A report from the EU Committee of the House of Lords in London is calling for the upcoming Brexit negotiations to fully recognise the special trading relationship that exists between the UK and Ireland.
The publication specifically highlights the fact that agriculture is Ireland’s largest indigenous sector with agri-food and drink accounting for 12.3% of exports (worth €10.8 billion in 2015), 8.6% of total employment and 7.6% of economy-wide gross value added.
Courtesy of his evidence to the Committee, Ireland’s Ambassador to Britain Dan Mulhall said that Britain is the most important market for Irish agri food exports.
The report confirms that more than 40% of Irish agri-food and drink exports go to the UK market, compared with 31% to the rest of the EU and 28% to international markets.
The IFA’s acting General Secretary Bryan Barry told the Lords’ committee that there are specific sub-sectors where the UK market accounted for an even greater share of exports, including beef at 50%, cheese at 60%, and mushrooms at 90%.
He argued this dependence made the sector Ireland’s “most exposed” should trade with the UK be negatively affected by Brexit.
In its submission, the Irish Department of Finance confirmed a multiplier of 1.5 on the wider economy, meaning that if it were to suffer a demand shock of €1m, an additional €500,000 shock would hit the wider economy.
Meanwhile, AIB Chairman Richard Pym told the committee that, if the UK moved to trading with EU countries on World Trade Organisation (WTO) terms following Brexit, some WTO agricultural tariffs would reach 60-70%. Given the centrality of agriculture to the Irish economy, Ireland thus stood to be among the worst hit by WTO terms.
Witnesses also highlighted the impact of the depreciation of Sterling following the referendum result, particularly on the Irish mushroom sector. Shane Campbell, CEO of the Irish Central Border Area Network (ICBAN), told the committee that, constrained by contracts based on the value of the pound at the start of 2016, mushroom businesses had been unable to adapt, and their traditionally tight profit margins had been wiped out.
Bryan Barry also pointed out that the Irish beef industry (employing 80,000–100,000 people) had also been hit by the sudden and sustained depreciation of Sterling.
He and Declan Billington, Chair of the Northern Ireland Food and Drink Association (NIFDA), noted that diversification away from the UK market would be challenging, both because of the time lag in indigenous industries being able to expand to meet demand, and because of the lower prices in the continental market.
A number of witnesses in front of the committee also commented on the potential impact on Ireland of future UK trade policy.
Dan O’Brien, Chief Economist with the Institute of International and European Affairs, suggested that any future UK trade deals – that reduced tariffs on beef and dairy from Latin America and New Zealand – could decimate Ireland’s agri-food sector.
In light of these concerns, many witnesses highlighted the vital importance of maintaining as free as possible market access to the UK … with the minimisation of any barriers to trade.