEADS OF GOVERNMENT

Mr Johnson told his fellow Presidents and Prime Ministers

“When the UK leaves the EU and after any transition period, we will leave the single market and the customs union. Although we will remain committed to world-class environment, product and labour standards, the laws and regulations to deliver them will potentially diverge from those of the EU. That is the point of our exit and our ability to enable this is central to our future democracy.”

DIVERGENCE FOR ITS OWN SAKE

This is the most revealing paragraph of HIS entire letter to his fellow leaders

The point of Brexit, according to Mr Johnson, is to “diverge” from EU standards on environment, product and labour standards.

 This  would mean, in the absence of the Irish  backstop,  that Northern Ireland’s environment, product, and labour standards  will continuously, and progressively over time, diverge further and further away from those of Ireland (as a  continuing member of the EU) and of the rest of Europe.

 Significantly, although it has been promoting Brexit for years now, the UK government has yet to say which EU standards it wants to diverge from, and why it wishes to do so.

 Most Brexit supporters would have difficulty naming one EU based law that has had an adverse effect on their lives.

It is, therefore, reasonable to conclude from Mr Johnson’s letter, that divergence, for its own sake, is what the UK wants. That was not the approach of the May government.

It is important to tease this out. Prime Minister Johnson has said he is committed to the” letter and the spirit” of the Belfast Agreement.

Given that the Good Friday Agreement is all about convergence (not divergence) between the two parts of Ireland, and between Britain and Ireland, there is a head on contradiction between  Mr Johnson’s proclaimed commitment to the Belfast Agreement , and his commitment that the UK  will progressively and intentionally diverge from EU standards.

The more regulatory divergence there is between the two parts of Ireland, the more border controls or other barriers there will have to be.

 On day one, relatively few border controls may be necessary.

But, by day one thousand and one, after the deliberate divergence had been done by the UK, far more border controls will be necessary.

By day two thousand and one, in about six years from now, the UK rules and tariffs will have diverged even further from EU ones, and even greater barriers and controls will  then be needed between North and South in Ireland, and between Ireland and Britain.

Nobody knows for sure which present rules or tariffs a future UK, government might change and in what direction.

 It is because of this complete uncertainty about the future direction of UK policy that the issue of North/South relations in Ireland, and the compatibility of Brexit with the Belfast Agreement, HAD to be settled upfront, in the Withdrawal Treaty.

Hence the backstop.

Leaving all this over until the wider trade negotiation with the UK, if one is ever concluded and ratified, might have meant that the UK government would never have faced up to the issue. The incompatibility, between the form of Brexit it has chosen and the Belfast Agreement , might have continued to be ignored by UK negotiators.

They would probably have tried to agree everything else, and to leave the inconvenient “Irish problem” off to the very end of the negotiation, in the hope of isolating Ireland.

 The issue had to be faced, sooner or later.

It is hard ,and not without risk, to put it to the test now, but it is much less risky than leaving it over until everything else is settled..

 

THE UK NEGOTIATING STYLE

A backstop to cover the whole UK is what is contained in the existing Withdrawal Agreement.

This was requested by the UK but it is the best outcome for Ireland, because East/West trade supports even more jobs in Ireland, than does North/South trade, although both are very important.

For the EU, at this very late stage, to contemplate reverting to a Northern Ireland only backstop would be a significant concession, and potentially a costly one for Irish exporters to Britain.

 But does the UK see that ?  I do not think so.

When concessions to the UK in EU negotiations are often not recognised by the UK as concessions, and are often just pocketed without a word, and becoming a platform for another demand.

 Look at how the UK negotiated on Justice and Home Affairs in the Lisbon Treaty.

 Look at the way the” renegotiation” concessions to David Cameron in 2016 were ignored in the subsequent UK Referendum debate.

 In fact some of those concessions would have been damaging to the EU and it is good that they are gone..

Exempting the UK from the commitment to ever closer union of the peoples of Europe would have been used as a precedent by populists in other states, and the suggested “Red Card”  would have gummed up the EU legislative process, making the completion of the Single Market impossible.

 

HOW BREXIT WAS DECIDED….THE MEANING OF DEMOCRACY

Brexit arose from a referendum in the UK in 2016, in which the larger populations in England and Wales were able to outvote the smaller populations in Scotland and Northern Ireland, who favoured remain.

There are two democratic principles at play here, consent, and respect for minorities.

 Mr Johnson’s own letter refers to

 “respect for minority rights” and to “consent”

 The majority of people in Northern Ireland voted against Brexit, but their wishes are to ignored because a majority in the wider UK voted for Brexit.. One of the fundaments of democracy is that governance should have the consent of the governed.

 The people of Northern Ireland have not “consented” to Brexit, or to the new barriers, controls, and costly bureaucracy that flow from it.

 And one of the fundaments of a successful union between different nations is a decision making process that shows respect for minorities and smaller nations.

The process by which Brexit was decided in the UK did not pass these tests.

As any football fan knows , the UK encompassed four nations,

 England,

 Scotland,

 Wales and

Northern Ireland.

 Brexit had the consent of the voters of England and Wales, but it did not have the consent of the voters of Northern Ireland, nor of Scotland.

The purely majoritarian Referendum allowed two of the UK’s nations to overrule the other two. That would  not happen in our European Union.

Brexit, no matter what way it may now be implemented, will change the status of Northern Ireland, and will do so without the consent of the people living in Northern Ireland.

 

WHAT IS THE ESSENCE OF SOVEREIGNTY?

 In his recent letter to his fellow EU Heads of Government, Prime Minister Johnson claimed that the Irish backstop is inconsistent with the “sovereignty” of the UK as a state.

 All international agreements impinge on sovereignty.

But the sovereignty of a state primarily consists in its having a monopoly on the use of force within its territory. The backstop does not diminish UK sovereignty in that way.

By joining the EU in 1973, the UK agreed to pool aspects of its sovereign rule making authority with other EU member states. It entered into a succession of EU Treaties on that basis.

 While  it was always possible  in international law for the UK  to renounce these Treaty commitments, as it is now doing,  the UK was, and is, obliged to take proper account of the effect  this has on other parties to the Treaty.

After all, these other EU states, including Ireland, acted in good faith on the basis that these shared EU Treaty commitments would continue to be adhered to by the UK.  Ireland acted on that assumption when it changed its constitution to facilitate the Belfast Agreement it made with the UK in 1998.

It is the UK that is now taking the initiative to renounce the EU Treaties, so it is for the UK to take the primary responsibility for finding a way to reconcile that renunciation with the other Treaty commitments it has made, notably  its legal Agreement  made in Belfast in 1998.

That is how international relations work, and why renouncing Treaty commitments is a rare occurrence.

Unfortunately, the UK never faced up to that responsibility.

 That was a failure of statecraft on the part of the UK, and of the UK alone.

 

THE IMPORTANCE OF RULES IN INTERNATIONAL COMMERCE

Adhering to Treaty commitments is usually in a state’s self interest.

This is because, in international commerce, rules are important. That is a commercial and political reality.

 Without shared rules or understandings, commerce would be impossible.

 The EU is an engine for

 + making rules democratically,

 + enforcing them consistently and

 + interpreting them uniformly.

 I do not think these realities of international commerce were explained to the UK electorate by their leaders over the last 40 years, which is why the English and Welsh electorate fell for the Brexit delusion..

Mr Johnson claimed in his letter

“The Belfast (Good Friday) Agreement neither depends upon, nor requires, a particular customs or regulatory regime.“

That is true, but disingenous.

 At the time the Agreement was negotiated, both the UK and Ireland were in the same customs and regulatory regime….that of the EU.

 That was taken for granted, and did not have to be made explicit in the Agreement. In any event in 1998, if there was in fact a possibility of the UK leaving the EU, it would have been the responsibility of the UK to have brought that up in the Good Friday negotiations.

 It did not do so, and, to the best of my knowledge, the Conservative official opposition,  did not bring it up either.

 If they had done so, it would have been a very different negotiation.

Prime Minister Johnson goes on

“The broader commitments in the Agreement, including to parity of esteem, partnership, democracy and to peaceful means of resolving differences, can be met if we explore solutions other than the backstop.”

This is a strangely vague  statement to make, barely a month away from the 31 October deadline.  No solid proposal, just “possibilities” and “explorations”.  Not good enough,

I now need to pose the following question.

 

DOES MR JOHNSON WANT TO CREATE NEW OPPORTUNITIES FOR SMUGGLING AND THE ACTIVITIES FINANCED BY IT?

Mr Johnson’s letter says

“This Government will not put in place infrastructure, checks, or controls at the border between Northern Ireland and Ireland. We would be happy to accept a legally binding commitment to this effect and hope that the EU would do likewise.”

This reads to me like a straightforward attempt by a UK Prime Minister to destroy the EU Single Market.

He seems to want the EU to legally bind itself not to enforce its own rules at its own borders.

If neither side enforce their rules, this will create want a “no man’s land” in the vicinity of the Irish border, where no controls or checks would apply.

 This is an open invitation to criminal and subversive organisations, who have financed themselves in the past by smuggling.

 Brexit will create a whole new set of opportunities for smuggling and consequently for the financing of subversive organisations

 Given that one such, smuggling financed , criminal organisation attempted to murder one of his predecessors as Conservative leader, one would be forgiven for thinking that Boris Johnson has not studied the history of his party closely enough.

At the moment, the only products where there are big price differences on either side of the border are fuel ,alcohol and tobacco. And there are huge revenue losses to legitimate traders and to the state on both sides of the border because of highly organised smuggling by criminal organisations. I reckon the losses are as much as £200 million, without Brexit.

Imagine what it will be like after a hard Brexit, in the absence of a backstop.

There will be hundreds of new products where there will be progressively ever greater price differences on either side of the Irish border, due to different rates of tariff and different standards. A whole new set of opportunities for smugglers will thus be created, on top of the opportunities they are already exploiting.

The opportunities for smugglers will  probably be trebled, thanks to a UK policy of deliberate divergence from the EU, in the event a hard Brexit without a backstop.

It would be downright irresponsible, in last weeks before this fateful decision may be made, to fail to highlight these foreseeable consequences of a hard Brexit.

Of course the smugglers are criminals, and they must be treated as such. But to counter them, the burden placed on policing services on either side of the border will increase exponentially, and  scare police resources will have to be diverted from  dealing with conventional crime.

 For a UK government to go out of its way to create new opportunities for smugglers by insisting, on the basis of some high principle of not having an Irish backstop, is irresponsible. This is a truth that must be stated..

 

WHY CHECKS ARE NEEDED TO PROTECT THE SINGLE MARKET

To sum up, in the event of Brexit without a backstop,controls  and checks on the goods and services that may cross EU borders will be essential .

This is because

 +  the UK has said it will to make trade deals, with different rates of tariffs,  and/or different quality standards for goods and services to the ones applied by EU, and

+  the UK has decided it will  increasingly diverge from EU environmental , product, and labour standards.

If it fails to protect its Single Market, the EU will not be able to continue to lead the world in setting higher standards to protect the climate, and to protect the privacy of the data of its citizens.

 That is why the EU cannot allow its nearest neighbour, and recently departed member, to undercut its standards with impunity.

The requirements to be fulfilled by Ireland, as part of the EU Customs territory, at its borders and its ports, are set out  clearly and in immense detail in the EU Customs Code.

 The Code was adopted in October 1992 by Council Regulation 2913/92, with full UK participation.

 It requires the uniform application of the Code across the entire customs territory of the EU.

 The UK knows full well what Ireland will be legally obliged to do as a continuing member of the Single Market and Customs Union.

The fact that Mr Johnson has invited the EU not to enforce its own rules, raises the suspicion that he would like to the EU to dissolve itself altogether !

 

THE SINGLE MARKET

We must defend the integrity of the EU Single Market, at the borders of the European Union and throughout its territory.

Ireland must be seen to be, fully compliant with EU Single Market rules. Otherwise Ireland’s geographic position will be used against it by competitors for the investment.

The EU Single Market is not complete. There is much more to do.

An April 2019 Study “Mapping the Cost of non Europe” estimated that

    + completing the  classic single market would add  713 billion euros to the EU economy.

    + completing Economic and Monetary Union would add a further 322 billion, and    

    + completing a digital single market a further  178 billion euros.

 A more integrated energy market would save a further 231 billion and a more integrated EU approach to fighting organised crime would be worth 82 billion.

 Cross border VAT fraud is costing 40 billion.

These are some of the reasons why we must complete the Single Market.

Services account for three quarters of EU GDP.

 But  we have been very slow in creating a single EU market for services.

 In the field of Services, only one legislative proposal had been adopted during the term of the outgoing Commission, a proportionality test for new regulations on professions.

 All other proposals are blocked.

 I think that a major obstacle is vested interests in national or regional governments, who do not want to give up power.

By completing the Single Market, the EU can show that it has much more to offer to the world than a post Brexit Britain.

 The European “Single Market on the Liffey” can will deliver more consumer benefits than “Singapore on  the Thames” .

To help complete the Single Market, Ireland should be open to qualified majority voting on energy and climate matters.

We should also be open to carefully defined individual amendments to the EU Treaties if they can be shown to the public to deliver real benefits.

 

A LEVEL PLAYING FIELD

The existing Withdrawal Agreement protects UK environmental, product and labour standards, in a way that a mere Trade Agreement will never do.

 In any trade negotiation with a post Brexit Britain, maintaining a level  competitive playing field will be vital.

 No subsidies, no cartels, and no undercutting of EU standards must be insisted upon.

 

A CLIMATE TARIFF?

President Elect Von der Leyen has suggested a border Adjustment tax to penalise imports that have been produced at the cost of excessive carbon emissions.

The intellectual argument for such a tax is a good one, but it will be provocative in the present fraught international trade atmosphere.

 Perhaps an adjustment of the VAT rate to take account of the emissions intensity of various products could be designed. It could be applied to domestic as well as imported products and services of all kinds.

 It would be more comprehensive than a Carbon Tax and would put the EU in the lead in the battle against climate change.

 

THE RISE OF CHINA

China is returning to the dominant position it held in the world economy in the two millennia up to 1800.

 It is doing this on the strength of its human capital, not its physical capital. It is educating more engineers that the US and the EU combined.

 It is doing it through its competitive and  innovative firms, not through its monopolistic state enterprises.

 It is ahead of everyone in 5G communications, at the time the world economy is becoming ever more digital.

 If the US thinks it can use trade policy to arrest Chinese development, it is probably making a mistake.

But the US is right to insist on fair competition. China must be treated in the WTO as a developed country, and not get concessions intended for much poorer countries.

In its response to the Chinese challenge, the EU should maintain its robust competition policy and should not try to pick industrial winners from Brussels.

Europe would be much better placed to defend its own interests, and to act as a balancing power in the world, if the euro functioned as a global reserve currency.

 To achieve that, we need to create a Capital Markets Union and complete the Banking Union.

The Eurozone must have a capacity to cope with localized shocks and to prevent contagion.  We need viable proposals for a eurozone wide reinsurance of bank deposits, and eurozone wide reinsurance  of the unemployment  benefit systems of member states..

 

CYBERSECURITY

Global trade disputes are becoming increasing entangled with arguments about security.

The EU is not a military power. But it does have interests to defend, notably in the field of cybersecurity.

 Ireland’s island status may have inured it against conventional military threats,  but  it offers no protection against cyber attacks.

The European Network for Information Security should have active Irish participation.

 The EU must develop joint capabilities to counter cyber attacks.

 

THE RULE OF LAW

There is an erosion of the basic tenets of the rule of law in some EU member states.

This takes two forms…a weakening of the separation between the judiciary and the executive, and a weakening in the effective administration of justice.

 We cannot contemplate taking in new member states until we are satisfied we can have full confidence in the rule of law in all existing members.

 The Commission must be non partisan and objective in pursuing member states that are falling below acceptable standards in respect of the rule of law.

The European Court of Justice is the place where the rule of law can best be vindicated.

 The Commissioner for Justice should show neither fear nor favour in making proposals for remedial action.

He should have the sole right to make such proposals, should do so publicly, and while the College should be free not to accept his proposal, it should have to publish its reasons.

 

EU WIDE DEMOCRACY

 It is over 40 years since the first European Parliament election.

 While the  EP elections are hotly contested, the contests are often really about national issues.

 A genuine EU wide debate does not take place, because the elections are confined within in national constituencies. An EU “polis” or public opinion has not been created.

In her political guidelines for the 2019-2024 Commission, President elect Von der Leyen commits to strengthening EU democracy.

She says she wants to strengthen the Spitzenkandidat system, and to address the issue of transnational lists in European Elections.  I hope she is true to her word.

My own view is that the President of the Commission should be elected separately from the Parliament using a system of proportional representation (PR).

 The Spitdenkandidat system failed for many reasons, not least the fact that it was to be a winner take all contest without any proportional element to reflect the preferences of the whole electorate.

It will be difficult to introduce transnational list without reducing the number of MEPs elected on a national basis. But it should be done.

 

CONCLUSION

As you can see, we have a very busy few years in front of us in the EU.

As Greece was for many years, Ireland may soon be cut off  from the rest of the EU by the territory of a non member. We will be a frontier state, never a comfortable position in international relations.

We will need to work harder than ever before to overcome the barriers that may be placed in our way.

 We will need our network of friends around  the world more than ever before, and that is why the Brussels branch of the IIEA will be more important than ever before!

We will also need to be assertive in protecting our interests, but to do so in the context of a strong pro European philosophy.

Thank you!

Compliments of John Bruton