AN AGENDA FOR NORTHERN IRELAND

AFTER BREXIT

How to bui ld a secure, peaceful and prosperous future .

byOwenPolleyandDavidHoey

CONTENTS

Introduction 3

ExecutiveSummary 5

1. Afterthereferendum 11

2. Businessandtheeconomy 14

3. Sovereignty,theborderandtheconstitution 23

4. Agricultureandfishing 30

5. Immigration 34

Commissionedby:

55TuftonStreet,Westminster,LondonSW1P3QL

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AnagendaforNorthernIrelandafterBrexit

INTRODUCTION

AnewfutureforGreatBritainandNorthernIreland

Onthe23rdofJune2016theUnitedKingdomheldareferendumonitsmembershipoftheEuropeanUnion.17,410,742people,51.9%ofthosewhocastavalidvote,votedtoleavetheEU,while16,141,241votedfortheUKtoremain(48.1%).1

Intheaftermathoftheresult,primeministerDavidCameronannouncedhisresignation,andhewasreplacedbyTheresaMay,onJuly13th.Inhisresignationspeech,MrCameronacceptedthatthereferendumwouldbebinding,saying"thewilloftheBritishpeopleisaninstructionthatmustbedelivered".2

MrsMayquicklyaffirmedthegovernment'scommitmenttoleavetheEU,assertingfrequentlythat"BrexitmeansBrexit".AttheConservativeParty'sannualconferenceshepledgedtotriggerArticle50oftheLisbonTreaty,startingaformalprocessofwithdrawalfromtheUnion,beforetheendofMarch2017.3ShehassincesetoutaframeworkforBrexit,andaWhitePaperhasbeenpublishedconfirmingthedirectionoftravel.4

Theprimeministerintendstointroducea'GreatRepealBill'toparliament,repealingthe1972EuropeanCommunitiesActthatmadeEuropeanlawpartoftheUKlegalsystemandasserteditssupremacyoverBritishlaw.ThislegislationwillabsorbexistingEUlawsintoUKlaw,sothattheycanbereviewed,amendedandrepealed,ifnecessary.

InNorthernIreland,moreelectorsvotedtoremainintheEuropeanUnionthantoleave(440,707to349,442).However,thereferendumwasheldnationwide,withnoregionalornationalvetoes.

Theprimeminister,theSecretaryofStateforNorthernIreland,JamesBrokenshire,andhispredecessor,TheresaVilliers,haveallmadeitclearthatthegovernmentwillnotconsiderexemptingNorthernIrelandfrom'Brexit'ornegotiatinga'specialstatus'thatpreserveselementsofEUmembershipnotapplicabletootherpartsoftheUK.

AlthoughtherearestillaspectsofuncertaintyaroundthetermsunderwhichwewillleavetheEuropeanUnion,abroadplantostartthatprocessisalreadybeingimplemented.'Brexit'willapplytothewholeoftheUK,withoutsignificantvariations.

1EUReferendum,ElectoralCommissionwebsite2UKGovernment,EUReferendumOutcome:PMStatement,June2016.3ForeignandCommonwealthOffice,ConsolidatedTextsoftheEUTreatiesasamendedbytheTreatyofLisbon,2008.4DepartmentforExitingtheEuropeanUnion,TheUK'sexitfrom,andnewpartnershipwith,theEuropeanUnionWhitePaper,2February2017.

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ThispaperexaminesthechallengesandopportunitiesthatleavingtheEUpresentsforNorthernIreland.Itfocusesonthekeyareasthatdecision-makersatStormontmustaddresstopromoteourinterestsastheUKnegotiateswithBrusselsandexaminesthepreparationsnecessarytoenabletheExecutivetoensureasecure,peacefulandprosperousregionoftheUKoutsidetheEU.

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EXECUTIVESUMMARY:ANAGENDAFORNORTHERNIRELANDAFTERBREXITOverview

• NorthernIreland'seconomicfuturewilldependincreasinglyuponlocalbusinesses'abilitytotradegloballybytakingadvantageofnewfreetradedeals.

• Buildinganopen,responsiveeconomyiscentraltocreatingaprosperousregionwithinanindependentUK.ThepotentialtoreformNorthernIreland'seconomysuccessfullywillbe,insomerespects,greateroutsidetheEU.

• NorthernIreland'sconstitutionalpositionandpoliticalsettlementarenotaffectedmateriallybytheUK'sdecisiontoleavetheEuropeanUnion.Thereisnoimpetustoheadinanyotherdirection,outsidetheEU,and,withconstructiveinputfromtheBritishandIrishgovernments,thereisnoreasonwhyanyprogresscannotbemaintained.

• BrexitwillbringabouttransformationalchangeacrosstheUK.ForNorthernIreland'spolicymakers,itcouldbeacatalysttolookoutwardtotheworldandcreateasuccessfulregionthattradesandexchangesideasglobally.

EconomyAfreshstart

• Decisionmakerswillhavegreaterflexibilityastheylooktotackleeconomicproblems,outsidetheconstraintsofEUregulationslikestateaidlaws,taxrestrictionsandemploymentlegislation.

• TheExecutivehastheoptiontofocusonskillsandeducationforNorthernIreland's

workforce,ratherthanover-focussingonmaintainingtheflowofmigrantlabour.Itcouldcreateopportunitiestoreachpeoplewhohavebecomeeconomicallyinactive,alongsideastrategyaddressingotherfactorslikedependencyandacultureofjoblessness.Anyinitiativeofthistypewouldbemosteffectiveifpublicagenciesworkcloselywithpartnersfromtheindustriesmostcloselyaffected.

• Therewillbemorepotentialtoaddresslong-standingissueswiththe

competitivenessofthelabourmarketinNorthernIreland.Likewise,policy-makerscanfocushelptocompaniesonareasofparticulareconomicimportance,especiallywithresearchanddevelopment.

• LeavingtheEUmayprovideanincentivetoremodeloureconomyanditishighlylikelythatBrexitwillmaketheExecutivefreertoprioritiseprivatesectorgrowth,ifitchoosestopursuethatpolicyaim.

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• EconomicsuccessafterBrexitwilldependuponNorthernIreland'sabilitytotrade

withtherestoftheworld.Oureconomy'sover-relianceonthepublicsector,anditslackofproductivity,couldpotentiallybecomegreaterobstacles,aswelooktocompetemoreeffectivelyinglobalmarkets.

• Some16.4%ofexternalsalesaredestinedfortheRepublicofIreland,whichmakesitoursecondbiggestexternalmarket,thoughthisnumberisdwarfedbythe55.5%ofexportsdestinedforGreatBritain.IftariffsareintroducedongoodsimportedtotheUK,localexportersmayhaveanopportunitytodisplaceimportstoGreatBritain,andinparticulartheSouthEastofEngland,withimportsfromNorthernIreland.

• CurrentlinkswiththeRepublicofIreland,basedoncommonownership,geographyandculturewillremainwhenNorthernIrelandleavestheEU.Tariffsarepossible,thoughtheireffectswouldbesmallcomparedtofluctuationsincurrency(19%forEuro-Sterlingrateinlast12months).

• Brexitisthetimetorefocusonthetaskofcreatingacompetitive,openeconomy.Theprimeminister'ssayssheaspirestomaketheUKthe"strongestglobaladvocateforfreemarketsandfreetrade".Againstthatbackdrop,thereareopportunitiesforNorthernIrelandtoaddressissuesofcompetitiveness,lowerbarrierstoinvestmentandupskillingitsworkforce.

GlobalTrade

• IftheUKistobecome"thebiggestglobaladvocate"offreetrade,NorthernIrelandcouldhaveunprecedentedaccesstosomeofthequickestgrowingmarketsaroundtheglobe.

• Businesseswillrelyuponeffectivelocalsignpostingofany'tradepush'bytheUKgovernment,afterBrexittakesplace;includingparticipationinnationalinitiativessuchasGREAT.gov.uk

• Manyofthechallengesinvolvedinsellingtotherestoftheworldandattractinginwardinvestment,afterweleavetheEU,arefamiliaralready:

o Committoarestructuredeconomythatfavoursavibrantprivatesector

ratherthananunproductivepublicsector.o Tacklingissuesofuncompetitiveness.

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o Providingcompanieswiththeskillstheyrequire.o HelpingSMEstogrowandaccessthehelptheyneed.o Improvingproficiencyinforeignlanguages.o Fosteringacultureofenterpriseandentrepreneurship.o Offeringlowbusinesstaxes.o Encouragingeffectiveresearchanddevelopment.

OpportunityBrexit

• NorthernIreland'sprinciplefocus,onceArticle50istriggered,mustbeontradingmoreeffectivelyaroundtheglobe,helpingcompaniestogrowandattractingFDI,ratherthanonreplacingEUfundsormaintainingpublicspending.

• BrexitisanopportunitytotransformattitudesinNorthernIreland.Theeconomycangenuinelybecomethemainfocusofpublicpolicy.NorthernIrelandwillhavelittlechoicebuttocompeteeffectivelywiththerestoftheworld,ifwewishtoprosperoutsidetheEU.

Sovereignty,theborderandtheconstitutionConfidentandoutwardlooking

• WithapositiveapproachtoBrexit,NorthernIrelandhasthechancetoplayanenhancedrolewithinaUnitedKingdomwithgreaterindependenceofaction,withthepotentialtogrowoureconomyandbuildaninclusivesociety.

TheIrishborder• ThetwogovernmentsalreadycollaborateextensivelyonimmigrationandBrexit

requiresonlyadeepeningofthisexistingcollaboration.Someofthisnecessaryworkisunderwayalready.

• Technologyandautomatedborderclearancesystemshavemadetheneedfor

disruptivecustomschecksredundant,evenwhereso-called'hardborders'exist.

• Theoutstandingpracticalitiesarelikelytoinclude;a. maintainingtheCTAanddeepeningcooperationovermonitoringits

perimeter(aresponsibilitythatthetwogovernmentsshare)b. ensuringthatadequatesystemsareinplacetoenablequickandeasy

customschecks,shouldtheneedarise.ThelatterburdenwillfallmostheavilyontheIrishgovernmentinconjunctionwiththeEuropeanUnion.

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Peacebuildingandcommunityrelations• EUPEACEfundshavebeenguaranteedfortheimmediatefuture.Lookingahead,

particularlybeyond2020,decision-makersinNorthernIrelandwillwanttoconsidertheirspendingprioritiesandthemosteffectivewaysinwhichtousepublicfunds.Itisworthnotingtoothatby2020itwillbemorethan20yearssincetheGoodFridayAgreementandtheargumentoftheneedforEUfundingwillbewearingabitthin.

• INTERREGfundshavealsobeenguaranteedto2020,thoughthesefundsareEurope-wideandshouldnotbeconsideredasexceptional.

• AnysuccessinbuildingmorepositivecommunityrelationsinNorthernIrelandis

groundedonconstructiveattitudesbetweenpeoplehere,theeffortsofthetwogovernmentsandanimprovedrelationshipbetweentheUKandtheRepublicofIreland,ratherthancommonmembershipoftheEU.AlltheconditionsareinplacetomaintainthatprojectafterBrexit,andtodeepentherelationshipsthatunderpinit,aswellasculturalandeconomiclinks,sharedrightsandcitizenship,solongasthenecessarypoliticalwillremains.

EuropeanLaw

• TheOFMDFM's'PreliminaryAnalysis'raisesthepossibilitythata"significantworkload"willberequiredtodisentangletheNIstatutebook.NorthernIrelandpolicymakerswillwanttoweighthatassessmentagainsttheongoingprocessofimplementingEUlegislationbeingconductedbytheUKgovernment.

• TheExecutivewillwishtoreviewtheeffectsofexistingEUlawsandregulations

acrossitsdevolvedcompetencies.TheHouseofCommonslibraryestimatedthat50%oflegislationwith'significanteconomicimpact'derivesfromtheEUandthatisinadditionto'softlaw',includingcommunications,declarations,recommendations,resolutions,statements,guidelinesandspecialreportsfromEUinstitutions,aswellasrulingsfromtheECJ.

• WhiledismantlingEUlawmaybeanadministrativechallenge,itisalsoasignificantopportunityforpolicy-makerstoboosttheeconomyinNorthernIreland.

AgricultureandfishingSustainablefarming

• TheExecutivehasanopportunity,inconjunctionwithHMTreasury,todesignaschemeofsubsidythatistailoredtoNorthernIreland'sparticularneeds,wasteslessmoney,improveefficiencyandbenefitsfarmersmoredirectly.

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• Aspolicy-makersinNorthernIrelandlooktowardthefuture,theywillwishtoconsiderhowtomakefarmssustainableinthelonger-termandimproveefficiencyintheindustry.

• TherearesignificantopportunitiesforNorthernIrelandproducetodisplaceEU

importstotherestoftheUK,particularlytothesoutheastofEngland.

• Inthelongerterm,theadvantagestoconsumersoflowercostimportswillhavetobeweighedagainsttheirimpactonproducers.

• AgricultureisadevolvedpolicyareaandleavingtheEUwillgivelocaldecision-

makersmoreroomformanoeuvre.TheExecutiveislikelytohaveresponsibilityfordistributingsubsidiestofarmers,possiblyusingaschemeofitsowndesign,whereasCAPwassubjecttostrictEUrules.

• Therewillbeopportunitiestolifttheburdenofregulationonfarmers.Oneprominentexampleisintheareaofscientificinnovationandcropyields.TheUFUhasarguedfor,"asimplifiedregulatoryburdenbaseduponscienceandapplyingan'advocacyfirst,regulationsecond'approach".

• TheExecutivewillwishtohelpcreateanopen,sustainableindustry,thatfocusesonitsstrengthsandonproductsthathaveaddedvalue,ratherthanrelyingonsubsidy.Theywillwanttoensurefarminghereiscompetitiveandefficient,whilestrivingforfairnessandbalancealongthefoodsupplychain

FishingDecisionmakerswillwishtoaddressissuesaroundtheIrishSeacodfishery,wherethespecies'recoveryhasnotbeenreflectedinaraisedTAC.

• Policy-makerswillwishtoinvestigatehowtheburdenofregulationthatcurrentlyhampersthecommercialfishingindustrycanbeeased.NorthernIrelandfishermenarelikelytobeconstrainedbysomeregulationsiftheywishtoselltheirproductsintheEUmarketandtheshapeofanytradedealwilldeterminetheoverallroomformanoeuvre.TheExecutivemayhavepowerstochangesomelawsrelatingtotheenvironmentandfishstocks,thatindustryrepresentativesinsistareoutdatedandineffective.

• LeavingtheEUopensupmorepossibilitiesforpolicy-makerstointroduceanewmanagementsystemthatlearnsfromthesuccessesofIceland,theFaroeIslandsandNorway,whenresponsibilityforfishingisreturnedfromBrusselsinthefirstinstancetoWestminsterandthentoStormont.

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ImmigrationOpen,butincontrol

• Iffewerpeople,particularlyfromeasternandcentralEurope,cometoNorthernIrelandtowork,itwillcreatepolicychallengesfortheExecutive,buttherewillalsobebenefitsandopportunities.

• NorthernIrelandandtherestoftheUKwillalwaysbeopentonewarrivals.Our

communityislikelytobecomemorediverse,andthatisastrengthratherthanaweakness.However,outsidetheEU,policymakersmustthinkmeaningfullyabouthowthathappens.

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AFTERTHEREFERENDUM

Postreferendum–thecurrentpoliticalcontext

DuringtheEUreferendumcampaign,anumberofpossiblemodelsforBrexitwereexplored.TheserangedfromremainingamemberoftheEuropeanEconomicArea(EEA),whichprovidestariff-freeaccesstothesinglemarketandcustomsunionandadoptssignificantaspectsofEUlaw(asisthecaseforNorway)–toa'cleanbreak',dismantlingmorethoroughlylegalconstraintsassociatedwiththe'singlemarket'includingthe‘fourfreedoms’offreemovementofpersons,goods,servicesandcapital.5

Oncearticle50istriggered,theshapeofBrexitwillbedeterminedafterthesubsequentnegotiationsbetweenthegovernmentandtheEU.Theprimeministerhasrejectedthepopularterms'hardBrexit'and'softBrexit',insistingthathergoalisafullyindependent,sovereigncountry,enjoying"thekindofmature,cooperativerelationship(withtheEU)thatclosefriendsandalliesenjoy".6ThePrimeMinisterhasoutlinedtheframeworkoftheGovernmentapproachtonegotiations,andthishasbeenfollowedwithaWhitePaper.7

Thegovernment'saspirationistogiveBritishcompanies"maximumfreedom"totradewiththeremainingtwenty-sevencountries,butitwishestosetitsownimmigrationcontrols,withoutinterferencefromtheEU,andendtheEuropeanCourtofJustice'sover-archingjurisdictionintheUK.

ItisprobablethatsomememberstateleadersandtheCommissionPresident,Jean-ClaudeJuncker,willarguethattarifffreeaccesstothesinglemarketisdependentuponacceptingfreemovementofEUworkers.8

ItislikelythattheofficialprocessofwithdrawalwillstartwithinorclosetothetimetablelaidoutbytheUKGovernment,butthedetailsofBrexit,particularlyasregardstrade,maybesubjecttowiderdiscussionandinfluencebyparliamentbeforeformalnegotiationsbegin.9

TheUKisstillinastrongpositiontonegotiateabeneficialtradedealwiththeEuropeanUnion.ItwillbecomethebiggestexternalmarketforEUgoodswhenitleaves,andthetwentysevenotherEUmemberstatescurrentlyexport£61.7billionmoregoodsandservicestotheUKthanweselltotherestoftheEU.1011

5Norway:MissiontotheEUwebsite,TheEuropeanEconomicAreaAgreement.6HouseofCommons'Hansard,Volume616,24October2016.7DepartmentforExitingtheEuropeanUnion,TheUK'sexitfrom,andnewpartnershipwith,theEuropeanUnionWhitePaper,2February2017.8Euractive.comwithReuters,'JunckertellsUK:Nosinglemarketwithoutfreedomofmovement',26July2016.9PeterStewart,HeatherStewart,'KeirStarmer:LabourwillnotblockArticle50butmustknowplan',TheGuardian,7November2016.10RyanBourne.'TheEUJobsMyth',InstituteofEconomicAffairs,March2015.11ONS,ThePinkBook,2015.

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IftheEuropeanUnionrefusestonegotiateafreetradedealwiththeUK,itwillbeacolossalexerciseinself-harm.However,againstabackdropofpoliticalrecriminations,divisionsanduncertaintieswithintheEU,itispossible,thatintheshorttermatleast,sometariffbarriersareapplied.

IrrespectiveoftheprecisetermsunderwhichtheUKleavestheEuropeanUnion,Brexitislikelytocreatethefreedomtomaketradedealsindependentlywiththerestoftheworld.NorthernIreland'seconomicfuturewilldependincreasinglyuponlocalbusinesses'abilitytotradegloballybytakingadvantageofsuchdeals.

Politicaldecision-makershavethechallengeofcreatinganenvironmentwheretheopportunitiesofwithdrawingfromtheEUcanbeexploited,whilealsominimisingtheeffectsofanypotentialthreatstooureconomyandsociety.

NorthernIreland–theopportunitytoflourishinpost-BrexitUK

ThereferendumresultedinanunexpectedbutcleardecisionthattheUKwillleavetheEU.AlthoughthedetailsofBrexitareuncertain,andthereisscopetopromotethetypeofsettlementthatwouldbenefitNorthernIrelandmost,thereislessvalueinrevisitingargumentsfromtheoriginalcampaign.Themostimportantpolicydebateaboutwithdrawal,regionally,willdealwithhowbesttoflourishoutsidetheEUandovercomeanydifficultiesthatleavingmightpresent.

ManyofthekeyissuesaroundBrexitcentreontheeconomyand,inNorthernIreland,theyarelinkedtobroadereconomicchallengesthatpredatethereferendum.TherehavebeenquestionsraisedaboutthepracticalimplicationsoftheislandofIrelandcontainingalandborderbetweentheUnitedKingdomandtheEuropeanUnion.Oddly,littleattentiontothegreaterchallengeoftheprimarydestinationandtraderoutetothecontinentforRepublicofIreland’sexportsandimports,reliesuponaccesstotheUnitedKingdom.ThesehavebeenconnectedtoadiscussionaboutwhetherthependingchangewillaffecttheconstructiverelationshipthattheUKandtheRepublicofIrelandcurrentlyenjoy,ortherelationshipsbetweenallgovernmentsandassembliesacrosstheseislands–thoughtherehasbeenlittleindicationofwhytheseshouldorwoulddeteriorate.

TheExecutive'seconomicstrategyhasalreadyidentifiedtheneedforNorthernIrelandto"increaseourexportfocus…anddiversifyintonewmarkets".12Buildinganopen,responsiveeconomyiscentraltocreatingaprosperousregionwithinanindependentUK.ThepotentialtoreformNorthernIreland'seconomysuccessfullywillbe,insomerespects,greateroutsidetheEU.13

12NorthernIrelandExecutive,EconomicStrategy,2012.13GrahamBrownlow,'OpportunityBrexit?InstitutionalEconomicImplicationsforNorthernIreland',NorthernIrelandAssemblyKnowledgeExchangeSeminarSeries,2016

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BoththeBritishandIrishgovernmentsaredeterminedthatthefrontierbetweentheirtwocountrieswillremainopenandlowkey.Muchofthecommentaryinthisareastemsfrommisunderstandingsabouthowmoderncustomscontrolsandimmigrationlawsareapplied.Thegreatestchallengesarelikelytobepracticalmattersoftechnologyandprotocol,ratherthanpolicy–thataretheresponsibilityofthegovernmentsinDublinandLondon,ratherthantheNorthernIrelandExecutive.

TheSupremeCourtrecentlyrejectedtheideathattheGoodFridayAgreement,whichunderpinsthepower-sharingsettlementatStormont,isdependentuponmembershipoftheEU.NorthernIreland'sconstitutionalpositionisnotaffectedmateriallybytheUK'sdecisiontoleavetheEuropeanUnionand,withconstructiveinputfromtheBritishandIrishgovernments,thereisnoreasonwhyanyprogresscannotbemaintained.14

SomeaspectsofBrexitarestilluncertainanditiseasytouseuncertaintytoconjureupfrighteningscenarios.However,theEuropeanUnionisalsobesetwithuncertainties,asitstruggleswithanunprecedentedinfluxofrefugees,itsownpoliticaldivisionsandcrisisintheEurozone.AlloftheEU'sinternalproblemsandcontradictionswillremainordeepen,aftertheUKleaves.15

InNorthernIreland,oureconomyhasstagnatedformanydecadesbecauseofanover-relianceonthepublicsectorandthereispoliticalconsensusthatitcanonlybeinvigoratedbyprivatesectorgrowth,drivenbyexportsandinwardinvestment.BrexitwillbringabouttransformationalchangeacrosstheUK.ForNorthernIreland'spolicymakers,itcouldbeacatalysttolookoutwardtotheworldandcreateasuccessfulregionthattradesandexchangesideasglobally.

14RTE,'Govtswant"seamless,frictionlessborderafterBrexit,saysMay',30January2017.15GlobalBritain,Secure,PeacefulandProsperous–WhyNorthernIrelandwouldbebetterleavingtheEU,2016

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BUSINESSANDTHEECONOMY

AfreshstartforNorthernIreland'seconomy

TheoutgoingNorthernIrelandExecutiveconsultedpreviouslyonitsdraftProgrammeforGovernment(PfG)for2016-2021.Inlinewithpreviousdocuments,itplacesheavyemphasisontheeconomy,listingatthetopofits'framework'ofdesiredoutcomes,prosperity"throughastrong,competitive,regionallybalancedeconomy".Successinachievingthisoutcomewillbeindicatedbyincreasedprivatesectoractivity,risingexternalsalesandanumberofothermeasurements.16

TheExecutiveidentifiedthecompetitivenessofNorthernIreland'seconomyasoneofthemainissuesitfacedduringitsmandate,highlightinginparticulartheneedtostrengthen'exportledgrowth'.

"Itisimportantthatcompaniescandiversifythemarketstowhichtheyexportbyidentifyingnewemerginganddevelopedmarketsandtakingtheopportunitiestocapitaliseonthese.Researchshowsthatexportingcompaniesarelarger,moreproductive,payhigherwagesandaremorecapitalintensivethanthosewhichfocusmainlyondomesticmarkets."

Currently,manufacturingdominatessalesexternaltoNorthernIreland.TheUnitedStatescomprisesourbiggestmarketoutsideGreatBritainandIreland,with9.5%ofexternalsales,followedbyCanada(6.3%).Duringtheperiod2001-2011,thegreatestgrowthinexports,albeitbypercentagechangeinvalue,layinemergingmarketslikeKuwait(+1839%),SaudiArabia(+1197%),Russia(+726%),Thailand(+524%)andChina(+408%),inconjunctionwiththemoreestablishedAustralianmarket(+975%).17

Theneedforanimble,openeconomy,drivenbyagrowingprivatesector,isrecognisedbypolicymakersandeconomists.TheExecutiveacknowledgedthat,toachievethisoutcome,NorthernIrelandmustbecomemorecompetitiveeconomicallyandthatourbusinessesmustselltoawiderarrayofmarkets,particularlyemergingmarketsoutsidetheEU.Amongitskeyaimsinitsdraftindustrialstrategytobuildasuccessful"Economy2030"inNorthernIreland,theDepartmentfortheEconomy(DfE),included"succeedinginglobalmarkets","drivinginclusivesustainablegrowth"and"enhancingeducation,skillsandemployability".18

ThebiggesteconomicchallengesthatwefacepredatetheUK'sdecisiontoleavetheEuropeanUnion,butBrexitputstheneedtoreformtheNorthernIrisheconomyintoevensharperfocus.Decisionmakerswillhavegreaterflexibilityastheylooktotackleeconomicproblems,outsidetheconstraintsofEUregulationslikestateaidlaws,taxrestrictionsandemploymentlegislation.

16NorthernIrelandExecutive,ProgrammeforGovernmentConsultationDocument,2016.17RSMMcClureWatters,ResearchintoGrowingandDiversifyingtheNorthernIrelandExportBase,October201418DfE,Economy2030–aconsultationonanIndustrialStrategyforNorthernIreland,24January2017.

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Sofar,tothepointofobsessionbysomeparticipants,politicaldebatehasfocusedonthepotentialproblemsthatBrexitcouldcreateforoureconomy.TherehasbeenlessdiscussionoftheprospectiveopportunitiesitpresentstotacklesomeofthelongertermeconomicproblemsafflictingNorthernIreland.LeavingtheEUmayprovideanincentivetoremodeloureconomyanditishighlylikelythatBrexitwillmaketheExecutivefreertoprioritiseprivatesectorgrowth.

Anopen,responsiveeconomy

NorthernIreland'sprivatesectorhasgrownatamodestrateanditsemploymentratehasrisen-accordingtothelateststatistics-buttheeconomylagsbehindtherestoftheUKandtheRepublicofIreland.

InitslatestmonthlyupdateforOctober2016,theDfEreportedthatlocaleconomicactivityincreasedby1.6%overthe12monthstoJune2016.19TheoverallUKgrowthratewas1.8%.Theproportionofpeopleofworkingageinemploymentstandsat70.1%inNorthernIreland,comparedto74.5%nationally.20However,thegapislikelytowidenin2017,withaveragegrowthintheUKexpectedtoreach1.1%,whilesomeforecasterssaythatNorthernIrelandwillbarelyavoidrecession,itseconomicactivitygrowingbyjust0.2%.21

Althoughthelegacyofcivildisorderduring'TheTroubles'wasblamedtraditionallyforoursluggisheconomy,commentatorspointincreasinglytounderlyingproblemswithitsstructure.22NorthernIreland'spublicsectoremploysalmostonethirdoftheworkforce.23Disproportionatelyhighpublicspendingandlowproductivitycontributetoacomparativelyuncompetitiveprivatesector.

TheEconomicAdvisoryGroup,(EAG)whichprovidesindependentadvicetotheDfE,publisheditsfirst'competitivenessscorecard'forNorthernIreland,inJuly2016.Acrosselevenmeasurementsdescribedas'pillars'ofcompetitiveness,theEAGratedNorthernIreland'seconomyaboveaverageinjustone.Therewereparticularlypressingproblemsaroundproductivity,businessperformanceandinnovation,researchanddevelopment.24

Consideringtherelativelypoorscoreforbusinessperformance,theEAGnoteswithconcernthat'publicadministration'wastheonlysectorinNorthernIrelandwheregrowthwasmorerapidthanintherestoftheUK.

"ThemajorityofprivatesectorservicesindustrieslaggedtheirUKcounterparts,whichdemonstratesthechallengesintermsofrebalancingtowardalarger,morevibrantprivatesectorinNI".

19DepartmentfortheEconomy,DfEMonthlyEconomicUpdate,October2016.20OfficeforNationalStatistics(ONS),UKLabourMarket,October2016.21PWC,UKEconomicOutlook,July2016.22Editorial,'ANewKindofTrouble',TheEconomist,24January2015.23DfE,QuarterlyEconomicSurvey,June2016.24EAG,CompetitivenessSummary,July2016.

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Althoughdecision-makershaveidentifiedtheneedtorevitaliseNorthernIreland'sprivatesector,publicpolicyhasnotalwaysreflectedthisprioritysufficiently.AnalysingthedraftPfGagainstthelikelyeffectsofleavingtheEU,UniversityofUlstereconomist,GrahamBrownlow,notedthatitsfortytwo'indicators'ofsuccessare"tiltedtowardsthoserequiringadditionalexpenditure"25:thatis,morepublicsectorfunding.

EconomicsuccessafterBrexitwilldependuponNorthernIreland'sabilitytotradewiththerestoftheworld.Oureconomy'sover-relianceonthepublicsector,anditslackofproductivity,couldpotentiallybecomegreaterobstacles,aswelooktocompetemoreeffectivelyinglobalmarkets.

Brexitmeansitistheidealtimetorefocusonthetaskofcreatingacompetitive,openeconomy.Theprimeminister'ssayssheaspirestomaketheUKthe"strongestglobaladvocateforfreemarketsandfreetrade,becausewebelievetheyarethebestwaytoliftpeopleoutofpoverty".Againstthatbackdrop,thereareopportunitiesforNorthernIrelandtoaddressissuesofuncompetitiveness,lowerbarrierstoinvestmentandupskillitsworkforce.

MaintainingtradewiththeEU

TheprospectsofafavourabletradedealwiththeEuropeanUnion,intheeventofBrexit,weredebatedvigorouslyduringthereferendumcampaign,andremainasourceofspeculationaftertheresult.AdealwiththeEUisnotrequiredtoensure'access'tothesinglemarket,buttheUnioncouldchoosetolevytariffsongoodsitimportsfromtheUK,iftheUKleavesthecustomsunion.Similarly,theUnitedKingdomwillbefreetosetitsowntariffs,outsidetheconstraintsoftheEUcustomsbloc.

TheUKretainsastrongnegotiatingposition,becauseitimportssubstantiallymoregoodsfromtherestoftheEUthanitexportsintheotherdirection(some£61.7billion).26However,therearelegitimateconcernsthatreachingafreetradeagreementmightprovedifficultortime-consuming.AprospectivedealcanbediscussedduringthetwoyearsofnegotiationsthattakeplaceafterArticle50isinvoked,butitwillrequireratificationbyallmemberstates,ifitaffectscertainareasofpolicy.27

Thethink-tankCivitashascalculatedlikelytariffcosts,weretheUKtoleavetheEU,withoutatradedeal.Britishexporterswouldfaceapotentialimpactofsome£5.2billionongoodsbeingsoldtotheEuropeanUnion,whereasEUexporterswouldface£12.9billionintariffsforgoodssoldtotheUnitedKingdom.FranceandGermanywouldbeparticularlyadverselyaffected,while22outof27remainingstateswouldpaymoretariffstotheUKthantheyreceiveinreturn.28

25Ibid.26ONS,PinkBook,2015.27RaoulRuparel,'ThemechanicsofleavingtheEU–explainingArticle50',OpenEurope,February2015.28Civitas,PotentialPost-BrexitTariffCostsforBritishTrade,October2016.

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IftheUKweretoleavetheEUCustomsUnion,importedgoodswouldnotbesubjecttothecommonexternaltariff,whichcouldmakeimportscheaper,butmayrequireexporterstotheEUtocomplywithcomplicatedRulesofOriginregulations.

SomecommentatorsarguethatNorthernIrelandwillsufferdisproportionatelyiftheUKfailstosecureanagreementfortarifffreetradewiththesinglemarket,becauseNorthernIrelandhasaland-borderwithanotherEUmemberstate.Some16.4%ofexternalsalesaredestinedfortheRepublicofIreland,whichmakesitoursecondlargestexternalmarket,thoughthisnumberisdwarfedbythe55.5%ofexportsdestinedforGreatBritain.29IftariffsareintroducedongoodsimportedtotheUK,localexportersmayhaveanopportunitytodisplaceimportstoGreatBritain,andinparticulartheSouthEastofEngland,withimportsfromNorthernIreland.

Laterinthisdocument,theprospectsofmaintainingaconstructivepartnershipwiththeRepublicareconsideredingreaterdetail.ItisnotedthatboththeBritishandIrishgovernmentsarecommittedtominimisingtheimpactofaborderbetweentheUKandtheEUonthisisland,andthatthepeaceagreementsherearegroundedonsecure,long-termrelationships.

CurrentlinkswiththeRepublicofIreland,basedoncommonownership,geographyandculturewillremainwhentheUKleavestheEU.Tariffsarepossible,thoughtheireffectswouldbesmallincomparisontofactorssuchasfluctuationsincurrencywheretheEuro-Sterlingratehasvariedover19%inthelastyear.Thesinglemarketalsoinvolvesnon-tariffbarriers,likeproductstandardsandregulations,butthesewillbemetbymostindustriesinitially,eventhoughtheUKmaysubsequentlydecidetosetrequirementsthatdivergefromthoseoftheEU.Themostsuccessfulcompaniesarealreadyaccustomedtomeetingdifferentstandardsindifferentmarkets.

EducationandscientificresearcharebothvitaltotheeconomyandsomeuniversitieshaveexpressedanxietythatresearchfundingmaybejeopardisedbyBrexit.Thegovernmenteasedtheseanxietiesby"underwriting"theseEUfundingstreams,likeHorizon2020.30ThePrimeMinisterhasstressedtheimportanceofremaininginresearchcollaborationfieldswhich,althoughtheyareoftenrunbytheEU,donotrestrictaccesstoinstitutionsinEUmemberstates.

BusinessesinsomesectorsinNorthernIreland,likehospitality,socialcareandfoodprocessing,aremostconcernedthattheywillbeunabletorecruitenoughstaff,iffreemovementofworkersbetweentheEUandtheUKisrestricted,afterBrexit.TheseissuesarenotuniquetoNorthernIreland.Forexample,thereareconcernsabouttheimpactontheNHSnationallyandonfruitandveggrowersintheSouthEastofEngland.Employershavealreadybeenobligedtoraisewagesforthistypeofemployment,duetothegovernment's'livingwage'policyandfurtherincreasesareplanned.31

29NorthernIrelandExecutive,EconomicStrategy,2012.30JohnMorgan,'Treasurytoguaranteepost-Brexitfundingforresearchprojects',TimesHigherEducation,13August2016.31TheNationalLivingWagewebsite.

18

Policy-makersinNorthernIrelandmayarguethatmaintainingcompanies'accesstolabourfromeasternandcentralEurope,orelsewhere,shouldbeahighpriorityforthegovernment,whenitnegotiateswiththeEuropeanCommission.TheNorthernIrelandFoodandDrinkAssociationhassuggestedthatresponsibilityforsettingregionalmigranttargetsshouldbedevolvedtoStormont,forinstance.32Theprimeministerhasemphasised,however,thatshewantstocontrolimmigrationintheaftermathofBrexit.Itseemsunlikelythatthegovernmentwillacceptadealincludingthefreemovementofworkers,becauseitbelievesthatconcernaboutimmigrationinfluencedtheresultofthereferendum.33

TheExecutivehastheoptiontofocusonskillsandeducationforNorthernIreland'sworkforce,ratherthanover-focussingonmaintainingtheflowofmigrantlabour,anapproachthatcomplementstheDFE'Economy2030'document'semphasisonimprovingcompetitiveness.Itcouldcreateopportunitiestoreachpeoplewhohavebecomeeconomicallyinactive.CurrentratesofinactivityaresubstantiallyhigherinNorthernIrelandthanintheUKasawhole(21.5%).34

Itmaynotnecessarilybeeasytoreplacetheseworkerswithpeoplewhobecomeunemployedoverthelongerterm,butitcouldprovidetheExecutivewithanothertooltotackleeconomicinactivity,alongsideastrategyaddressingotherfactorslikedependencyandacultureofjoblessness.Anyinitiativeofthistypewouldbemosteffectiveifpublicagenciesworkcloselywithpartnersfromtheindustriesmostcloselyaffected.

BuildinglinkswithmarketsoutsidetheEU

TheExecutivehasidentifiedthateconomicsuccessforNorthernIrelanddependsuponbusinessesexportingmoregoodstoamorediverserangeofmarkets.OurexportstoAsia,RussiaandAustralasiaaregrowinginrelativeimportance.35Meanwhile,theEU,andparticularlytheeurozone,isexperiencinglowratesofeconomicgrowth,comparedtotherestoftheworld.36

ThreeoftheNIExecutive'sfour'internationaloutreach'operationsarealreadysituatedoutsidetheEU.TheseincludetheNorthernIrelandBureauinNorthAmerica,whichhasofficesinNewYorkandWashingtonDC,andtheNorthernIrelandBureauinChina.37AnewemphasisontrademaymakeitworthwhileinvestigatingmovingtheBrusselsofficetoGermany,oropeningnewoutreachoperationsintargetmarketslikeDubaiorBahrainasasalesposttotheMiddleandNearEast,SingaporeasasalesposttotheFarEast,orperhapsBraziltoSouthAmerica.

32NIFDA,Brexit:ChallengesandOpportunitiesforNorthernIrelandFoodandDrink,November2016.33PeterDominiczak,'TheresaMaysaysDonaldTrump'svictoryshowswhyBritainneedstocontrolimmigration',DailyTelegraph,14November2016.34DfE,LabourForceSurvey,October2016.35Ibid.36PWC,TheWorldin2015,February2015.37NIBureauwebsite.

19

Thequalityoftradedealswiththerestoftheworldislikelytobeimportant,whenevertheUKleavestheEuropeanUnion.WhiletheEUitselfcomprisesalargemarket,ithasapoorrecordofbrokeringfreetradeagreementswithlargercountriesoutsideitsborders.

IftheUKistobecome"thebiggestglobaladvocate"forfreetrade38,NorthernIrelandcouldhaveunprecedentedaccesstosomeofthefastestgrowingmarketsaroundtheglobe.

TheUKandAustraliahavealreadyformedabilateralTradeWorkingGroup,withaviewtobrokeringadealquicklyafterBrexit.39Despitehisprotectionistrhetoric,thenewpresident-elect,DonaldTrump,wantsBritain'atthefrontofthequeue'foranagreementwiththeUnitedStates.40OneofTrump'skeyRepublicanallies,HouseSpeakerPaulRyan,hasurgedtheadministrationtoopentalkswiththeBritishgovernmentimmediately,aboutanewtradeagreement.41Brexitminister,DavidDavis,believesbilateralagreementscanalsobenegotiatedreasonablyswiftlywithChina,Canada,HongKong,IndiaandSouthKorea.42

ItislikelytobecomeevermoreimportantforNorthernIrelandtohavedeeperlinkswithalltheseeconomies,intheyearsafterweleavetheEU.TheExecutiveconductsitsownoutreachanddelegations,eitherthroughitsofficesorbodieslikeInvestNI,butNorthernIrishcompaniescanalsoaccesstheexistingnetworkofBritishembassiesandotheragencies,andparticipateinnationalinitiativessuchasExportingisGREAT.go.uk.

Businesseswillincreasinglyrelyuponeffectivelocalsignpostingofany'tradepush'bytheUKgovernment,afterBrexittakesplace.

NorthernIreland'seconomyisdominatedoverwhelminglybysmallandmediumsizedenterprises(SMEs),Thesectorcontributes70%ofprivatesectorturnoverandover75%ofprivatesectoremployment.43SMEsconfrontparticulardifficultiesconformingtotradingregulationsinexternalmarkets.44YetNorthernIrelandwillbedependentuponthesecompaniesexportinggoodsandgrowing.

Manyofthechallengesinvolvedinsellingtotherestoftheworldandattractinginwardinvestment,afterweleavetheEU,arefamiliaralready.

• Restructuringtheeconomysothatitfavoursavibrantprivatesectorratherthananunproductivepublicsector.

• Tacklingissuesofuncompetitiveness.• Providingcompanieswiththeskillstheyrequire.• HelpingSMEsgrowandaccessthehelptheyneed.• Improvingproficiencyinforeignlanguages.

38Ibid.39SteveCannane,'AustraliaandUKtakefirststeptopost-Brexitfreetradedeal',ABCNews,6September2016.40TheLawyer,'PresidentTrump:WillUKbusinessbebackofthequeue?',TheLawyer.com,9November2016.41KarounDemirjian,'PaulRyanurgesnewtradedealwithBritainafterBrexit',WashingtonPost,29June2016.42PatrickWIntour,'GlobaltradedealswillbebiggeroutsidethanintheEU,saysDavidDavis',TheGuardian,14July2016.43FSB(NorthernIreland),TheImportanceofSmallBusinessestotheNorthernIrelandeconomy',2015.44RSMMcClureWatters,ResearchintoGrowingandDiversifyingtheNorthernIrelandExportBase,October2014.

20

• Fosteringacultureofenterpriseandentrepreneurship.• Offeringlowbusinesstaxes.• Encouragingeffectiveresearchanddevelopment.

Competingandgrowing

NorthernIreland'scompetitorsincludeeconomiesaroundtheglobe,andneighbouringmarketsintheRepublicofIrelandandGreatBritain.TheExecutivehasclaimedsomesuccessinattractingforeigndirectinvestment(FDI)toNorthernIrelandandpowerstocutCorporationTaxwillbedevolvedinthehopeofattractingmorecompanies.4546

ThereissomedisagreementaboutthedegreetowhichlowercorporatetaxratesintherestoftheUKwillaffectStormont'splans.47Likewise,therearesuggestionsthatNorthernIrelandwillbealessattractivedestinationforFDI,outsidetheEuropeanUnion.Ontheotherhand,inapreliminaryanalysisofthelikelyeffectsofBrexit,preparedforOFMDFM,theEuropeanPolicyandCoordinationUnitconcluded,"FDIinto(theRepublicofIreland)couldbeunderminedbyunfairUKcompetition".48Orputanotherway,theUKhasthecapacitytoout-competetheRepublicofIreland,whichisanoddworryforpublicsectorofficialsinaregionoftheUK.

ItisuncertainwhethertheRepubliccanmaintainitslowtaxmodel,aftertheEuropeanCommissionassertedthatDublinhadgiven€13billionillegaltaxbenefitstoApple.49TheCommission'sproposedCommonConsolidatedCorporateTaxBasesupportstheideathattheEUismovingtowardacommoncorporatetaxregime,withmemberstatesenjoyinglessautonomyovertheirtaxaffairs.50Also,oncetheUKleavesthesinglemarkettheexportofturnoverbymultinationalsfromtheUKtobetaxedintheRepublicofIrelandwillcease.Thishasbeenestimatedasbeingworth£10billiontotheUKwiththeRepublicofIrelandandLuxembourgthemainbeneficiaries.51

TheeconomistStephenMoore,whoisaninfluentialadvisortoUSPresident-electDonaldTrump,believesthatacutinCorporationTaxcanstillbenefitNorthernIrelandconsiderably."Capitalflowstowhereitistreatedmostkindly.Taxesaren'ttheonlything,buttheydomatter",hetoldBBCRadioUlster.52

45ClareWeir,'ForeignInvestmentinNorthernIrelandrises41%inoneyear',BelfastTelegraph,24July2013.46CorporationTaxAct(NorthernIreland)2015.47JamesTapsfield,'FuriousBrixeteershitoutatTheresaMayfor'fuelinguncertainty'aftershehintsattransitionalEUdealtoappeasecity',DailyMail,21November2016.48EuropeanPolicyandCoordinationUnit(OFMDFM),PreliminaryanalysisontheimpactofaUKReferendumonitsmembershipoftheEuropeanUnion,May2015.49EuropeanCommissionPressRelease,'StateAid:IrelandgaveillegalbenefitstoAppleworthupto€13billion',30August2016.50EuropeanCommission,CommonConsolidatedCorporateTaxBase.51TheUK’slosttaxandGDPrevenues,BrexitPaper#4,GlobalBritain,6December201652JohnCampbell,'DonaldTrump'splantocutUScorporationtax'couldimpactonNorthernIrelandjobs',BBCwebsite,15November2016.

21

TheHouseofCommons'NorthernIrelandAffairsCommitteefoundthatleavingtheEUcouldgivethegovernmentandtheNorthernIrelandExecutiveflexibilitytopursuepoliciesthatmakeNorthernIrelandmoreattractivetoforeigninvestment.

"EUrulespreventtheUKGovernmentfromsettingalowerrateofCorporationTaxinNorthernIreland.Theresponsibilityhashadtobedevolved,whichhastakentimetoachieve,whereasiftheratehadbeenlowered,say,fiveyearsago,muchmoreFDIcouldpotentiallyhavebeenattractedtoNorthernIrelandbynow.Furthermore,EUrulespreventtheUKgovernmentfromloweringtherateofVATfortourisminNorthernIreland,whichisanothertaxthatcomparesunfavourablywiththerateintheRepublicofIreland,wheretourismappearstohavebeenboostedbytheloweringoftheirrateofVAT."53

Inaddition,therewillbemorepotentialtoaddresslong-standingissueswiththecompetitivenessofthelabourmarketinNorthernIrelandandenergyregulation.Likewise,outsideEUstateaidlaws,policy-makersarefreertoprovideassistancetocompaniesinareasofparticulareconomicimportance,likeresearchanddevelopment.54

OpportunityBrexit

NorthernIrelandmayencounterchallengesastheUKleavestheEU,butmanyofthesechallengesexistedbeforethereferendumandthereareopportunitiestoprosperafterBrexitandprepareforitsimplementation.Theseopportunitiescoincidewithpolicy-makers'statedobjectivesofdrivingprivatesectorgrowthinanopen,competitiveeconomy,thatisresponsivetotherequirementsofbusinessesandpotentialinvestors.

NorthernIreland'sfocus,onceArticle50istriggered,neednotbeonreplacingEUfundsormaintainingpublicspending,butratherontradingmoreeffectivelyaroundtheglobe,helpingcompaniestogrowandattractingFDI.55

Freemarketsareoftenaccompaniedbyfreemovementoflabour,buttheEUlinksthatconcepttofreeaccesstostatebenefitsandarangeofotherentitlements.IftheUKgovernmentrestrictsthenumberofEuropeanUnionmigrantstakinguplowerskilledjobshere,theExecutivehasachancetocombateconomicinactivityinNorthernIrelandandmobilisethelonger-termunemployed.

Ourdecision-makerswillhavenewoptionsaddedtotheexistingleversavailabletoattractinvestment,incentivisegrowthandrewardinnovation.NorthernIrelandwillbeoutsiderestrictiveEUlawsaroundemployment,state-aid,competitionandproductregulation.TheUKwilllaunchapost-Brexittradepush,thatourcompaniescanusetotheiradvantage.

53HouseofCommons–NorthernIrelandAffairsCommittee,NorthernIrelandandtheEUreferendum,25May2016.54PinsentMasons/CBI/MorganMcManus,ComparativeanalysisofemploymentlawinGreatBritain,NorthernIrelandandtheRepublicofIreland,February2013.55Ibid.

22

TherewillberoughlytwoorthreeyearstoprepareforleavingtheEUanditisimportanttousethatwindoweffectively.

Mostimportantly,BrexitisanopportunitytotransformattitudesinNorthernIreland.Theeconomycangenuinelybecomethemainfocusofpublicpolicy,withthedecisionmakingarchitectureandcapacitytomatch.Ourfocuscanshiftfrommaximisingpublicspending,toensuringthatthemoneywespendistargetedeffectively.ToprosperoutsidetheEU,NorthernIrelandwillhavelittlechoicebuttocompeteeffectivelywiththerestoftheworld.

23

SOVEREIGNTY,THEBORDERANDTHECONSTITUTION

Aconfident,outward-lookingNorthernIreland,withinanindependentUK,afterBrexit

NorthernIrelandisarelativelysmallpartoftheUK,butinavastEuropeanUnionofhalfabillioncitizens,withtenuouslyaccountableinstitutions,itsvoiceistiny.AsaconstituencyoftheEuropeanParliament,weelect3MEPstoabodycomprising751members.Incontrast,theSecretaryofStateforNorthernIrelandsitsinthecabinet,whileNorthernIrelandreturns18MPstothe650memberHouseofCommons,exercisingconsiderableinfluence,especiallyasUKgovernmentsoftenhavesmallmajorities.PowersoverarangeofpolicyareasaredevolvedtotheNorthernIrelandAssembly.56

Thereisbroadpoliticalagreementthatoureconomicprospectscanonlybeimprovedbyprivatesectorgrowth,stimulatedbyexportsandaglobaloutlook.57Progresstowardthatgoalispatchy,butBrexitoffersanincentivetoplayanenhancedrolewithinaUnitedKingdomthatdismantlestradebarrierswitheconomiesaroundtheworld.58

AftertheUKleavestheEU,theAssemblywillfinditselfwithgreaterindependenceoverareasofdevolvedpolicythatarecurrentlyaffectedbyEUrules.59ForinstancethefreedomtoreformemploymentlawcanbeparticularlyvaluabletoNorthernIreland,whichrankspoorlyintheOECD'sleaguetableforemploymentflexibilityandsuffersfromtheeffectsofanoverbearingpublicsector.60TheExecutivewillhavegreaterflexibilityoverindustrialandagriculturalpolicy.TheUK,andNorthernIreland,willoperateoutsidetheconstraintsoftheECJandthebodyofexistingEUlawwillbecapableofrepealandamendment.

ForthetimebeingtheRepublicofIrelandwillremainamemberoftheEuropeanUnion,afterNorthernIrelandleaves.Thismaymeansomepracticaladjustments,althoughitneednotaffectcloselinksoffriendship,cultureandtrade,orcommunityrelationsacrossourislands.

WithapositiveapproachtoBrexit,NorthernIrelandhasthechancetoplayedanenhancedrolewithinaUKwithgreaterindependenceofaction,withthepotentialtogrowoureconomyandbuildaninclusivesociety.

56LeaveEU/GlobalBritain,Secure,PeacefulandProsperous:WhyNorthernIrelandwouldbebetterleavingtheEU,May2016.57NorthernIrelandExecutive,ProgrammeforGovernment2011-2015.58Ibid.59NorthernIrelandAct1998,c.47.NorthernIrelandStAndrewsAgreementAct2006,c.53.60OECD,OECDGlobalCompetitivenessIndex,2014-2015.

24

TheIrishborder

Muchdiscussion,locally,hasfocussedontheprospectivenewlandborderbetweenNorthernIrelandandtheEuropeanUnion.Moreproperly,theissueathandistheentireinternationalfrontierbetweentheUnitedKingdomandtheRepublicofIreland.TheIrishlandborderispartofthatfrontier,whichalsoincludesairportsandseaports.TheUKisamajorpointofentryforgoodsdestinedforIrelandandtheUKis,byaconsiderabledistance,thebiggestpointoforiginforIrishimports.61ItisalsoclaimedthatthreequartersofIrishexportstotheEUandBritainpassalongtheM4motorwayinWales.62

Policy-makersinNorthernIrelandwillhaveacloseinterestinhowthesequestionsareresolved,buttheyaremattersultimatelyforthegovernmentsinLondonandDublin.

ConcernsaboutBrexitandtheIrishbordercentrebroadlyontwoquestions:

1)WhethertheCommonTravelAreabetweentheUKandtheRepublicofIrelandcanbemaintainedaftertheUKleavestheEU.

2)Whetherphysicalbordercontrols,includingcustomschecksandimmigrationchecks,willberequiredaftertheUKleavestheEU.

TheCommonTravelArea(CTA)allowspassportfreetravelacrosstheUKandIreland,aswellastheChannelIslandsandtheIsleofMan,forBritishandIrishcitizens.Therearesomerestrictionsfornon-CTAnationals,whomusthaveimmigrationpermissionforthecountrytheywishtoenter,butjourneyswithintheAreaaresubjectcurrentlytominimalimmigrationchecks.63TheIrishgovernmentreservestherighttocheckdocumentsforpeoplewhocomeintoitscountry,althoughtheCTAalsoentailscooperationonimmigrationbybothstates,asevidencedbytheprotocolsignedin2011.

TheCommonTravelAreaisnotprovidedforspecificallyinUKorIrishlaw,butitisreferencedinlegislationandrecognisedinanumberofbilateralinternationalagreementsbetweenthetwocountries.64ItisunderwrittenbytheIrelandAct1949,wheretheUKunilaterallyprovides'non-foreign'statustoallIrishcitizens,whoareessentiallyacceptedasBritishinallbutnationality.

BoththeBritishandIrishgovernmentshaveaffirmedtheircommitmenttokeeptheCTA.TheRepublic'sprimeminister,EndaKenny,saidthathisgovernmentwoulddoitsutmost"tomaintaintheCommonTravelAreaandminimisepossibledisruptionstotheflowofpeople,goodsandservicesbetweentheseislands".TheresaMaynotedthat,"thereisastrongwillonbothsidestopreserveit(theCTA)".65

61ObservatoryofEconomicComplexity(OEC)website62BBCNews,'WelshUKIPpoliticianwantsIrelandtopayforroad',29November2016.63HouseofCommonsLibrary,BriefingPaper7661,15July2016.64HouseofLordsLibraryNote,LeavingtheEuropeanUnion:TheUKandIreland,17November2016.65PadraicHalpin,'IrelandwilldoutmosttokeepBritishcommontravelarea:PM',Reuters,24June2016.

25

ThereisnoobviouslegalimpedimenttomaintainingtheCTA,whentheUKleavestheEuropeanUnion.66EUlawalreadyrecognisesthetwocountries'rightstooperatethearrangementoutsidetheSchengenAgreement,whichgovernsfreedomofmovementacrossmuchoftherestoftheEuropeanUnionandbeyond.67TherehavebeensuggestionsthattheEUmayhaveauthoritytointerfere,but,thereisaperceptionthattheCTAaffectssensitiveissuesofidentityandnationalitycentraltothepeaceaccordinNorthernIreland,somemberstateswouldsurelybeloathetodoso.68

NeithergovernmentwantstoendtheCTAand,likewise,thereisnoappetiteforextensivephysicalcontrolsattheborder.The"borderofthepast"thatmanypeopleenvisagefeaturedsecurityarrangementsinresponsetothethreatofterrorismduring'TheTroubles'.TheIrishTaoiseach,EndaKenny,saidthathisgovernment"doesnotwanttoseeaEuropeanborderinternallyontheislandofIreland"and,evenlessambiguously,"therewillnotbeahardborderfromDundalktoDerry".69TheBritishprimeminister,TheresaMay,assertedthat"therewillbenoreturntothebordersofthepast",whileBrexitminister,DavidDavis,confirmedgovernmentministers"donotwantahardborder".70

Concernsaroundbordercontrolsrelatebothtothemovementofpeopleandthemovementofgoods.Ithasbeensuggestedthatcontrolswillbeneededtopreventimmigrants,particularlyEuropeanUnionimmigrants,fromenteringtheUKviatheRepublicofIreland.Thisconcernisoverstated.ItishighlyunlikelythatEUcitizenswillrequirevisastoentertheUnitedKingdomandtheirrightstoworkorclaimbenefitswillbeassessedlater,whentheyapplyforemploymentorattempttogainaNationalInsurancenumber.71

Allmigrants,includingthosefromtheEU,alreadypassthroughUKorRepublicofIrelandborderchecksbeforeenteringtheUK.NeithercountryispartoftheSchengenborderlesstravelareaandIrelandhasoptedoutoftheEuropeanUnion'scommonimmigrationpolicy.ThismeansthirdcountrynationalswithoutarightofresidenceintheRepublicwillnotbeabletoentertheUKeither.72TherealityisthatwhiletheRepublicofIrelandborderandentrypointssuchasDublinactastheUK’sborder–theUK’sborder,includingentrypointssuchasHeathrow,Gatwick,ManchesterandEdinburgh,alsoactastheRepublic’sborder.Nopartyhasaninterestinunderminingthisarrangement.

66ProfessorBernardRyan,ILPAEUReferendumPositionPapers8:TheimplicationsofUKwithdrawalforimmigrationpolicyandnationalitylaw:Irishaspects,18May2016.67RFEU,Protocol20.68NorthernIrelandAffairsCommittee,NorthernIrelandandtheEUreferendum,HC48,26May2016.69BBCNews,‘Brexit:‘NoHardIrishBorder’,saysTaoiseachEndaKenny’,22July2016.70DepartmentforExitingtheEuropeanUnion,‘DavidDavisOp-Ed:IWillEnsurethatNorthernIreland’sVoiceisHeardinNegotiations’,1September2016.71JohnCampbell,'Brexit:Employers'willbearmigrationcosts'sayexperts',BBCNews,3November2016.72LeaveEU/GlobalBritain,SecurePeacefulandProsperous:WhyNorthernIrelandwouldbebetterleavingtheEU,May2016.

26

IthasbeenreportedthatthegovernmentintendstomoveaspectsofBritishimmigrationcontroltoIreland.73However,muchofthearchitectureofapost-BrexitarrangementonimmigrationisalreadypartoftheCommonTravelArea.TheSecretaryofStateforNorthernIreland,JamesBrokenshire,hasspokenaboutstrengthening"theexternalborderoftheCTA",aftertheUKleavestheEU.Asrecentlyas2011,IrelandandtheUKsignedaprotocol"tofurthersecurethecommontravelarea".74

ThetwogovernmentsalreadycollaborateextensivelyonimmigrationandBrexitrequiresonlyadeepeningofthisexistingcollaboration.Someofthisnecessaryworkisalreadyunderway.Thisprogrammeincludes:investmentinborderprocedures,increaseddatasharingtoinformimmigrationandbordersecuritydecisions,passengerdatasystemsenablingthecollectionandprocessingofadvancepassengerinformationandharmonisedvisaprocesses.75

Ithasalsobeensuggestedthattime-consumingcustomscontrolswillbeimplementedattheIrishborder.Inpart,thisarisesfromanout-datedviewofhowgoodsaremovedinthemodernworldandtheelectronictrailthatcreates.Technologyandautomatedborderclearancesystemshavemadetheneedfordisruptiveborderchecksredundant,evenwhereso-called'hardborders'exist.76

ItislikelythattheUKwillcuttariffswhenitleavestheEuropeanUnion,bearinginmindthegovernment'semphasisonglobaltrade.ThatwouldleavethepressureforstringentcustomscontrolscomingfromtheEU,andit,inturn,wouldbeartheconsequentcosts.Theissuesaroundupdatingtechnologyandimplementingsuitablecontrolsarelikelytofall,predominantly,ontheRepublicofIreland.IntheFAQssectionofits'InitialContingencyFramework'forBrexit,theIrishgovernmentsays,"ItshouldbenotedthatthecustomsregimebetweentheEUandsomeotherthirdcountriesdoesnot...involvefixedborderpostsbutalessdisruptivemixtureofelectronicfilingandrandomphysicalchecks".

Asonecommentatornotes,theimpositionofaphysicallandborderisboth"impracticableaswellasunpalatable".77Theoutstandingpracticalitiesarelikelytoinclude,maintainingtheCTAanddeepeningcooperationovermonitoringitsperimeter(aresponsibilitythatthetwogovernmentsshare)andensuringthatadequatesystemsareinplacetoenablequickandeasycustomschecks,shouldtheneedarise.ThelatterburdenwillfallmostheavilyontheIrishgovernmentinconjunctionwiththeEuropeanUnion.

73HenryMcDonald,‘BritaintoPushPost-BrexitUKImmigrationControlsBacktoIrishBorder’,Guardian,9October2016.74DepartmentofJusticeandEquality,'IrelandUKaccordtofurthersecuretheCommonTravelArea',20December2011.75HouseofLordsLibraryNote,LeavingtheEU:TheUKandIreland,2016.76RichardNorth,'Borderingontheridiculous',EUReferendumBlog,5April2016.77DanielHannan,'MyoneworrywithBrexit,ifwemessthingsup,wecouldharmrelationshipswithIreland',ConservativeHome,29September2016.

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Crossborderrelationships

RelationshipsbetweentheUKandtheRepublicofIrelandarerobustandarelikelytoremainso,aftertheUKleavestheEU.TheGoodFridayAgreement,whichre-establisheddevolvedgovernmentinNorthernIreland,islodgedasaninternationaltreatybetweenthetwonationstates.TheEuropeanUnionisnotasignatoryandtheHighCourtrecentlyrejectedtheargumentthatBrexitwillunderminetheaccord.78

TheagreementconfirmsrightsofpeopleinNorthernIrelandtotakebothBritishandIrishcitizenshipthatwerealreadyenshrinedinUKandIrelandlaws.TheprinciplethattheRepublicofIreland"isnotaforeigncountry"wassetoutintheIrelandAct1949,withtheresultthatitscitizensaretreatedexactlythesameasBritishcitizenswithintheUK.TheserightsunderpintheCTAandincludetherighttovoteinWestminsterelectionsandtherighttoresideintheUnitedKingdom.ThereisnoserioussuggestionthatthisspecialstatuswillbereviewedafterBrexitisimplemented.

SomecommentatorshavespeculatedthatpeaceandsecurityinNorthernIrelandcouldbeunderminedbyleavingtheEU.However,theevidenceforsuchacontentionisflimsy.BothgovernmentsareadamantthatkeepingNorthernIrelandpeacefulandsecureistheirkeypriority,intermsofbilateralrelations.MrsMaystates:

"ThepeaceprocesshasultimatelybeensuccessfulbecauseofthecommitmentofsuccessiveUKandIrishgovernmentsandthewillingnessofpoliticiansandthecommunitiestheyrepresenttoputasidepastdifferencessufficientlytoallowNorthernIrelandtobegovernedpeacefully.ItisclearthattherelationshipsthatboththeNorthernIrelandExecutiveandtheUKGovernmenthavewiththeIrishGovernmentcontinuetobeverystrong,andweexpectthatwouldcontinuetobethecaseregardlessoftheoutcomeofthereferendum."79

Ireland'sAmbassadortotheUnitedKingdom,DanMulhall,hasspokenaboutretaining,"alloftheadvantagesderivingfromthecurrentpositivestateofIrish-BritishandNorth-Southrelations".80

TheclosefriendshipbetweentheUKandtheRepublicofIreland,onanEast-WestaxisbetweenLondonandDublin,andonaNorth-SouthaxisbetweenBelfastandDublin,hasbeenapositivefeatureofrecentyears.Itisbuiltuponstrongfoundationsofinterdependence,unbreakableculturallinksandthecommonchallengespresentedbyoursharedhistory.Theserelationshipsarelikelyonlytodeepenintheforseeablefuture.81

78VincentBoland,'JudgerulesthatArticle50doesnotrequireparliamentaryapproval',FinancialTimes,28October2016.79HouseofLords'LibraryNote,LeavingtheEuropeanUnion:TheUKandIreland,17November2016.80AmbassadorDanMulhall,'ImplicationsforIrelandofaBritishexitfromtheEU',EmbassyofIreland,TheAmbassador'sBlog,3July2015.81LeaveEU/GlobalBritain,Securepeacefulandprosperous:WhyNorthernIrelandwouldbebetterleavingtheEU,May2016.

28

Peacebuildingandcommunityrelations

TheBelfastAgreement/GoodFridayAgreementsetsoutthebasisforpower-sharinginNorthernIrelandandformalisesvariousentitlementsrelatingtocultureandcitizenship.ThesewillremainintactaftertheUKleavestheEuropeanUnion(seeabove).AlthoughtheideathattheAgreementisincompatiblewithBrexitwasdismissedswiftlybythecourts,moresubstantivequestionshavebeenraisedaroundEUfundingforpeaceinitiatives.82

ThePEACEprogrammesI-IVreleasedmoniesto"reinforceprogresstowardapeacefulandstablesociety".PEACEIVhasearmarked€229millionforapplicantsandapplicationsareproceeding.

INTERREGoffersstructuralfundsto"supportstrategiccooperation"acrosstheIrishborderandwithwesternScotland,andisageneralfundintheEUratherthanspecifictothisregion.Whilethefundhasbeenoftenpromotedinthecontextof‘peace’thishasbeenbyappropriationratherthandesign.ThelatestINTERREGprogrammeincludesanEUcontributionof€240millionbetween2014-20.83

TheTreasuryhasnowguaranteedallstructuralandinvestmentfundingsignedbeforetheAutumnStatementof2016.Thispledgewillcovermostprojectswithinthecurrentstreamsoffunding.84Lookingahead,particularlybeyond2020,decision-makersinNorthernIrelandwillwanttoconsidertheirspendingprioritiesandthemosteffectivewaysinwhichtousepublicfunds.ThelikelihoodofsuccessivestreamsofPEACEfundingcontinuingindefinitely,hadweremainedintheEU,wasnothigh.By2020wewillhavehadover20yearsofpeaceprocessing.

Occasionally,thenotionisfloatedthathumanrightsunderpinningthe'peaceprocess'maybeunderminedbyBrexit.ThisappearstorestonamisplacedbeliefthatmembershipoftheEuropeanConventionofHumanRightsdependsuponmembershipoftheEU.FortysevenEuropeancountriessubscribetotheECHRandtheUKwillremainasignatorywhenitleavestheEuropeanUnion.Speakingbeforethereferendum,NorthernIreland'sAttorneyGeneral,JohnLarkin,suggestedthat"fundamentalrightsandfreedomswouldactuallybeenhancedby...awithdrawal".85

AnysuccessinbuildingmorepositivecommunityrelationsinNorthernIrelandisgroundedonconstructiveattitudesbetweenpeoplehere,theeffortsofthetwogovernmentsandanimprovedrelationshipbetweentheUKandtheRepublicofIreland,ratherthancommonmembershipoftheEU.AlltheconditionsareinplacetomaintainthatprojectafterBrexit,andtodeepentherelationshipsthatunderpinit,aswellasculturalandeconomiclinks,sharedrightsandcitizenship,solongasthenecessarypoliticalwillremains.

82DagmaSchiek,‘WhatDoesthe23JuneMeanforNorthernIrelandSpecifically?LegalPerspectivesNumber2:Peace’,Queen’sUniversityBelfastPublicPolicyBlog,7June2016.83SpecialEUprogrammeswebsite.84BBCNews,'Brexit:EU-fundedprojectsinNorthernIrelandwillbeguaranteed,Treasurysays',13August2016.85SamMcBride,'AttorneyGeneral:Brexitcouldimproverights',NewsLetter,26February2016.

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DismantlingEuropeanLaw

SomeofthemostpotentargumentsforleavingtheEuropeanUnioncentredonthesheervolumeofEUlawsandregulations,theunaccountablenatureoftheirenforcementandtheimmensedifficultyofreviewingorrepealingthe'Acquiscommunautaire',thatcomprisestheentirebodyofBrussels'law.TheUKisnowsettoregaincontrolofitslegalsystem,endingtheoverarchingjurisdictionoftheEuropeanCourtofJustice,andmakingEUlawcapableofrepealandamendment.

InanattempttosimplifytheBrexitprocess,theprimeministerannouncedhergovernment'sintentiontointroduceaGreatRepealBill,enshriningexistingEUlawinUKlawandannullingtheEuropeanCommunitiesAct.Thisprocessentailspracticaldifficulties,becauseoftheimpenetrablelengthoftheAcquis,aswellasthefactthatmanylawsandregulationsapplytointernal,cross-bordermatterswithintheUnion.86

TheOFMDFM's'PreliminaryAnalysis'raisesthepossibilityof"significantlegalimplications"andassessesthata"significantworkload"willberequiredtodisentangletheNIstatutebook.NorthernIrelandpolicymakerswillwanttoweighthatassessmentagainsttheongoingprocessbeingconductedbytheUKgovernment.TheNorthernIrelandAssemblyhasnotbeenaprolificlegislatoroverthecourseofitsexistenceandagreatdealoflegislationwillbedealtwithatnationallevel.

Likewise,theExecutivewillwishtoreviewtheeffectsofexistingEUlawsandregulationsacrossitsdevolvedcompetencies.TheHouseofCommonslibraryestimatedthat50%oflegislationwith'significanteconomicimpact'derivesfromtheEUandthatisinadditionto'softlaw',includingcommunications,declarations,recommendations,resolutions,statements,guidelinesandspecialreportsfromEUinstitutions,aswellasrulingsfromtheECJ.87

Someofthemoreburdensomerestrictionsapplytoheavilyregulatedareasliketrade,agricultureandfisheries.Localcompanieshaveidentifiedexcessiveregulationasamongthetopbarriersthattheyconfront.88WhiledismantlingEUlawmaybeanadministrativechallenge,itisalsoasignificantopportunityforpolicy-makerstoboosttheeconomyandagricultureinNorthernIreland.

86AdamPayne,'Thegovernment'splanforasmoothBrexitisturningintoalogisticalnightmare',BusinessInsiderUK,22November2016.87HouseofCommonsLibrary,ResearchPaper10/62,13October2010.88FSB(NorthernIreland),BusinessSurvey2015.

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AGRICULTUREANDFISHING

Towardsustainablefarms

InNorthernIreland,farmshavebecomefinanciallydependentontheDirectPayment(formallytheSingleFarmPayment);asubsidydistributedundertheEU'sCommonAgriculturalPolicy(CAP).ThegovernmenthaspledgedtoreplacedirectlyanylostDirectPayment(DP)fundsuntil2020.89ItishighlylikelythatareplacementsubsidyschemewillbeintroducedaftertheUKleavestheEuropeanUnion.

AlthoughmanyfarmersstilldependupontheDPforasignificantproportionoftheirincome,theleveloffundinghasfallenconsistently.Between2010and2014thevalueofDPtoNorthernIreland'sfarmersfellbyalmost10%,from£270millionto£248million.90

CAPsubsidiesaredividedintopillar1(DP)andpillar2,whichdistributesfundsfor'ruraldevelopment'.Bothpillar1andpillar2fundsareprojectedtofall.Beforethereferendum,theDepartmentofAgricultureandRuralDevelopment(DARD)estimatedthatfundingforpillar1wouldbeeffectively13%lowerforpillar1and22%lowerforpillar2by2021,thanin2013.ThedepartmenthadalreadybeguntorethinktheschemesitdeliversandacknowledgedthatthereissignificantuncertaintyaboutthefutureCAPbudgetandthewayitwasdistributed.91

ThecostsandbureaucracyinvolvedinCAPalreadycreateproblemsforfarmers,andthepolicy'sflawsarelikelyonlytogetworseinthefuture,asitentersaperiodofmajorreform.TheExecutivenowhasanopportunity,inconjunctionwithHMTreasury,todesignaschemeofsubsidythatistailoredtoNorthernIreland'sparticularneeds,wasteslessmoneyandbenefitsfarmersmoredirectly.

Inaddition,theDPhastraditionallydistortedthemarket,allowingfooddistributorstopaysubstantiallyunderthecostofproductionforproducts.Aspolicy-makersinNorthernIrelandlooktowardthefuture,theywillwishtoconsiderhowtomakefarmssustainableinthelonger-termandimproveefficiencyintheindustry.

MarketsintheRepublicofIrelandandtherestoftheEU

AgriculturefallsoutsidetheremitoftheEuropeanEconomicArea,andafreetradeagreementwiththeEUwouldnotnecessarilyresultinallUKagriculturalproductsescapingtariffs.Nevertheless,outsidetheEEA,bothSwitzerlandandCanadahavenegotiateddealsthatprovidebeneficialaccesstothemarketfortheirkeyproducts.

89Ibid.90DARDAnnualReportandAccounts31March2011,31March2015.91DARD,DARDResourceAccountsfortheYearEnded31March2015.

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TheUlsterFarmers'Union(UFU)hashighlightedconcernsaboutnon-tariffbarriersthatcouldaffectNorthernIrishexportstotheEU.Inparticular,ithighlightedtheprospectofdifferentrulesaroundanimalhealthandcostsassociatedwithcomplyingwithadifferentregime.92However,theinitialintroductionofEUlawsandregulationsintoBritishlaw,viatheGreatRepealBill,shouldensurethatthetransitionissmootherforfarmers.93

TherearesignificantlinksbetweenagricultureinNorthernIrelandandagricultureintheRepublic.Livestockandproducemovesinvolumebetweenbothjurisdictions,asthefoodproductionindustryoftenspanstheborder.LikewiseRuralDevelopmentmonieshavefundedsomecrossborderprojects,dealingwithanimalhealth,animalwelfareandcooperation.

Ontheotherhand,therearesignificantopportunitiesforNorthernIrelandproducetodisplaceEUimportstotherestoftheUK,particularlytothesoutheastofEngland.TheUKimportsalmostthreetimesasmanyagriculturalproductstotheEUthanitexportsintheotherdirection.94

Threatsandopportunities

AddedtotheirconcernsaboutmaintainingsubsidiesandaccessingtheEUmarket,farmershaveexpressedworriesthatlow-costorlow-qualityimportscouldundercutUKproducts,afterwithdrawal.95Inthelongerterm,theadvantagestoconsumersoflowercostimportswillhavetobeweighedagainsttheirimpactonproducers.Intheshorterterm,theUKintendstomaintainEUstandards,immediatelyafterBrexit.

Somefarmsarereliantuponseasonalandlow-costlabour,withtheresultthatanyrestrictionsonimmigrationthatresultfromleavingtheEUcouldhaveanimpact.Theseanxietiesareechoedinthefoodproductionindustry.Itisnotedpreviouslyinthispaperthat,whilelessaccesstomigrantlabourhasthepotentialtocausedifficultiesforsomesectorsoftheeconomy,policy-makersmaylookuponitasachancetoeaselong-termunemployment.

AgricultureisadevolvedpolicyareaandleavingtheEUwillgivelocaldecision-makersmoreroomformanoeuvre.TheExecutiveislikelytohaveresponsibilityfordistributingsubsidiestofarmers,possiblyusingaschemeofitsowndesign,whereasCAPwassubjecttostrictEUrules.

Inaddition,therewillbeopportunitiestolifttheburdenofregulationonfarmers.Oneprominentexampleisintheareaofscientificinnovationandcropyields.TheUFUhasarguedfor,"asimplifiedregulatoryburdenbaseduponscienceandapplyingan'advocacyfirst,regulationsecond'approach".96

92UlsterFarmers'Union,'UlsterFarmers'UnionsetsoutUKexitgoals',7July2016.93Ibid.94NFU,ImplicationsofaUKexitfromtheEUforBritishAgriculture,April2016.95UlsterFarmers'Union,'UlsterFarmers'UnionsetsoutUKexitgoals',7July2016.96UlsterFarmers'Union,'UlsterFarmers'UnionsetsoutUKexitgoals',7July2016.

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LeavingtheEUgivespolicy-makersarareopportunitytolookcomprehensivelyattheshapeoffarmingandagrifoodinNorthernIreland.Incommonwithotherareasoftheeconomy,manyproblemsbroughttoprominencebyBrexitpre-datethereferendum.InapresentationtotheNorthernIrelandAssembly,DrLeeMagowanandDrVivianeGraneyfromQUB,note"challengesalreadylayaheadforNorthernIrelandfarmingasCAPcontinuedtoundergoreform".97

TheNorthernIrelandExecutivewillwishtohelpcreateanopen,sustainableindustry,thatfocusesonitsstrengthsandonproductsthathaveaddedvalue,ratherthanrelyingonsubsidy.Itwillwanttoensurefarminghereiscompetitiveandefficient,whilestrivingforfairnessandbalancealongthefoodsupplychain.

Fishing–greatexpectations

Inthefishingindustry,thereferendumresultwasgreeted,forthemostpart,withunalloyedjoy.RepresentativessaythattheEUhasbeenresponsibleforover-regulation,unaccountabledecision-makingandunfairquotasforUKboats.ExpectationsthatBrexitcansavetheindustrywillbehighamongcommercialfishermen.

Themaininstrumentofmaritimelaw,theUnitedNationsConventionontheLawoftheSea(UNCLOS)grantscountriesanExclusiveEconomicZone(EEZ)thattheyareentitledtocontrolandexploit.98UnderitsCommonFisheriesPolicy(CFP),theEUimposesasingleEEZonallmemberstates,andusesasystemofquotas,relatingtoamountsandspeciesoffish,toestablishtheirfisheries'TotalAllowableCatch(TAC)eachyear.99

BecausetheUKisanislandnationanditsEEZisparticularlylarge,fishermenfeelthatitsTACdidnotreflecttheextentofthecoastalwaters.ItisestimatedthatBritishandIrishwatersaccountfor60%oftheEU'stotalwaters.100

LeavingtheEUshouldrestoretheUK'scontroloverthewholeofitsEEZwhich,intheory,givesittherighttosetitsownrestrictions,allowingtheNorthernIrelandfleettofishforagreatervolumeoffishacrossawiderrangeofspecies.Thegovernmentwillstillbeboundbycertaininternationalobligationsdesignedtoprotectfishstocks,butthelineofaccountabilitybetweenpoliticiansandthefishingindustryshouldbeclearer.

IftheUKestablishesexclusiveaccessoveritsfishstocks,decisionmakerswillwishtoaddressissuesaroundtheIrishSeacodfishery,wherethespecies'recoveryhasnotbeenreflectedinaraisedTAC.Impracticalnewregulationsarounddiscards,requiringboatstolandratherthandiscardcertainspeciesoffish,havecausedadditionalcostsandareconsideredarbitraryastheyinvolvelandingunsaleablefish.101

97DrLeeMagowan&DrVivianeGravey(QUB),NorthernIrelandAssemblyKESS,ExitingtheEU:PolicyconsiderationsforNorthernIreland,2016.98UnitedNations,UnitedNationsConventionontheLawoftheSea.99EuropeanCommissionwebsite,TheCommonFisheriesPolicy.100ChrisMuspratt,'TheEU'sbetrayalofBritain'sfishingindustry',TheCommentator,2October2015.101MarineManagementOrganisation,FisheriesManagement:LandingObligation,19October2015.

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Inthemain,commercialfishingrepresentativesdonotconsiderthatEUfundshaveresultedinappreciablebenefitsfortheirindustry.ThegovernmenthasagreedtounderwriteexistingfundingfromtheEuropeanFisheriesFundandotherstructuralfunds,signedoffbeforetheUKleavestheEU.However,coastalcommunitieswillwanttoknowhowtheExecutiveintendstohelpthemsustaintheireconomyandwayoflife,intothefuture.

Policy-makerswillwishtoinvestigatehowtheburdenofregulationthatcurrentlyhampersthecommercialfishingindustrycanbeeased.NorthernIrelandfishermenarelikelytobeconstrainedbysomeregulationsiftheywishtoselltheirproductsintheEUmarketandtheshapeofanytradedealwilldeterminetheoverallroomformanoeuvre.TheExecutivemayhavepowerstochangesomelawsrelatingtotheenvironmentandfishstocks,thatindustryrepresentativesinsistareoutdatedandineffective.102

FishinginNorthernIrelandhasbeendecimatedbytheEuropeanUnionanditsCFP.Peopleinvolvedintheindustryfeelangry,ignoredandletdown.LeavingtheEUopensupmorepossibilitiesforpolicy-makerstointroduceanewmanagementsystemthatlearnsfromthesuccessesofIceland,theFaroeIslandsandNorway,whenresponsibilityforfishingisreturnedfromBrusselstoWestminsterinthefirstinstanceandspecificallytoStormont.

102MarkAllenandDrDanHull,NorthernIrelandAssembly,ResearchandInformationServiceBriefingPaper71/16,8September2016.

34

IMMIGRATION

Open,butincontrol

PowerstosetimmigrationpolicyarereservedtoWestminster.NorthernIrelandwillhaveitssayinthenationaldebate,butitishighlyunlikelythatthegovernmentwillconsider,forinstance,handingresponsibilityforsettingregionalimmigrationtargetstodevolvedassemblies,assuggestedinonepost-Brexitpositionpaper.103

AlthoughthereferendumdebateinNorthernIrelandtoucheduponimmigration,theissuewaslessprominentthanintherestoftheUK.Migrantsformasmallbutgrowingproportionofthepopulationhereandtheirimpactonsocietyisonlybeginningtobemeasured.104Thestatisticslagbehindchangesindemography,butweknowthatthelargestnumbersofnewarrivalscamefromPoland,RomaniaandBulgaria,withsignificantnumbersfromSlovakia,LithuaniaandHungary.

AnychangeinimmigrationpolicyforEUcitizensislikelytoaffectsignificantlytheflowofmigrantsintoNorthernIreland.ThegovernmenthasindicatedthatregainingcontrolofitsborderswillbeoneitsmainprioritiesinBrexitnegotiations.IffewerpeoplefromeasternandcentralEuropecometoNorthernIrelandtowork,itwillcreatepolicychallengesfortheExecutive,buttherewillalsobebenefitsandopportunities.

Thepotentialimpactonlow-skilledlabourhasbeendiscussedpreviouslyinthispaper.SomesectorsinNorthernIreland,likefoodproduction,socialcare,hospitalityandsoon,havebecomeincreasinglyreliantonEUmigrantstofilllowerwagedjobs.Employershavealreadybeenobligedtoraisewagesforthistypeofemployment,duetothegovernment's'livingwage'policyandfurtherincreasesareplanned.105

ArecentpaperfromtheNevinEconomicResearchInstituteobservedthatinwardmigrationhasactuallyliftedtheperformanceoftheNorthernIrelandworkforce,improvingitsperformanceonskills,productivityandeconomicinactivity.Whilethesestatisticshighlightpossiblechallengesahead,theyalsounderlinetheprospectiveopportunitiestoaddresslong-standingeconomicdeficienciesandtheirsocialcosts,thatmightariseifthegovernmentdecidestolimit'freemovement'aspartofitsBrexitplan.106

103NIFDA,Challenges&OpportunitiesforNorthernIrelandFood&Drink,November2016.104NISRACensus2011.105TheNationalLivingWagewebsite.106NERI,QuarterlyEconomicObserver,Winter2016,

35

Inaddition,whileimmigrationfromtheEUisoftencastas'freemovementoflabour',Brussels'regulationsdonotdistinguishbetweenworkersandbenefitstourists.Freemovementofcitizensrequiresparitywithnationalsasregardsbenefits,thehealthservice,accesstofreeeducationandotherpubliclyfundedentitlements.Anecdotalevidencesuggeststhatservicesareunderpressure,duetoarrivalsfrompartsoftheEU.DavidCameron'sattemptstountanglefreemovementfrombenefitobligationsfellapartduringthegovernment'snegotiationsbeforethereferendum.107

BrexitrestoresgenuinecontrolovertheUK'sborders.Immigrationcannowbetailoredtoourskillshortages,socialconsiderationsandeconomicneeds.

NorthernIrelandandtherestoftheUKwillalwaysbeopentonewarrivals.Ourcommunityislikelytobecomemorediverse,andthatisastrengthratherthanaweakness.However,outsidetheEU,policymakersmustthinkmeaningfullyabouthowthathappens.

107HouseofCommonsLibrary,BriefingPaper7214,12February2016.

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Abouttheauthors…

OwenPolley

Owenisapublicpolicyconsultantandwriter.HepreviouslyworkedfortheConservativePartyinNorthernIreland.

DavidHoey

DavidisaNorthernIrelandbusinessmanwhohasworkedextensivelyincorporatemarketingandstrategiccommunicationsworldwide.HavingworkedgloballyhisinterestsarenowmostlyintheUKthroughhiscompanySandelford,thoughwithstronginternationalinterestsinpublicaffairs

BrianMonteith

BrianworkedinfinancialPRinTheCityfromtheearly80sbeforeestablishinghisownbusinessesinScotland,wherehelaterservedeightyearsasanelectedmemberoftheScottishParliament.Hereturnedtopoliticalandstrategiccommunicationsin2007andworksinternationallyinEurope,AfricaandtheCaribbean.

GlobalBritain

GlobalBritainwasfoundedtwentyyearsagotoprovidethepositivebusinesscasefortheUKtoleavetheEuropeanUnionandpublishedawealthofresearchbriefsandpaperstothatend.Nowthattheargumentforanoutward-facing,sovereign,democraticUKhasbeenwonGlobalBritainiscommittedtoensuringthatourpoliticiansdonotbetraythe17.4millionBritonsthatvotedforchange,throughthepublicationofpapersthatshowhowBrexitcanbedelivered.

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