The EU has formally commenced legal proceedings against the UK for violation of the Irish protocol in the withdrawal agreement after it introduced the internal market bill in the UK parliament.
Both the EU and UK agreed that the withdrawal agreement, which was signed in October last year, would be covered by the EU Court of Justice in the event of any disputes.
The EU had given the UK until 30 September to remove the offending clauses and on 1 October, Commission president Ursula von der Leyen announced that the EU had written a letter of formal notice, with a month for reply, which is the first stage of launching an infringement procedure against the UK.
The EU had given the UK until 30 September to remove the offending clauses
No doubt this will heighten the tension around negotiations on a future EU-UK trade agreement, due to take effect once UK participation in the customs union and single market finishes at the end of the year.
However, in practical terms, this is a tool that is frequently used by the EU Commission against member states that aren’t in compliance with EU laws, including Ireland.
As recently as July this year, the EU Court of Justice fined Ireland €2m for failing to transpose an anti-money laundering directive into Irish law. The legal equivalent of this procedure is akin to a parking fine, but it still ups the ante at a sensitive time.
London School of Economics (LSE) report
The report carried out for the UK division of the Arla Foods co-op is of particular relevance to Irish farmers, though much of the information is already known.
It highlights that the consequences of failing to agree on a future EU-UK trade deal will have a particular impact on the food and drink sector, given the high level of tariffs and the extent to which the UK food industry is intertwined with the EU.
The legal equivalent of this procedure is akin to a parking fine, but it still ups the ante at a sensitive time
What is particularly striking is that 40% of agricultural and food products consumed in the UK are imported from the EU.
Examples include 85% of certain Danish meat products and 53% of Dutch products go to the UK and 75% of UK-cut flower imports come from the Netherlands, worth €500m annually.
To that, of course, we could add 50% of Irish beef exports, as 75% of UK beef imports come from Ireland at a value of €750m.
Cost of doing business
In this week’s Irish Farmers Journal, we highlighted that the cost per kilo of carcase beef would be 11 cents, even with a future trading relationship agreed.
The LSE has also put a cost on administration at 8% of the product being traded, 85% of which is paperwork, and an overall cost to UK importers of £4bn annually.
The report also identifies a huge cost in registering chemicals for farmer use in the UK, and fertiliser costs would increase given the dependence on Germany for supply.
The LSE has also put a cost on administration at 8% of the product being traded, 85% of which is paperwork
The limited value of a basic free trade deal is also identified, with food exports from the EU to the UK predicted by LSE to decline by over 22% - almost one quarter - and this would increase to an almost 62% decline if there is no deal agreed.
Consumer impact
Consumers will be left with a share of the increased costs of trade. LSE estimates that for branded and speciality products imported from the EU under a trade agreement, the cost will be 9.9% and a massive 26.5% in the event of no deal.
For unbranded and more substitutable products imported from the EU under an agreement, the price increase to consumers is estimated to be 4.7% if there is a deal, rising to 12.5% in a no-deal situation.
Irish agri foods would mainly fall into this unbranded category. There would also be a similar cost to Irish consumers, given that we import huge quantities of processed food from the UK.
While the EU launching a formal legal procedure against the UK will grab the headlines in mainstream news, it is the potential cost of tariffs and the now certain administration cost of doing business that will concern farmers the most.
The EU has merely started a procedure it has employed against all member states at one time or another, but it is the cost of doing business that will hurt farmers in Ireland and consumers in the UK, with LSE being the latest to estimate a value of these costs.
The EU has used similar proceedings against other member states on other issues.The LSE report highlights the cost of trade for UK - import and export.Consumers will pay between 5% and 26% more, depending on whether there is a deal or not.Volume of EU-UK trade will reduce.
The EU has formally commenced legal proceedings against the UK for violation of the Irish protocol in the withdrawal agreement after it introduced the internal market bill in the UK parliament.
Both the EU and UK agreed that the withdrawal agreement, which was signed in October last year, would be covered by the EU Court of Justice in the event of any disputes.
The EU had given the UK until 30 September to remove the offending clauses and on 1 October, Commission president Ursula von der Leyen announced that the EU had written a letter of formal notice, with a month for reply, which is the first stage of launching an infringement procedure against the UK.
The EU had given the UK until 30 September to remove the offending clauses
No doubt this will heighten the tension around negotiations on a future EU-UK trade agreement, due to take effect once UK participation in the customs union and single market finishes at the end of the year.
However, in practical terms, this is a tool that is frequently used by the EU Commission against member states that aren’t in compliance with EU laws, including Ireland.
As recently as July this year, the EU Court of Justice fined Ireland €2m for failing to transpose an anti-money laundering directive into Irish law. The legal equivalent of this procedure is akin to a parking fine, but it still ups the ante at a sensitive time.
London School of Economics (LSE) report
The report carried out for the UK division of the Arla Foods co-op is of particular relevance to Irish farmers, though much of the information is already known.
It highlights that the consequences of failing to agree on a future EU-UK trade deal will have a particular impact on the food and drink sector, given the high level of tariffs and the extent to which the UK food industry is intertwined with the EU.
The legal equivalent of this procedure is akin to a parking fine, but it still ups the ante at a sensitive time
What is particularly striking is that 40% of agricultural and food products consumed in the UK are imported from the EU.
Examples include 85% of certain Danish meat products and 53% of Dutch products go to the UK and 75% of UK-cut flower imports come from the Netherlands, worth €500m annually.
To that, of course, we could add 50% of Irish beef exports, as 75% of UK beef imports come from Ireland at a value of €750m.
Cost of doing business
In this week’s Irish Farmers Journal, we highlighted that the cost per kilo of carcase beef would be 11 cents, even with a future trading relationship agreed.
The LSE has also put a cost on administration at 8% of the product being traded, 85% of which is paperwork, and an overall cost to UK importers of £4bn annually.
The report also identifies a huge cost in registering chemicals for farmer use in the UK, and fertiliser costs would increase given the dependence on Germany for supply.
The LSE has also put a cost on administration at 8% of the product being traded, 85% of which is paperwork
The limited value of a basic free trade deal is also identified, with food exports from the EU to the UK predicted by LSE to decline by over 22% - almost one quarter - and this would increase to an almost 62% decline if there is no deal agreed.
Consumer impact
Consumers will be left with a share of the increased costs of trade. LSE estimates that for branded and speciality products imported from the EU under a trade agreement, the cost will be 9.9% and a massive 26.5% in the event of no deal.
For unbranded and more substitutable products imported from the EU under an agreement, the price increase to consumers is estimated to be 4.7% if there is a deal, rising to 12.5% in a no-deal situation.
Irish agri foods would mainly fall into this unbranded category. There would also be a similar cost to Irish consumers, given that we import huge quantities of processed food from the UK.
While the EU launching a formal legal procedure against the UK will grab the headlines in mainstream news, it is the potential cost of tariffs and the now certain administration cost of doing business that will concern farmers the most.
The EU has merely started a procedure it has employed against all member states at one time or another, but it is the cost of doing business that will hurt farmers in Ireland and consumers in the UK, with LSE being the latest to estimate a value of these costs.
The EU has used similar proceedings against other member states on other issues.The LSE report highlights the cost of trade for UK - import and export.Consumers will pay between 5% and 26% more, depending on whether there is a deal or not.Volume of EU-UK trade will reduce. 
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