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Brexit 'the biggest political and economic challenge Northern Ireland has faced this century'

By Margaret Canning

Northern Ireland's top business groups have urged the Prime Minister to indicate how she will give the province a voice in negotiations to leave the EU after triggering Article 50 today.

As Theresa May begins the process of leaving the bloc, the CBI, Northern Ireland Chamber of Commerce and Industry, Institute of Directors (IoD), Queen's University and Ulster University have published a joint letter claiming the process will have "direct and profound" implications here.

But Dr Esmond Birnie, senior economist at the Ulster University Economic Policy Centre, said there would likely be little change in the short term.

He added that the certainty that Article 50 will bring to the UK economy could influence the behaviour of consumers and investors.

In their letter, the IoD, CBI, Chamber of Trade and universities described Brexit as "the biggest political and economic challenge" facing the province "this century".

They also said that ensuring Northern Ireland has a devolved Executive was the "first step" towards protecting the region's interests.

The group added that as the only UK region with an EU land border, Northern Ireland was "unique" with "chains of production, inputs and outputs stretching from Cork to Coleraine."

The province is "uniquely vulnerable" from the outcomes of Brexit and, in particular, a UK-EU relationship governed by World Trade Organisation (WTO) tariffs," they claimed.

The food and drink sector is one of the most vulnerable, it was stressed, with 25% of Northern Irish milk and 36% of its lamb processed at plants in the Republic.

"Profit margins in the sector remain low, and the sector remains ill-placed to accommodate food tariffs ranging from 7% to 65% in the event the future EU-UK relationship is governed by WTO rules," the group said.

That risk means Northern Ireland has to ensure "the strongest partnerships with the UK and Republic of Ireland as it looks for opportunities post-Brexit".

The letter said businesses were spending more than ever on research and development, and universities were able to access EU-funded research and world-leading staff and students.

"It is essential that businesses and universities continue to have access to these funding opportunities and we can continue to attract world-leading talent to live and work in the region," it added.

The letter also claimed Northern Ireland's position merited specific measures: "Keeping barriers to the flow of labour, goods, energy and services as low as possible is economically and socially essential."

It said customs checks "would be more than a barrier to trade... they would represent an unwelcome return to the past... we must remember that peace and prosperity go hand in hand".

Wilfred Mitchell, Northern Ireland policy chair of the FSB, said small businesses needed clarity on how Article 50 would affect them, particularly against a backdrop of uncertainty in politics at home.

"FSB members in Northern Ireland that export and import now need confidence that they will still be able to do business on the same terms, especially in relation to cross-border trade with the Republic of Ireland and the daily movement of people and products," he added.

"Those that employ non-UK EU citizens in their workforce will want early assurance they will remain and that hiring new staff will not mean a new system with extra costs and burdens."

But Dr Birnie claimed that little would change in the short term after the triggering of Article 50.

"Whatever the potentially vast long-term effects of leaving the EU, both good and bad, simply triggering Article 50 changes nothing in an immediate sense, although it obviously begins what could be a two-year period of exit negotiations," he added.

"It is possible that once we move from the current position to one where it is much clearer that the UK is actually going to leave, this will be psychologically important in terms of influencing the behaviour of consumers and investors, but there is no certainty about any of this."

Milestones along the way to Brexit

Article 50 of the Lisbon Treaty sets out a two-year deadline for completion of the withdrawal negotiations. But what happens within that period is less clear. Here are some of the milestones expected along the way to Britain’s final withdrawal:

  • This year

Today: Theresa May will inform the European Council of Britain’s intention to leave the EU. Within the following 48 hours, the European Commission is expected to issue draft negotiation guidelines to be sent to the 27 remaining states for consultation.

Tomorrow: A white paper will be produced on the Great Repeal Bill — the legislation that will turn more than 40 years of EU regulations into domestic laws.

April 29: An extraordinary European Council summit of the remaining 27 states will be held to agree a mandate for chief negotiator Michel Barnier and clear the way for talks to begin in earnest in May. Over this period, the European Parliament will also debate and vote on its red lines for any deal.

Negotiations are expected to begin with “talks about talks”, with arguments over whether divorce and trade discussions should take place simultaneously, as the UK wishes, or whether consideration of future trade relations should be put off until after arrangements for withdrawal are agreed, as the Commission wants.

Then talks could become bogged down in wrangling over a “divorce bill” of as much as 60 billion euros (£52 billion) which the Commission will present to cover spending commitments Britain has already signed up to, as well as its share of the cost of pensions for EU officials

Summer: Intensive negotiations are expected to continue through the summer, with early discussions on the status of EU citizens living in the UK and British nationals resident on the continent. Arrangements could also be thrashed out for a transitional deal to cover the period between Brexit and the conclusion of trade negotiations if these are not completed within the two-year deadline.

Autumn: German federal elections could see Angela Merkel replaced as Chancellor by former European Parliament president and staunch federalist Martin Schulz, who once called for the creation of a “genuine European Government”.

Successive rounds of talks can be expected to take place are expected through autumn, winter and into 2018, as teams of negotiators from each side gather around the table for several days at a time before retiring to their capitals to prepare for the next bout.

  • 2018

May: English local government elections.October: The target date Mr Barnier has set for concluding withdrawal negotiations, to allow time for them to be ratified before the end of the two-year Article 50 deadline.

Scottish First Minister Nicola Sturgeon has said she wants a second referendum on Scottish independence after the terms of the deal are known and before Brexit takes effect in the spring of 2019.

Winter 2018/19: Once a deal is concluded between the Commission and the UK, it will go back to the member states of the EU.

The European Court of Justice could be asked to rule on whether the deal requires approval by each individual state.If so, it could have to be ratified by as many as 38 national and regional parliaments across the European Union, with any of them effectively holding a veto. Mrs May has promised a parliamentary vote on the withdrawal deal, but offering MPs only the option to “take it or leave it”. Under her plans, rejection of the deal would mean the UK crashing out of the EU without agreement and being forced to trade under disadvantageous World Trade Organisation tariffs.

The PM has promised that the Westminster vote will take place before the European Parliament debates and votes on the deal, effectively giving MEPs the final say on whether it will go ahead.

  • 2019

March 29: Two years after the invocation of Article 50, the UK ceases to be a member of the EU and is no longer subject to the bloc’s treaties, whether or not there is a withdrawal agreement has been reached. This date can be extended for further negotiations by agreement between all member states. It is not yet clear whether the exit clock can be stopped by the UK withdrawing its Article 50 notification.

If no trade deal has been reached by this point, it is possible that UK-EU relations will continue to be governed for months or years after official withdrawal by a “transitional arrangement”.

Even if a trade agreement has been sealed, the Government has made clear that it could be introduced gradually during an “implementation phase” after Brexit.   May: European Parliament elections will take place without the UK.   

  • 2020

May 7: Scheduled date for the first UK general election following Brexit.  

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