A completely new, ‘half way house’ customs arrangement should be engineered to cushion the Irish agri-sector from a hard Brexit, Irish Co-Operative Organisation Society’s European Affairs Executive has stated.
Guest speaker at the Arrabawn Co-Op agm in Nenagh, Alison Graham, from Mallow, told suppliers that prospects under a hard Brexit are not good for the dairy sector, particularly for cheese, and therefore we should strive to achieve a concrete new customs relationship with the UK.
The Brussels-based expert also said that getting a transitional trade agreement for the period after the UK leaves the EU was critical to enable the agri-sector and others prepare for what will follow
A sudden Brexit could, however, be ruinous for many in the sector.
But she predicted also that the UK position may soften after the June general election.
“The UK has previously said it would be open to some kind of customs arrangement with the EU. Brexit is an entirely new situation and there is certainly the idea that we could create an entirely new kind of customs relationship with them in order to accommodate continued trade,” she told the Arrabawn suppliers.
“With 50,859t of butter and 114,749t of cheese exported to the UK in 2016, Brexit is the most significant threat to the growth and development the Irish agri-food sector. Without any agreement tariffs could potentially be as high as 60% on dairy and beef products and there would be major implications for the supply chains.
“It is now clear that the UK will leave the single market, however it is still not known what exactly the future EU-UK relationship will look like. The coming snap general election in the UK could potentially see a strengthening of support for a more moderate Brexit and therefore perhaps we will see more of a conciliatory mood after the general election.”
She continued: “A transitional agreement is of critical importance for all businesses in order to avoid a "cliff-edge scenario" which would see customs borders introduced overnight and tariffs on Irish exports to the UK. Maintaining customs arrangements that are as close as possible to the status quo under a transitional arrangement would allow industry the time to implement risk mitigation measures, such as adjusting supply chains, and finding new markets.
“We are already expanding our international exports, in particular to Asian markets. We will need to grow these markets at a faster pace than we initially thought, to compensate for potential market loss in the UK. However establishing a consumer brand or new product on these markets takes a lot of time and investment. Even then, there is a concern that we not will receive the same price premium that we currently get from the UK market.”
She said that there are Brexit threats beyond the tariffs which alone would reduce Ireland’s competitiveness on the UK market. Among them are the potential for increased third-country competition, particularly from New Zealand and Australia. This would not only threaten our market share but also prices, she said.
“Additionally, Brexit could result in an economic slowdown in both the UK and Ireland, which would likely impact on consumer spending. The UK is also used as a land-bridge for many Irish exports into continental Europe and therefore current supply lines will need to be re-considered. The impact of the UK on the CAP budget will also be significant. The UK is a net contributor overall to the EU budget- their departure will reduce the CAP budget by at least 5%.
“Based on these concerns, our key priorities going into the Brexit negotiations are essentially to maintain our current tariff free access to the UK market, protect the price premium of the market and to minimise the border controls and administration costs under any new trading arrangement.”