There are a lot of questions there and I will try to deal with them. First, on the update in the negotiations, I will give my assessment on where we are. There are two different negotiations, or conversations, happening in parallel but linked to each other. The first is the future relationship negotiation and is led, from our point of view, by Michel Barnier and his task force and on the British side by David Frost and his team. It is pretty clear at this stage that the best-case scenario is to get a very basic trade deal that avoids tariffs and quotas, but this would be a significant achievement from an Irish perspective. There are two major obstacles to getting agreement on that. There are a whole lot of other things that will require temporary solutions if there is not time to put a permanent solution in place in a future relationship agreement. When we signed off this time last year on a withdrawal agreement, and in parallel a political declaration, the ambition for both sides was to have a very comprehensive partnership agreement that involved multiple aspects for agreement around aviation, haulage, judicial co-operation, police co-operation, as well as on trade on a level playing field. It is important to say this because the British Government has moved away from its commitments in the political declaration in many areas.
There are 11 different areas in the future relationship negotiation that are all moving forward in parallel with each other. It is quite clear that in many of those areas we are not going to get a permanent and comprehensive agreement on a future relationship. So, the focus at this stage is on getting a core agreement on trade and what is required to do that, and then to put in place contingency plans in a number of other areas that may not be permanent, but will at least give us certainty in the medium term while we put in place further solutions next year.
If we do not have a trade deal at the end of the transition period then we do have a significant consequence because the default arrangement will be that the UK and the EU will have to trade on the basis of WTO rules and conditions, which involve tariffs and may involve quotas in certain products. Really the focus is on that.
To get a basic trade deal there are two big obstacles from the EU's perspective. One is around the level playing field provisions. It is no harm to remind people, for the record, what the UK did actually sign up to in the political declaration on the level playing field. That term almost seems to be a toxic term now in Westminster. It is a bit like the backstop: it is something that cannot be accepted. The political declaration contained a whole section entitled "level playing field for open and fair competition". It said: " Given the Union and the United Kingdom's geographic proximity and economic interdependence, the future relationship must ensure open and fair competition, encompassing robust commitments to ensure a level playing field." It goes on to outline all the areas that will need to be agreed in that space. The UK has gone from supporting that wording, which the UK signed off on with the EU, to now saying: "We can do nothing on a level playing field and you will just have to trust us. Britain will decide on its own standards, its own state aid rules and if we have disputes in the future then let us figure out how we will deal with that." That is very problematic from an EU perspective. Michel Barnier has been very consistent on this. He will not move this process into a more intensive phase, which many would describe as a tunnel, to try to close out the remaining issues, unless he gets a very clear signal from the UK that it is willing to show some flexibility and some realism around the need for fair and open competition between these two big economies. Mr. Barnier is right. The EU is very concerned that if this does not happen, in the future we will have disputes without a governance model to deal effectively with those disputes, and the potential is there for a future British Government to decide to deregulate its own market to create competitive advantage and to use state aid in a targeted way to create advantage for British industry in certain areas while selling into a very large EU Single Market without any tariffs or quotas, and having derived competitive advantage in its own cost base in Britain to do that. The EU and its Single Market simply cannot take that risk. This is why it is a very serious issue and why there needs to be an understanding on the UK side that this is not a sovereignty grab from the EU, it is quite the opposite. The EU has been very clear that it respects British sovereignty and the United Kingdom outside the EU.
If there is to be a preferential trading arrangement that avoids tariffs and quotas then there has to be an understanding and a governance model to deal with disputes in the future that is independent and trustworthy, and that can act in a timely manner to resolve disputes if and when they occur. That is not an unreasonable ask and is certainly not an overreach from the EU negotiating team. That is important. There is going to be a need for clear understanding as to how that fair competition will work, and a governance model to deal with disputes in the future so they can be settled quickly.
The second barrier to getting a trade deal is fishing. The committee members will hear a lot about fishing in the weeks ahead, especially the members from Donegal, west Cork and places such as Howth, Wexford and Connemara where there are big fishing ports and big fishing interests.
It was agreed as part of that political declaration that a fisheries agreement would happen along with the trade agreement. In fact, it was agreed that fishing would be agreed first. The idea was that we would get fishing done by midsummer to be able then to focus on finalising a future relationship agreement in the early autumn. That clearly has not happened and not only that, the position on fishing has hardened on both sides, if anything. There is a wide gap between what the UK Government is promising on fishing at the end of the transition period and the EU's mandate to negotiate on behalf of fishing interests. I do not believe that the EU will finalise a future relationship agreement on trade without an agreement on fishing. These are real problems. I will talk about the implementation of the protocol in a moment and while some issues are resolvable, the negotiations are going to have to find a way of dealing with the fishing, level playing field and governance issues if there is to be a trade deal in the next month or so. A range of other issues are linked to this, including data for example, and many others that are important for Ireland from the points of view of haulage, use of the land bridge and the aviation industry. I suspect we will see short-term contingency arrangements in many of those areas if we can get a trade deal that avoids tariff and quotas. The two big obstacles are the ones I have outlined.
The second issue that is being negotiated in parallel is about the Ireland and Northern Ireland protocol. It is not a negotiation on the policy or agreement around the protocol but is about the implementation of what has been agreed in the protocol in the withdrawal treaty, based in international law. As I say, there will be another specialised committee that will focus on the detail on Friday.
There are three outstanding issues, which the UK Government claims justify its Internal Market Bill. I do not think there is any justification for the Bill, which is essentially a negotiating tactic designed to tell the EU to give the UK what it wants on the implementation of the protocol or the UK is going to legislate for it anyway. That is no basis for negotiation. It has damaged trust and relationships in this negotiation and the tactic has significantly backfired on the British Government from a reputational perspective, not only within the Union but also further afield. We would be foolish to focus too much of our time on commentary around the Internal Market Bill. We need instead to focus the limited time that is available to try to focus on resolving the outstanding issues. Those issues have solutions.
There are three issues that the British Government has a particular problem with on the implementation of the protocol. The first relates to summary export declarations. This is an EU interpretation of the protocol to the effect that businesses in Northern Ireland should be required to have an export summary declaration on goods that they export to Great Britain. The British Government does not regard that as unfettered market access between Northern Ireland and Great Britain and believes that businesses should not be asked to go through the formal process of export summary declarations. The two sides have had quite fruitful discussions on this issue to try to find a middle ground position that allows us to understand what goods are moving between Northern Ireland and Great Britain while accommodating the British concerns within the context of full implementation of the protocol. A solution can be found if both sides approach it with an open mind, which I think they are doing.
The second issue relates to state aid, which is more complicated. The British Government fully accepts that Northern Ireland needs to mirror EU state aid rules. If that does not happen, we are back into Border issues and unfair competition on the island of Ireland. This gets difficult because the state aid provisions in the protocol are clear that they apply to all of the UK in the context of deriving a competitive advantage in Northern Ireland. What I mean by that is that there could be a parent company in Great Britain that has a subsidiary in Northern Ireland, that is, a company that has a footprint in both Great Britain and Northern Ireland. If, in the absence of a trade deal, a future British Government were to give significant state aid to the parent company, beyond what would be consistent with EU state aid rules, does the company derive a competitive advantage, by extension, in Northern Ireland? If so, how do we deal with it? There is real disagreement as to whether the wording on state aid in the Ireland and Northern Ireland protocol stretches into limitations on what a British Government could do in Great Britain. The wording is very clear and the EU's interpretation is spot on but the British Government has pushed back strongly against it. The Internal Market Bill is a means of the British Government stating that if it cannot get reasonable agreement with the EU on this matter during negotiations, it will legislate to give a British Government Minister the power to determine the issue which, of course, is a complete breach of the sprit and letter of the law in the protocol.
The third issue is what is called the "goods at risk" issue. This relates solely to the application of tariffs on goods coming from Great Britain into Northern Ireland. The protocol effectively creates in Northern Ireland a de facto extension of the EU Single Market for goods. By doing that, we prevent the need at any point in the future for border infrastructure, which is a good solution for an all-island economy. The consequence of that solution is that there needs to be some checks on goods coming into Northern Ireland from Great Britain because, of course, those goods could find their way into the Single Market if there is no border, barrier or checking system on the island. In the absence of a trade deal, goods coming into Northern Ireland from Great Britain should have tariffs applied to them on the basis that they may find their way into the Single Market through Northern Ireland, moving south across the Border with no checks? The EU has to be sure that, from a tariff perspective, there is not an unguarded back door for goods to come into the Single Market tariff free because that would create all sorts of perverse incentives in investment, trade, economic activity and so on. The protocol is quite clear on this. It effectively assumes that all goods coming into Northern Ireland from Great Britain could end up in the EU Single Market and, therefore, should have tariffs applied. The British Government has argued that in implementing that we must make allowance for goods that we know are going to stay in Northern Ireland and, therefore, in the UK single market, although operating to the EU customs code, and tariffs should not apply to certain goods. That list of goods is now called the "goods at risk" list. These are goods that are at risk of entering the Single Market and other goods will not be on that list. Trying to get agreement on that, and who makes the final decision if we cannot agree, is the issue. The British Government has said that, in its upcoming finance Bill, it will essentially pass legislation to give a British Minister the power to determine the goods at risk. That would be a complete breach of the protocol and international law. We have given a strong signal to the British Government, and I will say it again here, that if the finance Bill is introduced with that provision in it, many in the EU will see it as an indication that the British Government simply does not want a deal. It would be the second Bill designed to deliberately break the withdrawal agreement protocol on Ireland and Northern Ireland.
However, there is no finance Bill yet so we have time and space, I hope, to deal with these issues. I hope I am not going into too much detail and that this is helpful for members. When the negotiations unfold in the coming days and weeks these will be the key issues.
The reason I wanted to outline those three issues as well as the two that are holding up a trade agreement is that they are somewhat interlinked. If we get a trade deal, two of the three issues linked to the implementation of the protocol effectively disappear. If we get a trade deal, there will be an agreement on how the UK Government approaches state aid in Great Britain and on dispute resolution mechanisms that can deal with future disputes about that issue. Therefore, state aid in Great Britain relating to Northern Ireland and the Northern Ireland protocol is no longer an issue. Likewise, if there is even a thin basic trade deal that avoids tariffs and quotas, the goods at risk issue becomes quite irrelevant as well. If there are no tariffs, one does not have to worry about goods at risk to which tariffs should or should not apply.
If we were to get a trade deal, having solved the issues of fishing and the level playing field, the two most contentious issues in the implementation of the protocol in Northern Ireland are effectively no longer issues. The first issue, as I said previously, in terms of the requirement on businesses to have export summary declarations on goods travelling from Northern Ireland into Great Britain is, in my opinion, resolvable through negotiation. They have not agreed on a middle ground position yet, but there is a good discussion on that in which both sides are trying to address genuinely held concerns on both sides.
This is very doable. The Northern Ireland protocol and the three outstanding issues that have been publicly raised and put up in lights by the British Government can be resolved if there is a trade deal. If there is no trade deal, they will have to be resolved anyway. The British Government is under a legal obligation to implement the Northern Ireland and Irish protocol in full. There is an international treaty that requires it to do that. As Deputy Richmond said, this is an all-weather protocol and withdrawal agreement. It is not contingent on a trade deal, and sometimes that point is lost in the commentary. From an Irish perspective, we have protections in international law that will prevent border infrastructure on this island re-emerging linked to Brexit. That is the reason the EU has given a signal that it is going to initiate legal proceedings, to make sure that the British Government is held to its obligations under international law in this space.
Some people living in Border counties have asked me, in quite emotive language, if they are facing the Border question all over again because of the British Government's threat not to implement the withdrawal agreement in full. My answer to that question is an emphatic, "No, we are not". There are areas of dispute regarding the implementation of the protocol, but not to the extent that it threatens as a consequence the question of whether Ireland has to either impose a border or find itself having to face checks between the Republic of Ireland and the rest of the EU Single Market. We need to take as much heat out of this debate as we can. I do not believe we need to go back into this very emotive area. We have a protocol in international law. The British Government is saying it wants to implement that protocol in full. There is a dispute over some elements of the implementation, on which the British Government has behaved quite recklessly in terms of introducing the Internal Market Bill in domestic legislation, but, in my view, the outstanding issues can be resolved, and will be.
That is the negotiation. I will come back to the contingency planning if members wish, in terms of customs arrangements and so forth, but I will give the members some reassurance on customs. In the last number of weeks, the Revenue Commissioners have written to 90,000 businesses and have followed that up with about 16,000 telephone calls. Part of that contact has been to give a type of Brexit checklist for the companies concerned. We now estimate - I am open to correction on this but I believe I am right - that, in terms of value, some 96.4% of the companies that are involved in the business of exports to the UK have now registered in respect of their customs number and are preparing for the new reality. Some 94.5% or so of the companies involved in imports have also got their economic operator registration and identification, EORI, numbers and are planning for that new reality in customs. There are many other companies that do not trade very often with the UK, but do so at certain times in the year. They will have to register their EORI numbers as they need to, but the bulk of the businesses involved in the trade between Britain and Ireland are gearing up to do what they need to do.
We are also getting increased buy-in into the customs training programmes we have funded. There is also grant aid available for companies that either want to train people internally to understand how they can manage customs declarations or to take on a customs agent. There are grants of €9,000 for companies that wish to do that. There is much activity there. I know it is not all about customs. There are other elements that companies have to deal with, but customs gives a good indication of the level of preparedness now. It is in a reasonably good space, but there will still be a great deal on the radio and in newspapers from the Government with regard to making sure people understand what they must do between now and the end of the year.
To respond to Senator Chambers, we have been here previously in these negotiations. We have effectively marched Ireland up the mountain on three occasions when there was the potential for a no-deal Brexit. Thankfully, it did not happen, but there is no extra time this time. This is it. Nobody is even talking in back rooms, confidentially and off the record, about extensions beyond the end of this year. It is not an issue. It is now in law and has been agreed between both sides that at the end of the transition period a new reality takes effect. The only question is whether we will be ready for it and whether we can limit the impact and the damage of the trade friction that is going to happen by having a basic trade deal in place that ensures tariffs and quotas are not part of that friction. That is the issue before us now.
I dealt with international law and legal action. There is some complacency, and Covid has made that even more complicated. It is very difficult to get messages out through a Covid fog, all the debates that take place about Covid and everything that flows from it in terms of economic damage, different levels of restrictions and so forth. Despite the fact we are spending significant resources on getting messages out, we must focus in the next few weeks on having a greater impact in terms of not only getting businesses ready but also getting consumers ready. For example, if people buy goods online from the UK, as a large number of people do and particularly during Covid, the consumer protections that we all take for granted - Deputy Harkin will know all this from being in the European Parliament - and that are in the law and protected by EU directives and so forth are gone. It will be a very different trading environment.
Maybe I can talk in the next round of questioning around targeted supports and the EU recovery fund in terms of areas such as agrifood and tourism.
Deputy Richmond raised the outstanding issues and the specialised committee. The focus of the joint committee, which is the implementation of the withdrawal agreement, and then onto the specialised committee, has been effectively implementing what has already been agreed. It is not only the three outstanding issues that I outlined. There is also a range of other issues that the British Government accepts need to be done and on which there is no dispute over implementation but the EU wants to see progress on, for example, physical infrastructure in ports in Northern Ireland. I am not aware that one can see any difference yet. I am aware that it is now moving ahead but, let us be honest, it has been left terribly late. Look at what we have done in Dublin, Rosslare and Dublin Airport. For instance, we spent over €30 million in Dublin Port. We have spent millions of euro in Rosslare. The systems will be ready by the end of the year. I see a little bit of coverage today on something I said around Dublin Port. There will be some ongoing work in Dublin Port beyond the end of the December but Dublin Port will be ready on 1 January for what it needs to do in terms of extra parking facilities, storage facilities, cold-storage facilities, stabling for live animals and inspection bays. It is a huge operation. I would encourage members, it they get a chance, to go and see it if they are interested in trade and Brexit. The OPW, Dublin Port, the Revenue Commissioners and the Department of Agriculture, Food and the Marine have all done a really good job there. When I see how much time and effort, and resources, we have put into our own infrastructure provision, one has to ask if the ports in Northern Ireland will be ready by the end of the year. I hope they will be but I suspect some of it will be temporary infrastructure at the end of the year while they finalise arrangements beyond 1 January. That is really a matter for implementation. That, as well as some of the other issues, will be quite a focus of the specialised committee.
On judicial co-operation, one of the elements, Part 16 of the legislation, will deal with extradition arrangements between the UK and Ireland. Under European arrest warrants, etc., this would have been a non-issue previously. I am sure Senator McDowell will understand the legalities of this better than I do. Part 16 is intended to apply the provisions of the European Convention on Extradition 1957 of the Council of Europe to extradition arrangements between Ireland and the UK when the provisions of the European arrest warrant no longer apply. This is a byproduct of Brexit that many people have not even thought about but for which we have to legislate.
I would say that the relationship between the PSNI and An Garda Síochána - I cannot say for certain because I have not been around forever but it is my understanding - is a closer relationship than it has ever been in terms of sharing of information and joint operations on the Border. It has been very effective. We have seen many arrests over the summer because of that co-operation and we will continue to see that. That is all good news and I can assure the committee it will not change with Brexit. In fact, I will visit Belfast tomorrow to meet the Secretary of State and we will discuss many of these issues.
There were some long answers. I will be much more concise with my future answers but I think that gives the committee a good sense of where we are.
