Assumption of the Good Friday agreement was of free movement of goods and people, writes John Bruton
The Republic of Ireland in the 1950s was an economic backwater. Its young people were emigrating, exports were limited to a few markets (notably Britain) and it discouraged foreign investment.
That changed later on in the decade, when the country initiated a policy of attracting foreign investment by offering a predictable, simple system of profits tax, at a fixed low rate. Two politicians deserve credit for the policy shift, Gerard Sweetman of Fine Gael and Seán Lemass of the rival Fianna Fáil party.
But the main driver of change was that the previous experiment had so obviously failed: a balance of payments crisis in 1956 was the original spur to the new focus on exports but this soon became the impetus to attract foreign investment. Market opening was pursued, initially by a trade agreement with the UK, and later by joining the European Common Market.
Over the half century since 1960, Ireland moved from being one of the most inward looking to one of the most outward looking countries in Europe. This involved abiding by rules made elsewhere. That was fine, as long as external rulemaking remained predictable.
Events in the past two months have changed all this. The European Commission’s move to force Apple to pay €13bn in tax has created uncertainty about Irish tax rulings. More seriously, the decision of the UK to leave the EU has created uncertainty about whether there will be a stable structure to keep markets open in northern Europe.
The commission’s Apple decision presumed, in my view wrongly, the company was selected by the Irish government for a subsidy that was not available to other businesses in a “comparable legal and financial situation”.
As far as Brexit is concerned, eventual relations between Ireland and the UK, and the scale of controls at the land border in Ireland, will depend on the deal Britain makes with the EU. There is little wriggle room here, despite the soothing noises being made at the moment.
It is difficult to see how the UK can claim to control its borders with the EU if it does not apply the same controls on its land borderwith the EU in Ireland. Judging from ministerial statements, it is looking likely that the UK will leave the EU customs union because it cannot accept trade policy decisions being made in Brussels. As an EU member, Ireland would then have to impose the full EU common external tariff on imports from Britain.
As the UK insists on controlling immigration from the EU, it will have to impose controls on immigration from, or through, Ireland. Again, this means hard controls within Ireland or between Ireland and the UK mainland. Britain’s subsidisation of the Northern Ireland economy will become less sustainable.
Ireland is now facing a prolonged period of uncertainty. After years of focus on the Anglosphere, it will have to invest in developing much closer political and cultural relationships with its 26 continental fellow EU member states.
It will also have to recognise that the Brexit negotiations will become fraught, because Britain is trying unilaterally to unravel 40 years of joint work by EU countries. Ireland, as an EU member, will have to take the side of the EU team. This will mean conflict with the UK. Ireland will also face intense competition from British regions seeking to compensate for the losses from Brexit by exploiting their exemption from EU competition rules to try to relocate business from the bloc to the UK.
Ireland will have to persuade the EU competition directorate to prioritise keeping the competitiveness of peripheral member states over the global ambitions it displayed in the Apple case.
A century ago, Ireland set out on a course of separation from Britain. This year, the UK decided, in its turn, to separate from the EU. Leaving the bloc has been decided, but the extra step of leaving the customs union has such serious implications for peace on the island of Ireland that it is arguable that it should be the subject of a separate referendum.
The writer is a former prime minister of Ireland