The UK is urgently seeking to conclude what it calls "continuity trade agreements" with as many governments outside the EU as it can before the end of March deadline.
In February, Britain's international trade secretary Liam Fox concluded one of these continuity agreements with Switzerland. He has also agreed mutual recognition trade deals with Australia and New Zealand, as well as trade continuity agreements with Chile, the Faroe Islands and the eastern and southern Africa trading bloc.
But deals with major trading countries for the UK - such as the US, Japan and China - have still to be concluded.
Of particular concern for Ireland is the potential for these continuity deals to wipe out the current markets in the UK for our agri food and drink sector.
The current negotiations with the US give a good indication of the potential damage that could be done to Ireland’s export trade. US dairy producers are amongst the largest globally and have indicated in recent talks that they foresee the UK becoming a significant export market once it splits from the EU.
The UK currently imports dairy products valued at €2.6bn from the EU and only €7.7m from the US. One third of the diary imports that the UK takes from the EU come from Ireland.
The UK market, as part of the EU, has maintained a protected position for its dairy producers, as well as for Irish and other European producers, through regulatory controls and import duties. US dairy product exports to the UK have faced high tariffs on cheese, butter and milk powder and now wish to use the vulnerability of the British government to push for the elimination of both the regulatory and customs tariffs, in return for opening the US market for motor vehicles and industrial products. A signing off on a trade continuity agreement with the US before the scheduled end of March Brexit deadline would bolster the Conservative Party’s hand in dealing with Brussels and its own hardliners and may, therefore, be pushed through with concessions to the US on agriculture, despite the objections of the British agri-food industries.
The significance of such a deal is magnified by the stalemate in the current EU –US trade negotiations on the refusal of the European negotiators to included agri-foods in the trade talks.
Until the outcome of Brexit is settled and the customs arrangement between Britain and the EU is finalised, it is difficult to quantify the potential gain in market share for the US. However, of the many sectors at risk in such a deal, arguably the most exposed is Ireland's cheddar cheese sector - the largest dairy export to the UK, taking approximately half of all the country's cheese production. US cheddar cheese factories have the highest output globally and dwarf Irish producer volumes.
Some of Ireland’s producers have woken up to the threat and like the Carbery Group, in west Cork, have taken decisive action to diversify away from cheddar. Carbery currently produces cheddar cheese, principally for the UK market and now with EU and Irish Government state aid plans to diversify both in terms of production - through the production of Mozzarella cheese – and in markets – by reducing its dependence on the UK.
Mozzarella is the world’s most popular cheese, and while it is a higher added-value product for which there is a growing global market, the market leader is again the US and hence is open to the same threats in selling into the cheddar market both in the UK and further afield.
The French, Italians and Germans have been much more adept at both diversifying their cheese products and protecting their brands. They have both expanded the range but have also registered the regional domain names to protect their regional production status - under the three EU schemes of protected designation of origin, geographical indication and traditional specialities guaranteed.
The EU regulation underpinning the three schemes is enforced within the EU and is being gradually expanded internationally via bilateral agreements between the EU and non-EU countries.
The legislation first came into force in 1992, but so far amongst the several hundred cheeses registered across the EU 28 member states - including Britain - only one Irish cheese has been registered. Imokilly Cheese Company from Cork was the first Irish producer to list its cheese on the EU register in 1999 and so far is the only one registered.
Brexit, whether hard or soft, is a wake-up call for Ireland’s cheese producers, who are overdue to drop their reliance on a single product and use the benefit of EU membership for brand protection.
John Whelan is managing partner of international trade consultancy The Linkage-Partnership