The first week of real negotiations between the EU and UK on Brexit has concluded and there is little room for optimism in a solution that will be good for Irish agriculture.

It was clear at the press conference on Thursday that there is no meeting of minds or even understanding. The EU side has now asked that the UK put a number on what it believes it owes on exiting the EU, given that London appears to have accepted the principle of an exit bill.

Security checks

The other thorny issue is how each side will treat each other’s residents after the UK is no longer a member. The EU has bristled at the notion of security checks on people before they are conferred UK residential rights. The notion that UK residents could be confined to right of residency in a single EU country as opposed to the entire 27 has also been mooted. All of these have a negative vibe.

As for the Irish border, beyond platitudes of wanting it to be as seamless as possible, no practical thinking has emerged. On the contrary, Foreign Affairs Minister Simon Coveney’s rejection of electronic tagging solutions suggested a hardening of approach. It is difficult to visualise how dealing with the Irish border can be undertaken without going into the wider post-EU membership trading position of the UK with the EU.

Lack of political direction

The difficulty for the first round of detailed discussions appears to centre on the lack of political direction so far on the UK side. The EU has had its team and overall instructions in place for some time.

However, the UK had the aftermath of triggering Article 50 dominated by a general election campaign. This has greatly diminished the prime minister’s authority, as opposed to enhancing it as planned.

Whereas she had complete authority and control over her cabinet colleagues before the election, she has now lost this and the UK government is beset by infighting and lack of coherent thinking on Brexit.

Transition period

The belief that the UK could have its cake and eat it, as espoused by Foreign Secretary Boris Johnson in the referendum campaign, is diminishing in Westminster. Chancellor of the Exchequer Philip Hammond is actively looking to extend the transition period and this idea is gaining traction.

Parliamentary votes can be no longer assumed in the manner that they were prior to the election. The repeal bill, severing the legal ties with the EU, will be challenged line by line. The position of the pro-single market Scottish Conservatives will be particularly interesting in this.

While the idea of a long transition may be sensible, there is no guarantee that the EU 27, each of whom has to agree, will be amenable to the idea. After all, seven countries including Ireland are expected to bear 83% of the cost of additional tariffs if trade between the UK and the EU defaults to WTO rules. For the other 20, there is little trade interest in a long transition.

On the other hand, there could well be an attraction in retaining the UK contribution to the EU budget as many of these more recent members are the main beneficiaries of EU structural funds.

Brexit has all the appearance of a game of chicken

As it stands at the end of the first serious round of negotiations, Brexit has all the appearance of a game of chicken, with one side having to back down or make major compromises. With the clock ticking, as the EU’s lead negotiator Michel Barnier (pictured) said, we are now just over 18 months away from the exit date and just over a year away from negotiations concluding (October 2018) to allow ratification.

The potential chaos in air travel has been making the news recently, but, for Irish farmers, the reality is that calves born this spring and being weaned this autumn may be excluded from the market that has bought over half of Ireland’s beef. It is a similar story with cheese and several other Irish agricultural products.

Ireland and the EU need a contingency plan to deal with this after March 2019, and it needs to go beyond forums and statements on promotional campaigns.

Intervention

Minister Creed has been working hard to open third country markets, with some success. However, outside of China, these are relatively low-value and even full access to China wouldn’t replace the UK. With the default outlet for Irish beef being mainland Europe, the EU needs this contingency plan to handle Irish beef as much as Ireland does. It appears an intervention-buying plan at close to market prices is the only option.

Irish farmers need an assurance that it is worth their while producing beef cattle that will be ready for the factory 18 months from now. This will dictate whether they put the cow back in calf or cull it at the end of this season.

Brexit and market meltdown is that close and cannot be dismissed based on the negotiations so far.

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