After months of debate the UK has decided to withdraw from the EU. The process of finding a new arrangement with its former EU colleagues begins under Article 50 of the Treaty of Rome, which stipulates a two-year negotiation period in the event of a member choosing to leave. There are five types of trade arrangement that the EU has with non-members on the edge of the EU which the UK could use.

1 The European Economic Area

This enables a non-EU member avail of all the free-trade arrangements between EU states. It operates in Norway, which has twice voted to reject joining the EU as a full member. While this may look attractive, it means accepting all EU law into domestic law. This means all the restraints of EU membership remain in place without the opportunity to shape or influence policy as a member. Not likely to be an attractive option to the UK government.

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2 European Free Trade Association

This is similar to the EEA but involves transcribing EU law into domestic law by way of bi-lateral treaties. Switzerland has this arrangement but it is thought unlikely that the EU would extend it the UK as it is not particularly happy with the time it takes to update Swiss legislation. In any case, it would again involve the UK accepting EU law into domestic law without the opportunity to shape or influence it.

3 Customs union with the EU

This is a common trade policy which means that outside the EU the UK could still be part of the customs union, as is the case with Turkey. Trade and goods can move freely and it has less regulatory imposition but would involve accepting international trade agreements and again includes loss of sovereignty in decision-making, which was such an issue with the UK.

4 Deep and Comprehensive Free Trade Agreement (DCFTA)

Probably the preferred UK option, which would lower or even eliminate tariff buyers and give more regulatory freedom than the other arrangements. However, it would be necessary to have post-exit UK standards recognised and accepted as equivalent to the EU in order to trade. For example, the UK couldn’t decide it would allow the use of hormones in beef production and trade that product into the EU. A full agreement on standards and tariff rate quotas would have to be negotiated.

5 Most Favoured Nation – WTO

This is trading on a tariff-paid basis and is the most unlikely option unless there is a serious breakdown in relationships after a British exit. It would be the most costly option both for Britain and the remaining EU27.

Impact on farmers

The immediate impact on Irish farmers south of the border will be the weakening of sterling against the euro. This makes Irish exports to the UK more expensive while the opposite applies to Northern Ireland, where sales to the eurozone are more competitive, hence the surge in lamb prices in Northern Ireland this week.

Farmers in the North will, however, be concerned in the longer term about what support package can be negotiated to replace the CAP direct payment. Farmers will be concerned in the remaining EU27 about the loss of the UK net contribution to the EU budget of almost €8bn.

With 40% of the EU budget spent on the CAP, that leaves over €3bn to be found. Longer term there is the issue of trade deals the UK may enter into that allow cheap imported beef into the UK in return for selling financial services and industrial goods.

This could undermine the market for domestic beef production and particularly Ireland who enjoys the role of preferred second supplier with many of the UK’s biggest beef buyers.