BREXIT AND UK AGRICULTURE IMPLICATIONS FOR IRELAND · Weaker Pound = Bad for Irish exporters Good for UK Farming SHORT TERM BREXIT UPSIDE 1.0 0.66 0.9 0.83 0.77 ... •UK and EU heavily

BREXIT AND UK AGRICULTURE

– IMPLICATIONS FOR

IRELAND

Michael HavertyRDS, Dublin

May 2017

1

1.1

1.2

1.3

1.4

1.5

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

€/£

€uro and Pound– 2005 to 2017

Stronger Pound = Good for Irish exportersBad for UK farming

Weaker Pound = Bad for Irish exportersGood for UK Farming

SHORT TERM BREXIT UPSIDE

1.0

0.66

0.9

0.83

0.77

0.71

Source: ECB / Andersons

UK PLAN: 12 NEGOTIATING OBJECTIVES

56

7

8

9

10

1

2

3

4

11 12

Certainty on

leaving process

Control UK laws

Strengthen

union of four

UK nations

Maintain

Common Travel

Area with Ireland

Control

immigration

from EUProtect EU and

UK nationals’

rights

Protect

workers’

rights

Free trade

with EU via

trade

agreement

New trade

agreements

with other

countries

UK: best place

for science &

innovation

Crime & terrorism

cooperation

Smooth & orderly

Brexit

Sovereignty

Single

Market

Access

EU POSITION

• EU requires ‘sufficient progress’ on this before trade

talks start

• Covers areas such as;

- Money: UK’s obligations to EU – i.e. £££s

- Migration: status of EU citizens in UK and UK citizens in EU

- Ireland: protect achievements of Good Friday Agreement

• Deal needs a majority of Member States + EP

‘Exit’ Talks

Trade Talks

• More complex (and lengthy) than exit talks

• Deal requires unanimous agreement by Member States

• What is the UK’s capacity for negotiation?

FUTURE TRADE: UK AND EUROPE

‘Soft

Brexit’

‘Hard

Brexit’

Single

Market

+ least disruptive to trade

- EU migration, regulation & budget

Customs

Union

+ assists trade, migration control

- prevents trade deals with RoW

Free Trade

Agreement

+ bespoke, allows UK ‘control’

- time to negotiate, goodwill?

WTO

Rules

+ ‘no deal better than a bad deal?’

- tariffs on EU trade, not simple

• Agriculture is not automatically covered by these

- excluded from EEA and Turkish Customs Union

- could have limited coverage as part of FTA

THE WTO OPTION

EU Agricultural Tariffs – Selected Commodities

Commodity Standard Tariff Within TRQ Tariff

(€ per tonne) (€ per tonne; %)

Skim Milk Powder €1,254 €475

Cheese (cheddar) €1,671 €210

Lamb (fresh/chill) 12.8% + €1,710 €0

Beef (fresh/chill) 12.8% + €1,770 20% (frozen)

Pigmeat €536 €268

Poultry cuts (fresh/chill) €512 €0

Source: EU Commission / Andersons

• Also non-tariff barriers – regulations, customs etc.

• Less visible but potentially more trade-inhibiting

• Cascading tariffs: (e.g. boneless beef 12.8% + €3,034/t)

IRISH REPUBLIC’S TRADE WITH UK & EU

Exp (€m) 2,262 3,951 731 256 275 12,199 117,608

Imp (€m) 111 692 301 448 20 8,170 72,087

Source: Irish CSO / Andersons

Export Destinations from Irish Republic – 2016

50%

22%

56%

85%

21%

40%

13%

44%

29%

16%

8%

73% 30%

38%

6%

49%

28%

7% 6%

30%

49%

Beef Dairy

Produce

Pigmeat Poultry Sheepmeat Total Agri-

food

Total

Goods

UK Rest of EU Non-EU

BORDERS AND REGULATIONS

• Northern Ireland: €2.7 billion of trade; substantial live

cattle movements (e.g. 389,000 lambs (N→S)).

• How will ‘frictionless border’ be achieved?

• EU Official Controls Regulations Article 44 (3) – official

controls… “performed at appropriate place” including:

- point of Entry; border inspection post

- point of release for free circulation

- warehouses/premises of operator

- place of destination

• Could checks take place at operators’ slaughterhouses to

facilitate ante and post mortem inspection?

• Could veterinary equivalence agreement reduce physical

checks (i.e. from 20% to 1%)?

OUR OPINION: THREE-STAGE BREXIT?

Apr

2017 EU

Gu

idelin

es

Ag

reed

Trade Talks with Rest of World

Mar

2017

Art

icle

50 t

rig

gere

d

Fo

rmal Exi

t

Mar

2019

‘Exit’ talks 18 months

Sept

2018

Rati

fica

tio

n

Future

trade talks

Transitional Deal: UK retains (some) Single

Market access in return

for?? ‘Sunset’ clause.

+3 years?

+5 years?

Fre

e-t

rad

e d

eal

Fu

ture

tweaks?

FINAL COMMENTS

• UK and EU heavily inter-connected – deal will be done

• Not going to be concluded within two years

- ‘transitional’ (Customs Union) leading to a free-trade deal

- special arrangements with Ireland.

- a period where the UK is trading without an agreement?

• Ireland must ensure agriculture is adequately addressed

- encourage UK to continue to uphold EU standards?

• If WTO, set-up TRQs to permit “free-ish” trade

- base on historic average plus popn. growth allowance

• Border arrangements based on Norway/Sweden model

- minimise impact on Irish trade when transiting to continent

• Trade with UK to continue; more competitive pressures

BREXIT AND UK AGRICULTURE

– IMPLICATIONS FOR

IRELAND

Michael Haverty

[email protected]

Tel: +44 (0) 1664 503 200