A no deal Brexit has presented itself again in the face of a vulnerable agri-food sector, Ellen Durkin outlines the implications tariffs and checks could entail.
With an atmosphere of confusion present in Westminster and Brexit looming, planning for a no-deal scenario has become increasingly difficult, with the likelihood of the UK and the EU reaching a deal decreasing. There will be a Northern Ireland backstop if the EU and UK can’t reach a deal by the end of the transition period.
A hard border will be difficult to avoid in the case of a no-deal Brexit come October 31. An Taoiseach Leo Varadkar has said Ireland will be asked to implement EU laws to protect the single market and Britain will have to operate under World Trade Organisation (WTO) rules. WTO rules have the potential to enforce tariffs on export goods, from food, to electronics, and fuel. Ultimately this would result in the return of customs checks on goods entering the south and our exports to the United Kingdom, including Northern Ireland. In theory, this will create difficulty for farmers in Northern Ireland to send lambs and milk to the South, unlike the free movement we have today.
There is no doubt that the economy will suffer as a result of a no-deal Brexit and a hard border. Estimates are currently circling around €6.5bn, with the agri-food sector being hit the hardest. With regards to the beef industry, the UK accounts for 75% of animal exports. Currently, 50% of meat and meat-product exports from Ireland are destined for the UK.
An Taoiseach Leo Varadkar has warned of checks on goods and has promised further supports to be made available to the agriculture sector if the UK leaves the EU without a deal. In the case of mandatory checks, they are expected to occur at ports, airports, and businesses.
While addressing an audience at the British-Irish Chamber of Commerce, Varadkar highlighted a number of consequences from a potential no-deal Brexit, which included the application of tariffs on goods. He added a no-deal would cause economic growth to slow but a return to recession was not expected.
An Taoiseach continued by outlining support currently being planned in the event of a no-deal Brexit. He alluded to further financial supports that will be announced in Budget 2020. These supports are to be made available to areas of agriculture, industry, tourism and the border region. He added that the Beef Emergency Aid Measure (BEAM), had opened its applications and would “provide financial aid to Irish beef farmers facing difficult circumstances as a result of market volatility and uncertainty arising out of Brexit.” The BEAM scheme was formed to utilise the €100 million beef fund agreed by the European Commission and the Irish Government to support Irish Beef Farmers.
UK Prime Minister, Boris Johnson wants to have the current backstop proposal removed, because, in effect, it locks the UK into a Customs Union with the EU. This could inevitably inhibit the UKs ability to carry out its own trade deals. This is of concern to farmers across Ireland as regulatory alignment in Ireland would allow goods to move freely. However, if Britain is to set its own trade path, the market for Irish farmers could potentially be severely undermined.
Representatives from the Department of Agriculture and Rural Affairs (DAERA) representing the UK government have said that in the event of a no-deal Brexit, exports of certain products to the EU, including the Republic of Ireland will stop overnight, regardless of tariffs. An example of this is potatoes, where the EU will no longer continue to recognise UK regulatory standards once it becomes a third country.
Another problem could be in the export health certificates that have to accompany every consignment of animal product moving from NI to the EU if there is a no-deal Brexit. These certificates are filled in by the exporter and have to be signed by a department vet. Concerns are mounting over the availability of vets in NI to manage the anticipated increase in these export health certificates as figures are expected to jump from 18,000 to over 2 million.
As it stands, a no-deal Brexit appears likely. However, it will be difficult to know for sure until Brexit takes place on October 31st. Farmers can hope that sense will prevail in Westminster before this time.