The five weeks of intensive EU – UK negotiations on a future trading relationship concluded in London last week, without any sign of a breakthrough. Talks will resume on 17 August, with further rounds scheduled into September.

Fish

Despite the talks, there is no indication that a deal can be secured without major concessions on bottom lines. Fisheries is one of the main stumbling blocks, despite it being a miniscule economic contributor to either the UK or EU 27. The problem is that while the EU wants to retain its current access to UK territorial waters, the reality is that the main market for fish caught in these waters is in the EU 27.

There is no indication that a deal can be secured without major concessions on bottom lines

Basically, the UK have the fish in their territory, but not the market, while the EU have the market, but not the supply without having access to EU water. On the surface, this may seem like an area where the EU could concede to the UK, but the fear of protests from French fishermen will make the EU slow to give ground.

State aid rules

The biggest area of EU concern about the UK in a post-Brexit era is that they become a low-cost, lightly-regulated manufacturing base on the EU border. This is the justification for not treating the UK like Canada, as well as the sheer volume of trade between the EU and UK. Giving the UK a favourable arrangement would allow the UK to cherry pick the best bits of being an EU member without the responsibilities, and this is something the EU has committed to not doing. To be part of the single market as Norway is, without being a member of the EU, involves accepting the free movement of people, goods, services and money, something that the UK isn’t prepared to do.

Standoff

There is considerable speculation that a basic deal of some sort will be put together in the autumn, but trade after 1 January will be very different from what it has been.

The only way these can be avoided is if the UK reverses its policy of extending the transition, or indeed, accepting the single market rules, neither of which seem likely

One area that is already decided on is the introduction of border controls and the UK in its Brexit impact assessment has calculated the transaction cost per trade will be between £15 (€16.66) and £56 (€62.22) per transaction, amounting to a total of €7.5bn (€8.3bn) on UK imports and exports. These costs will be incurred on trade, irrespective of what arrangement the UK and EU reach before the end of the year. The only way these can be avoided is if the UK reverses its policy of extending the transition, or indeed, accepting the single market rules, neither of which seem likely or politically acceptable in the UK.

Effect on Irish agri exports

At a minimum, this will make Irish exports to the UK more expensive, with the opposite applying to imports from the UK.

The reality now is that the different types of Brexit available are bad or worse

At best, a free trade deal would open the door for the UK to make trade deals with other global exporters of agricultural produce, thereby weakening the value of the market for Irish exports. An even worse scenario is that no deal at all is reached, at which point penal tariffs would hit Irish exports to the UK. The reality now is that the different types of Brexit available are bad or worse.

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