Last week’s penultimate round of trade negotiations between the EU and UK broke up without any progress or apparent basis for future progress on aligning future trade interests when the UK exits the Brexit transition arrangement at the end of this year.

What was striking was that both chief negotiators, David Frost for the UK and Michel Barnier for the EU, appeared to be in a race to brief the media on just how much they disagreed and apportion blame to each other for failure to make progress.

This will have been of interest to political observers and adjudication on who was right and wrong is largely shaped by views on the principle of Brexit itself.

However, it was made very relevant for farmers this week in the announcement of UK tariff policy on goods that will take effect from 1 January 2021 in the event that no alternative deal is concluded with the EU.

Reversal of UK policy

The UK policy will be effectively adopting WTO tariffs for agricultural produce and cars, with the euro rates converted to sterling at an exchange rate based on the average of the past five years.

This is a reversal of the policy indicated by the previous government ahead of the original departure date of 31 March 2019. Then, the UK policy for agricultural imports was to create a tariff-free quota of 230,000t for beef, available to all countries in the world, plus a reduction of WTO tariffs on beef and poultry by half, pork products at 10% to 20% of EU levels, and import tariffs removed across a range of dairy produce.

This exposed UK farmers to competition from the lowest-cost beef producers in the world – the South American countries where cattle prices are on average €1.50/kg lower than UK equivalent prices at present.

Disaster for Irish exports to UK

This move will protect the value of the UK market for UK farmers but it will torpedo Irish exports to the UK of cheddar, poultry, pigmeat and beef where the UK accounts for half the market or more.

There may be scope to develop alternative markets for dairy, pigmeat and poultry because Irish prices are competitive at a global level.

This move will torpedo Irish exports to the UK of cheddar, poultry, pigmeat and beef

However, there is no alternative for the 250,000t of Irish beef exports to the UK which this week’s proposals would add a tariff cost of £2.53/kg plus 12% of the product value on entry to the UK from Ireland.

That would double the cost of some lower value boneless beef exported from Ireland to the EU on a daily basis.

Business as usual on north south trade

The withdrawal agreement provides for uninterrupted tariff-free trade between both jurisdictions on the island of Ireland. This means that these tariff proposals would have no impact on milk and lambs moving north-south for processing or on pigs and cattle that move the other way.

What will be interesting is how the tariff plan will be implemented given the commitment to avoid checks on movement of goods at the land border in Ireland or on movement of goods from Northern Ireland to the rest of the UK. Surely there has to be temptation for Irish exporters to continue shipping through this route as some routinely do already.

Negotiating tactic?

There is also perhaps a more Machiavellian explanation for the UK announcing its tariff position at this time. The negotiations on a future trade deal are in deadlock and the EU chief negotiator consistently refers to his negotiating mandate given by the 27 member states as the reason for his firm negotiating position.

The UK is anxious to bypass the chief negotiator and get to the leaders of the individual member states but this isn’t provided for in the negotiating mechanism. Perhaps there is a plan that the countries whose trade is most threatened by these tariffs, in particular Ireland with agriculture and Germany with cars, might have a word with the chief negotiator to encourage him to move to accommodate UK requests.

Publication by the UK of their tariff intention raises the negotiating stakes and crystallises the cost of Brexit – €1.7bn estimated by the Irish agriculture minister early in 2019.

This is the reality if there is no meeting of minds between the UK and EU and despite the consequences, there is no guarantee that future trade on WTO terms will be avoided, even though logic suggests that it should given the already huge economic cost of COVID-19.

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UK to maintain agricultural tariffs