Free Trade Agreements, Customs Unions and all that…
A collective sigh of relief could be heard across the meat industry when a cliff-edge, no deal Brexit was avoided on 12 April. I have my views on whether Brexit is ‘a good thing’ or not but what we can all agree on is that a disorderly, no deal, Hard Brexit is a ‘bad thing’. Analysis carried out by the UECBV, the European Meat Trade Association estimates that it would lead to over 32,000 job losses across the EU industry and see a collapse in trade from the UK to the EU of over 50% for sheep and pigmeat and some 90% for beef with major financial consequences for all sectors.
If anything positive came out of those last anxious days it was the decisions made by the Commission’s Standing Committee on Plants, Animals, Food and Feed (SCoPAFF) formally listing the UK as a third country for all products of animal origin on the same animal health conditions as it currently enjoys as a Member State. This is on the basis of the maintenance of regulatory alignment for an initial period of at least 9 months.
This was essential as there had been concerns that if the UK failed to maintain its ‘A’ rating, additional conditions would apply such as a requirement for beef to have come from animals that have reacted negatively to a TB test carried out within 3 months before slaughter. This would have been a deal breaker and effectively stopped the beef export trade in its tracks.
We can only hope that the prospects of an accidental no-deal Brexit have been finally averted though there are a few more banana skins in the path.
We can only hope that the prospects of an accidental no-deal Brexit have been finally averted though there are a few more banana skins in the path. A planned no-deal remains a risk. More likely is something that takes us beyond the existing Withdrawal Agreement and Political Declaration and seeks to more clearly define our future trading relationship with the EU.
Whatever the outcome, Brexit will bring with it additional trade friction. The issue is how this is mitigated in a way that remains politically acceptable. Setting no-deal / full WTO aside, a number of options are open, ranging from a Free Trade Agreement which can vary in its degree of freeness (sometime referred to as Canada +, ++, +++ etc.) to a Customs Union.
The option of an EU/UK FTA with no tariffs and no quantitative restrictions has already been offered and this would go far beyond any existing EU FTA. A Customs Union would reduce trade friction even further in areas such as rules of origin and customs procedures but problems with veterinary checks would remain.
And there’s the rub. To achieve relatively frictionless trade with the EU is not only a question of securing a Trade Deal but also one of reaching a sensible agreement on regulatory alignment.
At the upcoming BMPA members-only conference at Stationer’s Hall, London on 5 June 2019 we will be taking a closer look at these issues, what the consequences of the various trade agreement options are on trade friction and how regulatory alignment might work as well as looking at examples of how this already functions with some of the EU’s close trade partners.