Maintaining access to and value of the UK market
Among the key Brexit priorities is the retention of tariff-free access to and maintenance of the value of the UK market is a key priority for Irish farming and the food sector in the Brexit negotiations. In addition, the potential disruption to trade flows between Ireland and Northern Ireland, with their highly integrated agri-food sector and complex supply chains, must be minimised.
The imposition of tariffs on EU agri-food exports to the UK could make agri-food trade uneconomic. In addition, an increase in low cost food imports that undermines the value of the UK market would have a devastating effect on the Irish agri-food sector and on other EU agri-food exporters for whom the UK is an important trading partner. The value of EU agri-food exports cannot be undermined by an increase in low cost food imports into the UK market, which do not meet the high food safety, animal welfare, health and environmental standards that are required of EU producers.
Overall, the displacement of Irish food exports from the UK market could create a serious market disturbance on the EU market, potentially destabilising the EU market balance. The retention of access to and maintenance of the value of the UK market is critically important, therefore, not just for the Irish farming and food sector, but for food producers and the food industry across the EU.
IFA believes that the EU must set as a strategic objective in the Brexit negotiations the maximisation of the future value of the EU farming and food sector.
To achieve this, the optimum outcome for Irish farming and the agri-food sector is that the UK would remain within and fully compliant with the Single Market and Customs Union.
If this outcome is not possible, the EU must seek to negotiate a Comprehensive Free Trade Agreement between the EU and UK, which would include the following specific elements for agriculture and food:
- Tariff – free trade for agricultural products and food;
- Maintenance of equivalent standards on food safety, animal health, welfare and the environment; and
- Application of the Common External Tariff for imports to both the EU and UK.
A strong CAP Budget Post 2020
A key Brexit priority is that a strong CAP Budget post-2020 is critical for farm incomes, farm output and wider economic activity.
A reduction in spending power for Irish agriculture arising from a cut in direct payments to farmers would have a significant and negative knock on impact on the demand for goods and services in the rural economy.
EU solidarity with farmers requires that there must be no reduction in the CAP budget arising from the UK exit. Options to make up any shortfall in the EU budget must include contributions from the UK withdrawal payment and from the remaining Member States.
Support for Market Disturbance
The volatility of the euro-sterling exchange rate during the Brexit negotiations presents a clear threat to the competiveness of Irish agri-food exports with the potential to undermine the viability of primary producers, processors and exporters.
Direct support for farmers through CAP Market Support or other measures must be made available in the event that sterling further depreciates during exit discussions, impacting negatively on farm incomes and livelihoods.
Flexibility on State Aid rules
The market disturbance caused by the sterling depreciation is impacting unequally on different Member States and different sectors, depending on their exposure to trade with the UK. Ireland, and the Irish agri-food sector in particular, are hugely impacted by the exchange rate movements that have occurred as a result of the UK referendum.
EU State Aid limits must be extended in Member States that have been disproportionately impacted by the depreciation of sterling, and whose competitiveness versus their EU trading partners has been undermined.
Increased support for marketing and promotion
As an export dependent sector, increasing market access remains critical for the growth of the Irish farming and food sector. This challenge has been intensified by the UK Brexit decision and the uncertainty it creates for access to the UK market.
Increased funding, at both Irish and EU level, must be provided to Bord Bia and other state agencies, to support the promotion of agri-food exports on the UK market and the diversification of products into new markets.
Minimising uncertainty during the negotiation process
The exit of the UK from the EU is an unprecedented event, and with no previous experience of a withdrawal negotiation, has led to considerable economic uncertainty, with the potential for significant economic damage to both the EU and UK economies.
In order to minimise economic uncertainty and the potential for major economic damage for exposed sectors, discussions on the future EU-UK relationship must be commenced early in the negotiating process.
In addition, there must be a commitment to implementing a transitional arrangement, if necessary, between the UK exit and agreement on the future EU-UK relationship. This must be implemented to minimise disruption and damage to trade and farmers’ livelihoods in that time period.
Providing Structural and Adjustment Support
Any changes to the trading relationship between the EU and UK that reduce market access, and increase barriers to trade, have the potential to disrupt trade flows, reduce the value of exports, and, ultimately negatively impact on farm incomes and employment in exposed sectors.
The EU must make available structural and adjustment funding to the farming and food sectors that are negatively impacted due to changes in the relationship that is negotiated between the EU and the UK.