The negotiation of a post- Brexit Trade Agreement with the UK has finally been concluded at the eleventh hour, after years of up and downs. Farm Europe has from the outset closely analysed the consequences of Brexit, and raised the attention of the sector and decision-makers to its large impact.
Our assessment is clear: the deal reached is pretty much the best possible outcome, although the very best would have been not to have Brexit in the first place. More on it at the end.
The Trade Agreement delivers across the board duty and quota-free trade for agricultural products. As the EU enjoys a hefty trade surplus with the UK this is indeed a good outcome.
On sanitary and phytosanitary rules, each side must respect the other’s rule when exporting.
On organic products, an equivalency agreement was reached.
On the very technical but equally important issue of Rules of Origin, key to preventing “triangular trade” and that the UK could become a platform to export third-countries products to the EU, most products are covered by the “wholly obtained” rule. This means that the products exported from the UK and that benefit from duty free access to the EU, must be produced in the UK without any significant content from third countries origins. Meats, dairy, cereals, starch, wines, are well covered by this rule. On processed products, the sugar content has in some cases more leeway, but as the UK has kept a high border protection we do not anticipate any significant problems.
Thus the integrity of the EU’s single market is well preserved.
The sole area where a broad agreement does not seem to have been reached is on the recognition of Geographical Indications, although there is some language as to possible further talks, which we would encourage.
To conclude, we have good grounds to congratulate the Commission, in particular the chief negotiator Michel Barnier and his team.
But let’s not forget that Brexit, even with a good Trade Agreement, will bring more costs and red tape linked to customs procedures; and increased competition in the UK market for our exports, as the UK has the freedom to negotiate Trade Agreements with third countries. Also, the risk of regulatory divergence in the future is real, it works both ways, and might negatively impact free trade.
The real impact of Brexit in our agriculture trade balance with the UK will take a few years to show-up, as the UK opens-up gradually to highly competitive third countries.
Although the Trade Agreement is the best possible, and we anticipate its ratification, our agri-food sector should not waste time to prepare for more competition. The CAP resources should without delay be mobilised to support improving the economic productivity of farming, whilst improving its environmental credentials.