When the EU and UK agreed the Trade and Cooperation Agreement (TCA) on Christmas eve, there was an expectation that the prolonged debate on a no deal Brexit was over.

Unfortunately, despite being heralded as a wonderful deal by the UK initially, it soon grew controversial as the reality of EU border controls on trade between Britain and Northern Ireland came into effect.

Since then, there has been constant debate on operational aspects of the protocol and since the release of a UK command paper in July this year, the issue of the European Court of Justice (ECJ) as arbitrator has come to the fore as well.

Article 16

There has been much media commentary on the UK moving unilaterally to suspend the parts of the protocol that create a trade border between Northern Ireland and Britain.

The EU would contend that they have moved to remedy many of the causes for disruption and the UK have made it clear that they want a total renegotiation

Such a facility is provided for under Article 16 of the protocol, which enables either party to suspend the operation of parts of the protocol where there has been a serious disruption caused to trade.

The EU would contend that they have moved to remedy many of the causes for disruption and the UK have made it clear that they want a total renegotiation, as there are parts of the protocol they don’t want, such as the role of the ECJ.

Next steps

If the UK use Article 16, nothing changes immediately, rather there is supposed to be an intense period of negotiation to resolve the issues causing the problem. However, this has become a bigger issue than operation of trade between Britain and Northern Ireland. Relations between the EU and UK have plummeted and there is an expectation that if the UK proceed with Article 16, the EU will react, possibly suspending the entire TCA or even withdrawing from it entirely in retaliation.

Farmers and traders will be hoping for resolution, but there is a real possibility of an EU-UK trade war where either side could impose tariffs

If this were to happen, nothing would change immediately for farmers, as a nine-month notification period is required for suspension of the TCA and 12 months for termination.

In practice, that means a return to the deal/no deal negotiation that dominated news bulletins in 2019 and again in 2020 in the lead up to the final agreement on Christmas eve.

Farmers and traders will be hoping for resolution, but there is a real possibility of an EU-UK trade war where either side could impose tariffs.

This and a collapse of the TCA this time next year would be a nightmare for Irish farmers. The particularly high level of tariffs on meat and dairy mean that in the absence of a deal, Ireland would carry 19% of all EU tariffs in trade with the UK, despite only having 5% of the total EU-UK trade.

t is also the TCA and the protocol that facilitate continued seamless trade on the island of Ireland

Based on trade patterns and volume, the tariff cost would be over €1bn, the vast majority carried by Irish beef exports to Britain, with cheddar the next most impacted product.

It is also the TCA and the protocol that facilitate continued seamless trade on the island of Ireland, but in the absence of an agreement, an EU-UK tariff border on the island of Ireland seems unavoidable.

This would have serious negative consequences for milk and lambs coming south for processing and cattle and pigs going north.

Hope for the best, prepare for the worst

Previously, when a no deal Brexit seemed inevitable with all the negative consequences for Irish farmers, a last minute solution was found. If logic was the guiding star for the negotiations, a solution could be found again. However, such is the level of animosity between the EU and UK that a trade war cannot be ruled out.

It is only when these are in place, and when the trade agreements with Australia and New Zealand come into effect, that Irish farmers will feel the impact of Brexit

With this in mind, the Irish Government has to prepare for the worst case scenario of full tariff trade with the UK and hope it never happens.

A Brexit adjustment reserve (BAR) fund is in place, but the fact that it is time limited and Irish farmers have not yet had negative Brexit consequences means that it is of little practical use. There has been no negative impact because of strong market prices and the UK hasn’t enforced its border controls yet. It is only when these are in place, and when the trade agreements with Australia and New Zealand come into effect, that Irish farmers will feel the impact of Brexit. If this is added to by full tariffs, it will be a nightmare scenario for Irish farmers and the Government and EU need to have a BAR 2 fund on standby because if there are tariffs, it will be needed.