Con Lucey outlines emerging UK agri-trade policy post-Brexit

The implications of the UK’s trading policy for agriculture post-Brexit has been outlined by the former economist for the Irish Farmers’ Association (IFA), Con Lucey.

Compiling a report for the Institute for International and European Affairs (IIEA), Lucey has laid out three scenarios following the UK’s looming departure from the European Union.

This includes, in the first instance, a situation whereby the UK remains in the customs union – or negotiates an equivalent customs agreement – and maintains regulatory alignment with the EU.

According to Lucey, this is the only scenario that would avoid tariffs and remove the need for the Northern Ireland backstop.

Secondly, in the event that the UK and EU instead reach a free trade agreement, this might be subject to tariff rate quotas from the EU to avoid trade displacement; i.e. the UK supplying its home market with non-EU imports, but exporting its own produce to the EU.

In this situation, border checks between the EU and UK would be necessary to ensure regulatory compliance, while the internal UK market would see prices being undermined from cheaper imports from abroad.

The third scenario, according to Lucey, is the hard-Brexit outcome, whereby trade between the UK and the EU is governed by World Trade Organisation (WTO) rules.

This would result in tariffs being implemented in both directions, and would be a “doomsday scenario” for UK producers, according to Lucey.

Consumer prices

In March of this year, the UK outlined the regime of tariff rate quotas it would implement in the event of a no-deal scenario, which would apply for 12 months, while negotiations would occur to set a more permanent regime in place.

According to Lucey, these tariffs would drive up consumer prices within the UK and disrupt business supply chains there.

The UK government also announced that some produce would also have tariff rate quotas; i.e. that there would be zero tariffs on a certain volume of imports. This applies to beef, lamb and poultry meat.

The combined effect on the UK market of these new tariff rates and tariff rate quotas would be, according to Lucey’s research, to: (i) apply a tariff on imports from the EU, which have no tariffs on them currently; and (ii) replace the relatively high current tariff on imports from non-EU countries with a lower tariff.

Data source: Con Lucey / IIEA

However, Lucey stresses that these tariff rates may apply even in the event of a withdrawal agreement being ratified, if the UK operates an independent trade policy in the future.

The UK government announced at the time that these tariffs would not apply to Northern Ireland, ostensibly to ensure that there would be no hard border on the island of Ireland.

However, this may be temporary, depending on the subsequent trade flow, Lucey explains.

Ireland will be obliged by the EU to implement tariff rates on trade from Northern Ireland, even if there are no tariffs on trade in the opposite direction.