This Brexit Readiness Action Plan supports and promotes the necessary preparations for the substantial and enduring changes that will arise at the end of the transition period in less than four months’ time, on 31 December 2020. In many respects it draws on the Government’s Brexit Contingency Plans of December 2018 and July 2019.
The United Kingdom left the European Union on 1 February 2020 after both sides had concluded a Withdrawal Agreement which facilitates an orderly departure. The Withdrawal Agreement also includes the Protocol on Ireland and Northern Ireland which protects the peace process and avoids a hard border on the island of Ireland, while preserving the integrity of the EU Customs Union and Single Market and Ireland’s place therein.
Regardless of the outcome of the future relationship negotiations, the provisions of the Withdrawal Agreement and the Protocol will apply. The Common Travel Area between Ireland and the UK will also continue to operate as it does today. Citizens of either country will continue to be able to live, work, study and to access associated entitlements and services in the other.
The Withdrawal Agreement also provides for a transition period. The transition period is intended to give time for national administrations, businesses and citizens to prepare for the changes that will definitively arise on 1 January 2021. From this point, the UK will be outside the EU’s Single Market and Customs Union, and will no longer be bound by EU law. This will significantly change the way the EU and the UK engage into the future.
The EU and the UK are currently negotiating a future partnership agreement. The EU’s approach to the negotiations is underpinned by the Political Declaration
signed by the EU and UK in October, 2019. The Declaration set out the parameters for an 'ambitious, broad, deep and flexible partnership across trade and economic cooperation with a comprehensive and balanced Free Trade Agreement (FTA) at its core'.
One of the key issues addressed in the Political Declaration is the need for a strong level playing field, to ensure fair and open competition and to prevent businesses gaining an uncompetitive advantage by diminishing important protections of workers and the environment – an important element of any deal given the geographic closeness and interconnected nature of the EU and UK economies.
To date, the EU and UK have completed seven formal rounds of negotiations and progress has been disappointing.
Given the limited progress we have seen to date, the Government decided on 29 May 2020 to intensify its readiness work on the basis of two scenarios:
a limited FTA (including fisheries
a hard Brexit with the EU and UK trading on WTO terms.
While Ireland still supports the closest possible relationship between the EU and UK, prudence dictates that we approach our readiness planning on this basis.
With less than four months until the end of transition, it is vital that government, business and citizens understand the changes that will arise and take steps now to mitigate the risks. Both scenarios will raise many, although not all, of the risks which arose in the No Deal planning undertaken last year, ahead of the Withdrawal Agreement being concluded.
In the first scenario, the EU and UK would agree a limited FTA with acceptable level playing field elements, providing for zero tariffs and zero quotas. This outcome will bring substantial challenges for supply chains and trade flows and will require checks and controls in both directions on EU-UK trade. In practice, this will mean that every time an Irish company or individual imports from, or exports to, Great Britain they will need to (at least) complete a customs declaration. A limited FTA would not address the full range of the EU’s relations with the UK.
If the EU and UK fail to reach an agreement, we will be faced with a hard Brexit and an immediate and disorderly change in the way the EU and UK trade and engage. In this scenario on 1 January 2021, the EU and UK will trade on WTO rules. In addition to the implications outlined above, this outcome will also see the introduction of tariffs and quotas on trade in both directions, with significant impacts on Irish trade, notably in the agri-food sector.
Either scenario will be highly disruptive and will have profound political, economic and legal implications, first and foremost for the UK, as well as having significant impacts on Ireland and the rest of the EU.
The EU and UK negotiations are continuing and our planning, together with EU partners, in respect of a number of key areas such as tariffs, fisheries, connectivity and transport and data sharing will evolve as the outcome of the negotiations becomes clearer.
However, it is already very clear that a range of changes will definitively take place regardless of the outcome of the negotiations and it is vital that we step up our preparations to address these changes now.
These changes will be significant and lasting. Of these, the most significant is that, from 1 January 2021, the UK will no longer apply the rules of the Single Market and Customs Union. This means that any business, regardless of size, who moves goods from, to or through Great Britain will be subject to a range of new customs formalities and other regulatory requirements.
The Government acknowledges that the end of the transition period approaches at a time when businesses and citizens are already under considerable strain because of the COVID-19 crisis. This is not the context in which we would have chosen to implement such a major change to the relationship between the EU and the UK. However, as the UK Government has made clear that the transition period will not be extended, we all must turn our efforts to strengthening our readiness preparations based on the two scenarios outlined above.
The Government will take this work forward in three distinct but overlapping streams:
work which the Government can lead directly such as infrastructure at the ports and airports; introducing new legislation; and engaging with the European Commission;
communicating with and supporting sectors and businesses most directly impacted
helping to prepare for wider societal and citizen-focused impacts.
Preparations of Government, business and citizens were well advanced for the possibility of a no deal Brexit on 29 March 2019, 31 October 2019 and 31 January 2020. The additional time afforded by the transition period provides space to refine this work and recalibrate as necessary for the end of the transition period.
However, our readiness work for the end of the transition is also different from earlier no deal preparations as it will require planning for both immediate challenges, but also long term, permanent changes, to current arrangements. It can also be expected that EU contingencies will be limited.
It needs to be acknowledged that, notwithstanding the extensive readiness preparations that have been made by Government, businesses and citizens, significant risks can still be expected to arise when the transition period ends. These risks include:
disruption of East-West trade between Ireland and Great Britain due to delays at ports and/or inability of businesses to meet regulatory requirements
delays to trade transiting the UK landbridge, with knock-on impacts on wholesale and retail supply chains;
closure of businesses and/or loss of jobs in Ireland due to trade disruption and associated costs, including possible tariffs and currency movements, in particular in the agri-food, fisheries, manufacturing and retail sectors;
regional economic and labour market impacts due to the location of most exposed business sectors
feterioration in Ireland’s macroeconomic position, already impacted by the COVID-19 crisis;
loss of access to fish landings from UK EEZ, and displacement of other EU fishing activity into Irish waters;
possible deterioration in the resilience of Ireland’s medicines supply chains
some disruption to daily life in areas such as online retail purchases from UK; financial services sourced from the UK; the exchange of personal data with entities in the UK; and for transport services to, from or through the UK (e.g. aviation or road haulage).
The scale and inter-connectedness of the EU-UK relationship mean we cannot entirely eliminate the possibility of disruption. Even with all the work that has been done, there will be severe disruption. However, Government, businesses and citizens working together to address the changes we know are coming will allow us to reduce the burden and impact that arises as a result of the UK’s decision to leave the EU.
Time is short and it is not feasible to await the outcome of the negotiations before acting. It is clear that, no matter what, the status quo will not be maintained. With less than four months to the end of the transition period, this Readiness Action Plan outlines concrete actions that the Government, business and citizens can take to address the changes and mitigate the risks that will arise regardless of the outcome of the ongoing negotiations. It is important that we take these actions now.
The Government will continue to develop and refine our readiness efforts. As before, this work will be underpinned by a strong communications and outreach programme aimed at addressing specific sectors and challenges.
We recognise that preparing for these changes is extremely challenging for many businesses already severely affected by the COVID-19 pandemic, and will try to support them as much as possible over the coming months. We remain grateful for our ongoing engagement with stakeholders and representative bodies and will continue to work closely with our partners in addressing our shared objectives. We will face the challenge of the end of the transition period as an EU Member State, with the support, solidarity and strength this brings.