CAP 2020: regulating post-Brexit agricultural markets
Beyond the budget shortfall, the UK's decision to leave the EU has the potential to destabilise the agri food markets regulated by the Common Agricultural Policy.
The CAP faces the challenge of regulating an EU market flooded with Irish beef denied competitive access to the UK – here in the Netherlands.
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The future trading relationship between the UK and the EU 27 will affect CAP’s stated objective of regulating agricultural markets. The ideal situation for Irish and many British farmers would be for the UK to remain in the single market and customs union after Brexit to maintain seamless trade. However, this is incompatible with the UK’s triple ambition: end freedom of movement of EU citizens; remove the UK from the jurisdiction of EU courts; and conclude bilateral trade deals with other countries, starting with the US.
If the UK leaves the single market, it can negotiate a trade agreement with the EU, or default to the higher tariffs applicable between any two World Trade Organisation (WTO) member states. Experienced international trade negotiators in Brussels have told the Irish Farmers Journal that the negotiation of a new trading arrangement seems most unlikely within the 20 months remaining before the UK leaves the EU.
British Chancellor of the Exchequer Philip Hammond has said that a transitional arrangement could run until 2022. This would create more space for discussions, but requires the support of all other 27 member states. Ireland and Germany have huge interests in keeping of the status quo because of their large exports to the UK. Many eastern European members, who are large recipients of EU funds, might also welcome an extended British contribution to the EU budget in exchange for transitional market access. Other countries may not see an interest in this.
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If WTO rules applied, Ireland’s 5% of the EU27’s sales to the UK would be hit by 19% of the new tariffs. This is because of the large volumes of high-tariff products such as beef and cheese in our exports to the UK. In practice, this would close this trade. Even if the UK were to lower its beef tariff, the UK market would then be flooded with South American imports. In this worst-case scenario, the 230,000t of Irish beef exported annually to Britain would be dumped on the EU mainland, which would have serious repercussions for prices across the continent.
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The future trading relationship between the UK and the EU 27 will affect CAP’s stated objective of regulating agricultural markets. The ideal situation for Irish and many British farmers would be for the UK to remain in the single market and customs union after Brexit to maintain seamless trade. However, this is incompatible with the UK’s triple ambition: end freedom of movement of EU citizens; remove the UK from the jurisdiction of EU courts; and conclude bilateral trade deals with other countries, starting with the US.
If the UK leaves the single market, it can negotiate a trade agreement with the EU, or default to the higher tariffs applicable between any two World Trade Organisation (WTO) member states. Experienced international trade negotiators in Brussels have told the Irish Farmers Journal that the negotiation of a new trading arrangement seems most unlikely within the 20 months remaining before the UK leaves the EU.
British Chancellor of the Exchequer Philip Hammond has said that a transitional arrangement could run until 2022. This would create more space for discussions, but requires the support of all other 27 member states. Ireland and Germany have huge interests in keeping of the status quo because of their large exports to the UK. Many eastern European members, who are large recipients of EU funds, might also welcome an extended British contribution to the EU budget in exchange for transitional market access. Other countries may not see an interest in this.
If WTO rules applied, Ireland’s 5% of the EU27’s sales to the UK would be hit by 19% of the new tariffs. This is because of the large volumes of high-tariff products such as beef and cheese in our exports to the UK. In practice, this would close this trade. Even if the UK were to lower its beef tariff, the UK market would then be flooded with South American imports. In this worst-case scenario, the 230,000t of Irish beef exported annually to Britain would be dumped on the EU mainland, which would have serious repercussions for prices across the continent.
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