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EU Agriculture Commissioner Phil Hogan fielding questions from Business delegates on the EU misson to China and Japan.
After months of debate, the UK has made its decision, and it is not the choice that Irish farmers would have wanted. When the dust settles, the process of finding a new arrangement between the UK and its former EU colleagues begins under Article 50 of the Treaty of Rome, which stipulates a two-year negotiation period in the event of a member choosing to leave.
There are five types of trade arrangement that the EU has with non-members on the edge of the EU, which the UK could now move into.
Become part of the European Economic Area (EEA) or the “Norwegian model”
This model enables a non-EU member to avail of all the free-trade arrangements between EU member states without membership. It operates in Norway, which has twice voted to reject the option of joining the EU as a full member.
While this may initially look attractive, in practice it means accepting all EU legislation automatically into domestic law. This means that all the restraints of EU membership remain in place without the opportunity to shape or influence policy as a member. Not likely to be an attractive option in the UK government.
Join the European Free Trade Association (EFTA) – the “Swiss model”
This is similar to the EEA in practice but involves transcribing EU law into domestic law by way of bilateral treaties. Switzerland currently has this arrangement, but it is thought unlikely that the EU would extend this to the UK as they are not particularly happy with the time it takes to update Swiss legislation.
In any case, it would again involve the UK accepting EU legislation into domestic law without the opportunity to shape or influence it, which is also unlikely.
Customs union with the EU – “Turkish model”
This is a common trade policy which means that outside the EU, the UK could still be part of the customs union as is the case with Turkey. Trade and goods can move freely within the customs union area, with less regulatory imposition. This would involve accepting international trade agreements and again includes loss of sovereignty in decision-making, which was such an issue with the UK.
Deep and comprehensive free-trade agreement (DCFTA)
Probably the preferred UK option, which would lower or even eliminate tariffs and give more regulatory freedom than the other arrangements. However, it would be necessary to have post-exit UK standards recognised and accepted as equivalent to the EU in order to trade.
For example, in an exit situation, the UK could not independently decide it would allow the use of hormones in beef production and trade that product into the EU. A full agreement on standards and tariff rate quotas would have to be negotiated.
Most favoured nation (MFN) – the WTO option
This is essentially trading on a tariff-paid basis and is the most unlikely option unless there is a serious breakdown in relationships after a British exit. It would be the most costly option both for Britain and the remaining EU27.
Costs
Economics Professor Alan Matthews of Trinity College is of the view that British-EU trade in agri-food would likely continue tariff-free, but with Britain staying outside the single market. This would involve the return of border formalities, including between Northern Ireland and the Republic of Ireland, and an inspection regime to ensure compliance with EU legislation, an administrative burden in itself.
Even outside a tariff arrangement, Professor Matthews estimated that the cost of doing business between the UK and the EU 27 would cost an extra 5%.
After months of debate, the UK has made its decision, and it is not the choice that Irish farmers would have wanted. When the dust settles, the process of finding a new arrangement between the UK and its former EU colleagues begins under Article 50 of the Treaty of Rome, which stipulates a two-year negotiation period in the event of a member choosing to leave.
There are five types of trade arrangement that the EU has with non-members on the edge of the EU, which the UK could now move into.
Become part of the European Economic Area (EEA) or the “Norwegian model”
This model enables a non-EU member to avail of all the free-trade arrangements between EU member states without membership. It operates in Norway, which has twice voted to reject the option of joining the EU as a full member.
While this may initially look attractive, in practice it means accepting all EU legislation automatically into domestic law. This means that all the restraints of EU membership remain in place without the opportunity to shape or influence policy as a member. Not likely to be an attractive option in the UK government.
Join the European Free Trade Association (EFTA) – the “Swiss model”
This is similar to the EEA in practice but involves transcribing EU law into domestic law by way of bilateral treaties. Switzerland currently has this arrangement, but it is thought unlikely that the EU would extend this to the UK as they are not particularly happy with the time it takes to update Swiss legislation.
In any case, it would again involve the UK accepting EU legislation into domestic law without the opportunity to shape or influence it, which is also unlikely.
Customs union with the EU – “Turkish model”
This is a common trade policy which means that outside the EU, the UK could still be part of the customs union as is the case with Turkey. Trade and goods can move freely within the customs union area, with less regulatory imposition. This would involve accepting international trade agreements and again includes loss of sovereignty in decision-making, which was such an issue with the UK.
Deep and comprehensive free-trade agreement (DCFTA)
Probably the preferred UK option, which would lower or even eliminate tariffs and give more regulatory freedom than the other arrangements. However, it would be necessary to have post-exit UK standards recognised and accepted as equivalent to the EU in order to trade.
For example, in an exit situation, the UK could not independently decide it would allow the use of hormones in beef production and trade that product into the EU. A full agreement on standards and tariff rate quotas would have to be negotiated.
Most favoured nation (MFN) – the WTO option
This is essentially trading on a tariff-paid basis and is the most unlikely option unless there is a serious breakdown in relationships after a British exit. It would be the most costly option both for Britain and the remaining EU27.
Costs
Economics Professor Alan Matthews of Trinity College is of the view that British-EU trade in agri-food would likely continue tariff-free, but with Britain staying outside the single market. This would involve the return of border formalities, including between Northern Ireland and the Republic of Ireland, and an inspection regime to ensure compliance with EU legislation, an administrative burden in itself.
Even outside a tariff arrangement, Professor Matthews estimated that the cost of doing business between the UK and the EU 27 would cost an extra 5%.
Attendees of the Irish Farmers Journal Tillage Day in Kildare on Thursday heard how the ongoing loss of key sprays and chemistry in the sector is having an impact on costs.
To reach the EU’s Farm to Fork goals by 2030, Ireland’s organic farming area will have to increase drastically. Is this easier said than done? Janine Kennedy investigates
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