In her speech on Tuesday, the UK prime minister Teresa May effectively confirmed that Irish agriculture – and to some extent the Irish economy – is set for a decade of economic uncertainty. It is unlikely to cause her any great concern.
As Colm McCarthy points out, the fact that “Global Britain” is now the slogan of choice gives us some insight as to the level of consideration being given to the impact of any policy decisions on the island of Ireland. While it is clear that a common travel area between the UK and Ireland is desired, it is far from clear as to how it could operate – and it is unlikely to extend to customs and tariff-free trade between the two parts of this island.
Since the outcome of the Brexit vote, much has been made of the reliance of our agri-food sector on the UK market – and rightly so. It is a market that consumes five times more Irish beef and almost four times more Irish cheese than the Irish market itself. At the IFA AGM this week, the association’s president Joe Healy accurately described Brexit as the biggest challenge to face the sector in over half a century.
We at least now know the UK position and eagerly await a detailed response from Brussels and the Irish Government. Ireland must not be behind the curve. Given the historic links, Ireland can position itself in a key negotiating role that can influence the direction of travel in the months and indeed years ahead.
It is concerning that to date the focus of the Irish Government appears to have been weighted towards reinforcing UK rather than EU relationships. Speaking at the IFA AGM, Minister for Agriculture Michael Creed was less than clear as to what discussions have taken place at EU level to protect farmers from the fallout of the political uncertainty – Bord Bia figures show the farmer burden to date at €150m.
These are exceptional times and require an exceptional response. Minster Creed needs to push for the introduction of export refund-type measures and monetary compensation amounts (MCAs) to take account of currency volatility and protect farmers in the years ahead. The precedent has been set in how the European Commission moved to support Finland and the Baltic states in the wake of the Russian embargo.
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The contents of May’s speech need to be assessed against a backdrop where she is about to enter into what will no doubt be prolonged and tough negotiations with Brussels. Nevertheless, the extent to which she has committed to removing the UK from the EU single market and customs union sees any hope of what has been described as a soft Brexit evaporate.
A free trade agreement (FTA) is now the preferred mechanism through which the UK wants to advance future relations with the EU. The reality is that the UK always saw an FTA model as its ideal and never really subscribed to a full political role for the European Union. By striking an FTA, May clearly aims to cherry-pick the pieces of European involvement that appeal to the UK while attempting to have total freedom to negotiate deals with every other third country.
The mechanism for the EU to grant such a deal will be neither straight forward nor quick. Such a move would set a dangerous precedent and fuel the campaigns of other anti-EU parties. Furthermore, the two-year time frame for Brexit negotiations is totally unrealistic – an eight- to 10-year time frame is a much more likely proposition in the context of the UK, operating outside of the single market, reaching an FTA with the EU.
From an Irish perspective, ensuring agricultural goods are a key part of any FTA would be essential.
No doubt buoyed up by recent comments from the US in relation to a potential trade deal, May at the same time as wanting free access to the EU markets, intends to progress global trade deals. She cited discussions with Australia, New Zealand and India with reference to Brazil and obviously the US – worryingly for Ireland all active players on the global beef and dairy markets.
Of course, the UK will quickly realise the difference between trade discussions, hard-ball negotiations and striking a deal. History shows the risks associated with quick and dirty trade deals. Globally, the UK proposition will be further complicated by the fact that trade partners will be reluctant to strike a comprehensive trade deal until there is clarity on the UK’s future relationship with the EU.
Lessons from history
There is a time in a nation’s history when, looking back, it can be seen that conditions have fundamentally changed. Take, for example, the UK joining the then common market in 1973 and the UK Labour government’s agricultural act of 1947. The latter signalled very difficult access for Irish agricultural products on to the UK market while access to Europe drifted further and further away. Accession to the EEC in 1973 changed all that for the better. We are at a similar inflection point now. Granted, we still have access to Europe but Ireland needs to plot a strategy that will serve us for as far into the future as we can see. We are starting from a strong base – the pig sector has reduced its dependence on the UK with access to China. We need the same for our beef sector, while on the dairy side, our cheese exports to the UK are vulnerable.
Those in charge of agricultural policy cannot wish the problems away – the changes coming are real and fundamental. The only certainty we now have from the events of this week is that Brexit is going to be a long and possibly fractious process during which Irish farmers will need protection from Government and Brussels.
We will certainly listen with interest to the keynote address by Agricultural Commissioner Phil Hogan at our Global Trade Conference taking place on Friday 27 January.
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