Ed's Brexit round-up
22nd Jun 2018 / By Alistair Driver
An interesting few weeks for the NPA as we have ramped up our discussions with Government departments about where we stand with trade post-Brexit.
Expertise and personnel in place at Defra
Being an independent trading nation, out of the EU, requires a lot of work. You have to represent yourself at the World Trade Organisation, you have to publish your own list of tariff schedules, set your own trade barriers, demonstrate your compliance with subsidy rules and determine what Free Trade Agreements you want to create and what you inherit from the EU. Needless to say, Whitehall is having to expand at a significant rate in order to facilitate this activity, both through the Department for International Trade (DiT) and Defra.
Defra in particular now has a number of teams and groups working solely in international trade, as it is often food products that are most affected by tariffs (they are usually higher in food) and by health and quality standards rules (SPS rules), plus what we call non-tariff barriers – things that restrict trade that aren’t to do with tariffs, like banning imports of hormone treated beef or chlorinated chicken.
I have been somewhat heartened that in Defra at least, the expertise and personnel are in place who have an excellent understanding of the complexities of each of the aforementioned issues. The WTO, trade remedies (disputes etc) and these SPS measures are all examples of these teams that are now seriously working their way through each farm sector’s interests.
WTO - a complex beast
Hopefully by now we all have heard plenty about the WTO. It is a complex beast; emerging out of ‘GATT’ and other semi-formal groupings to become the primary body to oversee trade disputes and help facilitate trade.
In the past we have been part of the EU and almost all of our concerns have been in their care – but no more. WTO membership is a big undertaking and the UK will be a separate country in its own right. This means joining new committees, submitting tariff levels, determining rules on imports…I could go on.
A useful development for pork has been tariffs. Now, exports outside the EU to the EU in pork has been tiny (less than 0.5%), well under the total quota available. In order to set out how much tariff free quota to give to different countries, the UK is looking at previous exports to the UK – so lamb from New Zealand will be quite high but pork will be tiny – almost negligible in fact. This is good for us in that on ‘day 1’ we are protected by tariffs if, and it is an if, the standards we set on imports are not suitably high. With tariff rates on meat very high, it is going to make such cheaper imports to the UK unviable.
Another similar, but different part of this is establishing a ‘trade remedies’ authority – a body that is in charge of trade disputes, either where another country is unhappy with something the UK has done (setting a ban on pork produced to sow stalls for example) or where the UK feels it is being unfairly targeted by tariffs on exports (bombardier and the USA), or where another country is ‘dumping’ products here (think China and steel).
Before, this was all the EU’s job – now we have to go it alone, and that means the NPA will have a massive role in the event of our market being dumped on, or where there are unfair practices happening abroad that uncut domestic producers. Setting the terms of how we engage and work with Government in such a dispute is vital, which is why we are devoting so much time to it now.
Our friends in the poultry industry have in fact been through this before – where South Africa tried to block imports from the UK, and as they will tell you it was a very time consuming exercise. Getting us as an industry and Defra well prepared now will help us anticipate the uncertain trade horizon in front of us.