Brexit: Tariffs could force Irish beef farmers out of the British market

A speech by the UK’s Environment, Food and Rural Affairs Secretary, Michael Gove, at the National Farmers’ Union (NFU) conference earlier this week, has set the Irish agricultural sector on target for tariffs on trade inwards, should a no-deal Brexit emerge on March 29.

Gove is determined to place tariffs on beef, lamb and dairy products ahead of the UK’s exit from the EU.

It now looks likely that farmers and those working in the Irish agri-food sector will face potential tariffs of €1.7 billion, according to the Minister for Agriculture, Food and the Marine, Micheal Creed.

Meanwhile, during the speech, Gove pointed out that the UK would not cut off tariff barriers in the event of a no-deal Brexit – meaning that Irish farmers would be subject to the same tariffs as set by the UK on other countries it engages with on trade deals.

Dr. Kevin Hanrahan, research officer with Teagasc, said the move also has “a potential negative downside to British farming”.

Right now we do not know what the tariffs will be, nor do we know what Britain’s trade policy will be, in the event of a no-deal Brexit.

He added: “What we do know is that when the UK leaves the EU it will inherit tariff schedules that it has with the World Trade Organisation (WTO) and this will set the maximum tariffs the UK has set in relation to agriculture with the rest of the world.”

Hanrahan went on to say that there was also the possibility that the UK could impose a tariff schedule “similar to that of the EU” and that it could be set at the maximum level possible, or “it could be very little”.

But whatever happens, the Teagasc research officer warned, “it is entirely up to the UK what tariffs it does apply”.

WTO Rules

Under WTO rules the ‘Most Favourable Nation’ regulation exists.

And, according to Hanrahan, the UK will have to apply the same tariffs across the board unless an existing trade agreement is in place, despite this regulation.

So, for Ireland, it will be subject to the same trade tariffs as say Brazil for example; you can’t discriminate between WTO members unless there is already a trade agreement in place.

He continued: “UK tariffs could also be very little but at the same time WTO rules dictate it will have to treat all countries it does business with in the same way. It is also important to point out that if the UK leaves without a deal in place, the EU will not have a trade agreement with the UK until a withdrawal agreement is in place.”

Imposing Tariffs

Hanrahan then pointed to what WTO rules refer to within the agri-trade as ‘sensitive’.

These sensitive products include beef and dairy products.

He continued: “This means that the UK wouldn’t work unilaterally, so what they may do is offer some sort of protection to beef farmers. Tariff Rate Quotas (TRQs) create access to the market but not free access.”

The Teagasc expert went on to say that Ireland exported 250,000t of beef into the UK annually and that accounted for three quarters of its total beef imports.

He also pointed out that in the event of a UK crash-out Ireland would then end up “competing” with other countries that, in many cases, would be producing beef at much lower costs.

If Ireland were then to get ‘locked out’ of that market because tariffs are too high, warned Hanrahan, “beef prices will go up in the UK” and decrease in Ireland.

Hanrahan also pointed out that the price of R3 steers could fall by as much as 20% “or maybe even more”.

He continued: “The UK will have to manage market price – as a country it is more concerned with the consumer than it is with the producer, but at the same time it needs its beef imports. The one advantage that Ireland has is that it will be starting off in the process as one of the biggest suppliers of beef into the UK and that is very significant indeed.”

British standards

Hanrahan said that tariffs, in any case, were paid by the importer and if it became a reality that Irish beef was no longer going into the UK, new markets for that beef would have to be established. He also pointed to the standards around meat that the UK might or might not introduce.

We know, for example, that Uruguay is already shipping fresh and frozen beef into the EU.

He continued: “We don’t know yet what standards the UK will require when it comes to meat – will they accept beef, for example, from the US that has been washed with chlorine prior to slaughter? Is it going to accept meat, perhaps, that has been treated with growth hormones?

“Regardless of what happens though, one thing we are certain of, is that Ireland will be facing additional competition in the beef market within the UK by countries outside of the EU and prices will be lower than what farmers are even getting now for their produce.

“Brexit is not the fault of anybody in Ireland; this has happened because the British decided to do it and we are now looking at a structural change to our relationship with the UK as a result of this.”

National Farmers’ Union

Meanwhile, the NFU – on its website – has described a no-deal Brexit as “catastrophic”.

Its president Minette Batters said that, with less that two months to go now until the UK leaves the EU, union members were “hugely concerned” of the likelihood of a no-deal Brexit.

The NFU has been absolutely clear that this would be catastrophic for food production in Britain.

She continued: “Leaving the EU without a deal could well mean a trade embargo is imposed on animals and animal products going to the EU which, along with punitive tariffs on all goods going into the EU, would severely restrict livestock farmers’ export markets.

“Meanwhile, the potential for Government to unilaterally lower import tariffs on food could lead to British farmers being undercut by food coming into the country which may have been produced to lower standards than is legally required of UK farmers.”