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Ireland eyes role as trading gateway to Europe

Europe / 13-03-18 / by

Ireland hopes to use Brexit to cement its position as a gateway for European trade.

On the first stop of a whistle-stop tour of major Chinese cities, Ireland’s deputy prime minister Simon Coveney outlined his ambition for Ireland to provide an entry point for Chinese companies looking to do business in the EU.

Coveney told an audience at Hong Kong’s Foreign Correspondent Club that “undoubtedly there are some opportunities from Brexit for Ireland”.

He said: “We’re going to become the only English speaking country in the EU. My city, Cork, is going to be the second-largest English speaking city in the EU and there are only 200,000 people there. I get phone calls from foreign ministers all over the world saying: ‘Until now, Britain was our friend in the EU in terms of trade talks and EU regulations.’ They’re now calling Ireland saying: ‘Can you be our gateway into trying to influence EU policy in a way that takes note of our concerns or interests.’”

In an interview with GTR on the sidelines of the event, Coveney, who is also the minister for trade and foreign affairs, stressed the importance of Ireland’s growing trade with China. He said that a trade mission that will also take him to Shenzhen, Shanghai and Beijing is about “reinforcing the relationship that’s delivering extraordinary trade growth between Ireland and China”, at a time when the global trading order is experiencing significant change.

“I think there are all sorts of ironies listening to President Xi Jinping talking about the need for frictionless trade globally and global ambitions, and at the same time hearing a US president talk about America first,” he said, adding that “maintaining the relationship we have with the US is important, regardless of who’s in the White House”.

Bilateral trade between Ireland and China is forecasted to reach €16bn this year, double what it was four years ago. As the UK prepares to exit the EU, relations in Asia has been a priority of the Irish government, as GTR reported earlier this year.

Brexit, however, carries a grave threat to the Irish economy. The UK is by a distance Ireland’s largest trading partner, while the imposition of a hard border between Northern Ireland and the Republic of Ireland would be a huge impediment to cross-border trade.

The negotiating position of the UK appears to be contradictory: Theresa May is committed to leaving the single market and customs union, but has also committed to having no border infrastructure on the island of Ireland. Many have declared the two positions incompatible, but Coveney says that he is “confident that we won’t have a physical border”.

He says: “I have to take the British government at their word. We have a written agreement to say that there will not be any physical border infrastructure or related checks or controls. That is a clear commitment. In fact, they said they would provide a guarantee that that’s the case.”

EU and UK negotiators will soon start attempting to thrash out the terms of a free trade agreement (FTA). How that solves the Irish border issue is unclear, and Coveney admits that it “is going to be very difficult if Britain holds onto its current approach, which is to leave the customs union and single market”.

He adds: “But in the absence of a political option around option A [an FTA] and some sort of bespoke solutions offered to Ireland, then we have a default position, which we’re very clear on, because we have it in black and white. But I know that poses real difficulties for the British government in the context of unionism, to which we’re very sensitive. But we cannot and will not allow these negotiations to result in physical border infrastructure on the island of Ireland as some kind of unintended consequence, because somebody can’t come up with a solution, and Britain will have to make choices in that regard.”

While calling for “more realism” from the British government, the minister says that Brexit shows that the Irish economy must spread its risk. A study from the Economic and Social Research Institute found that a hard Brexit could lower Irish GDP by 4%, a direct result of the tariffs that would be placed on Irish goods exports (13% of which go to the UK).

The Irish mission to China is expected to deliver a number of memoranda of understanding, but no concrete details were discussed. At the same time as Coveney’s visit to China, the Irish prime minister Leo Varadkar will be visiting the US to commemorate St Patrick’s Day in the White House.

Varadkar has been an outspoken critic of US trade policy, saying “there are many of Donald Trump’s policies with which I do not agree. I do not agree with him on migration, climate change or trade”.

He said that he will raise his concerns with Trump and vice-president Mike Pence while in Washington DC. Coveney, meanwhile, said that he will raise concerns over China’s human rights record when he meets Chinese foreign minister Wang Yi.

“There are questions that need to be asked but I think I raise them in a respectful way, as opposed to just issuing press releases and painting China into something that it’s not,” Coveney told GTR. “But we need to be honest enough with each other to raise concerns when we have them, and listen to each other’s answers and that’s the kind of relationship I hope Ireland has with China.”

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