Beyond Brexit: examining trade between the EU and the rest of the world

The media frenzy around Brexit at present risks attention not being paid to the wider trade negotiations ongoing between the EU and the rest of the world.

Of course, from the importance of trade perspective, the UK is a major market for the entire EU but Ireland and Irish agriculture in particular.

Conference

The Irish Farmers Journal, in partnership with Grant Thornton, explored many of these issues in the Navigating Global Trade/EU Citizens Dialogue event on Friday in the RDS.

The continued growth of EU food and drink exports highlights the success of developing the Common Agricultural Policy (CAP) over the last two reforms from supporting production to supporting farmers, who in many cases are better described as landowners.

It is much more politically acceptable to have a CAP that focuses on the person rather than production, especially if it creates surpluses. It does leave a problem, however, with the vulnerable sectors of agriculture such as specialised suckler beef and the definition of what exactly a genuine farmer is.

Future trade with the UK

While the debate goes on about the type of Brexit, deal or no deal, soft or hard, the reality is that nothing can be as seamless as the UK being a full EU member.

Customs union alignment would be fine for keeping the UK market closed to cheap imports, but it still means border checks as most scrutiny is for alignment of standards which is what the single market means.

While the debate goes on about the type of Brexit, deal or no deal, soft or hard, the reality is that nothing can be as seamless as the UK being a full EU member

It will be the extent that these plus how customs are aligned that will determine how more bureaucratic doing business with the UK becomes.

Mercosur

A further round of trade negotiations took place with Mercosur in South America this week but the deal which appeared imminent at the end of 2017 has slipped, largely because the South Americans couldn’t meet EU expectations on access for cars and dairy produce.

A new president in Brazil has also interrupted negotiations because trade deals are a lower priority for him than they were for his predecessor.

EU 481 grain-fed beef quota

A deal that is getting very close is allocation of a dedicated share of the EU 481 grain-fed beef quota, which is a 45,000t quota shared between Australia, New Zealand, Uruguay, Argentina, Canada and the US on a first-come, first-served basis. This was set up in 2009 to resolve the dispute between the EU and USA on the EU ban of US hormone-treated beef.

The tariff on product under this quota is zero-rated, and the quota is almost always filled quickly and while the USA was the main beneficiary at the outset, in recent years the other countries have been using it and squeezing the USA’s share.

The dispute threatened to reignite again recently but this looks like being solved by the EU agreeing to ring fence 35,000t of this quota for the USA.

Australia and New Zealand

The EU is currently taking great pride in the trade deal with Japan, which came into effect last month, and deals concluded with Singapore and Vietnam are also positive for agricultural exports.

However, negotiations are progressing at speed with New Zealand and Australia, which are more a threat than opportunity for Irish and EU farmers.

Australia has just a 19,000t sheepmeat quota to the EU compared with New Zealand’s 228,000t and they are pressing for much increased access for sheep meat as well as beef.

New Zealand is currently in dispute with the EU on allocation of the sheepmeat quota between the EU and UK on Brexit. However, its main interest in the EU will be for beef and dairy.

While many trade deals present a threat to Irish farmers, overall international trade is good and necessary to a country that exports 90% of its production. This was confirmed in a sli.do poll at the conference in which 93% of the participants viewed international trade as more an opportunity than threat.