The news this week that Switzerland is the only significant UK trading partner that has agree to roll over EU trading terms for the UK on its departure from the EU has consequences not just for UK exporters.
If product from Britain or Northern Ireland has to cease trade with non-EU markets because it is no longer viable with tariffs applied, then it means greater pressure will come on the UK market and Irish exports will feel the impact.
This makes Brexit an indirect consequence for Ireland just as the collapse in the value of sterling has been since the referendum in June 2016.
Disruption to the UK and wider EU market is also likely to increase in the coming weeks in the lead-up to Brexit on 29 March as well. That means product that until now was exported from Britain and Northern Ireland will increasingly be looking for a market within the EU itself during the remaining weeks of membership.
Already this week we have seen the imminent Brexit impact directly on exports from Northern Ireland to non-EU countries.
The dairy industry has chosen to risk despatching deliveries to Asia in the knowledge that when they arrive, the UK may no longer be a member of the EU. That will call into question what tariff will apply if the trade is with a country that has a FTA with the EU such as Japan and even more importantly the status of the EU health cert that accompanies the delivery.
Will it still be recognised given that the UK is outside? The exporters have taken a leap of faith in the UK government having something sorted out with the EU ahead of Brexit day but there are no guarantees.
Beef exports paused
The beef industry has taken a different view with exports to Canada. The Canadians had been buying trims out of the north but the view taken is that there is no certainty that product shipped today would have cleared the import process by the time of the UK’s scheduled departure at 11pm on 29 March.
Beef products entering Canada are subject to a series of E coli tests that take some time and there are two issues at play with beef in Canada.
The first is what the applicable tariff is going to be. As of now, Northern Ireland companies are availing of CETA, the free trade agreement between the EU and Canada, to export product at zero tariff.
When the UK leaves the EU, then the product becomes liable for tariffs unless the Canadian government has a rollover deal in place similar to what has been agreed with some countries. Switzerland and Chile are two of the more substantial countries with which a rollover agreement is in place. The rest are smaller nations such as Zimbabwe, the Seychelles and the Faroe Islands.
Given that Canada is a Commonwealth member, the UK might have expected that they would facilitate such a rollover. By not having this in place ready to go immediately suggests that Canada has ambitions to negotiate a separate and different agreement with the UK form what it has in place with the EU.
Canada has big ambitions for agricultural exports and in an separate negotiation, we would expect that Canada would be making demands for access in agriculture greater than what it has with the EU through CETA.
There is also the issue of health cert recognition. CETA was something of a first for the EU in that Canada agreed to recognise the EU28 as one unit from a health cert perspective with a one-size-fits-all approach across the 28 member states.
This also expires on the UK departure so that means the UK will have to agree its own health cert. Again they might expect that this would also be rolled over but as of now that doesn’t appear to be the case.
This is what Brexit looks like in practice as opposed to the theory that has been presented since before the referendum.