(CNN) If you want an idea of the challenges Brexit negotiators on both sides of the table face ahead of the summit in Brussels later this month, look no further than the world of horse racing.
Known as the “Sport of Kings” for its centuries-long connection with royalty, a so-called “hard Brexit” could have serious consequences for both the British and Irish horse racing industries.
Thoroughbred racing and breeding is big business on both sides of the Irish Sea, providing jobs for more than 32,000 people in rural areas and adding a combined $7.2 billion a year to the Irish and British economies, according to consultancy firm Deloitte.
“It would have a huge impact on horse racing in this country and in Britain, it is a real worry,” Brian Kavanagh, chief executive of governing body Horse Racing Ireland, told CNN by phone.
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‘One industry’
“The two sectors in the UK and Ireland really effectively operate as one industry,” said Kavanagh. “If Britain remains outside of the customs union and the single market, it’s a very tough one to crack because we have had a very good situation up to this point.”
For example, some 10,000 horses move freely between the UK and Ireland every year under a so-called tripartite agreement between the two countries and France.
The agreement dates back to the 1960s and has since become EU law.
“Britain relies heavily on Ireland to supply the racehorses it needs to operate its racing industry, and Ireland relies heavily on Britain to buy its horses,” Robin Mounsey, a spokesman for the British Horseracing Authority (BHA), said in an email.
“Maintaining the free movement of thoroughbreds within Europe (currently underpinned by the tripartite agreement) along with common transport, health and welfare policies are the industry’s major objectives.”
Stud fees slashed
Although the second phase of the Brexit talks start this month, the impact of Britain’s pending divorce from the European Union is already felt by Irish horse breeders, who cut their stud fees in the wake of the sterling’s decline against major currencies — including the dollar and euro — following the June 2016 referendum.
Ireland, a horse-mad country with 50 thoroughbred horses per 10,000 people — 10 times more than Britain — is likely to suffer the most from a “no deal” Brexit.
It would mean the UK exiting the single European market of 500 million consumers entirely, with the freedom of movement for goods, services and people, as well as horses, coming to an end.
Quarantines and tariffs?
The tripartite agreement between the horse racing authorities in Britain, Ireland and France, which predates Britain’s 1973 accession to what was then called the European Economic Community, covers close to 90% of all horse movements within the EU.
It allows animals registered in one country to move freely between Europe’s top three racing nations, as long as they have a passport and mandatory health certificate.
This also includes movement between Ireland, an EU member state, and Northern Ireland, a British province, which effectively operate as one entity in racing. For example, nine out of 10 horses that race in Northern Ireland are trained in the Irish Republic.
If no Brexit agreement is reached with Brussels, racehorses may be subject to lengthy and costly veterinary checks at the border, quarantines and even tariffs under World Trade Organization rules, according to Horse Racing Ireland.
It would also mean highly sensitive thoroughbreds trained in Ireland would have to be transported on 24-hour boat trips to mainland Europe, instead of traveling by road to Britain and then making a short journey to cross the English Channel.
“You have to take into account welfare considerations,” Kavanagh said. “You don’t want a horse stuck in a traffic jam at a port for a few hours, or you don’t want a horse having to be pulled off a lorry to be checked and to be examined.
“It is not safe for a pregnant mare to spend 24 hours on a ferry from France to Ireland, so they come overland through the UK. Any barriers to that movement could reduce the incentive to use Irish stallions, and that is a concern.”
One in five of the Top 100 rated flat horses in 2016 were Irish-bred, making it the most successful breeding nation, according to Deloitte. The value of Irish bloodstock exports to the UK is over $300 million per year.
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‘Fundamental change’
When asked if Brexit posed a greater challenge to the industry than the 1970s oil crisis or the 2008 global financial crisis, Kavanagh said: “It’s in that league, because it’s fundamental. But this one we can have some influence in shaping the outcome of it.”
Kavanagh and his counterparts in Britain and France met with EU Brexit negotiator Michel Barnier in September.
“The difficulty when we met last year was that they said ‘Look, we can’t talk about new trade arrangements until we are past the divorce phase,'” Kavanagh said.
In December, after Kavanagh’s meeting with Barnier, UK Prime Minister Theresa May announced a last-minute deal with the EU aimed at moving Brexit talks to the next phase, hammering out a transition deal covering a period of up to two years after the UK leaves the EU.
One of the key elements in the December deal was the guarantee there will be no so-called “hard border” between Northern Ireland and Britain.
“Those [trade] talks haven’t started and the clock is ticking,” Kavanagh said. “But we did take some heart of some aspects of that announcement.
“The special status of Ireland is to be recognized, and I would argue that the horseracing industry is probably the best example, either in the sporting world or the business world, of integration between Ireland and the UK.”
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‘Hopeful’
“Challenges remain, particularly in the event of no deal being reached and the UK becoming a third country the day after leaving the EU, so we are not alone as an industry in respect of welcoming the call for a transition period of up to two years,” BHA’s Mounsey said. “We are also conscious, though, that we must not lose sight of the opportunities presented by Brexit.”
Although Kavanagh said he was “hopeful” of a good Brexit outcome and felt the industry was being listened to both in Brussels and in London, “the devil will be in the detail.”
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“We’ve been very lucky with this system, people with great foresight have put that in place,” he said.
“If we’re sensible, we can get some way to overcome that, but again maybe it is naive thinking that nothing will change post-Brexit.”