Q&A: What post-Brexit tariffs of up to 83% could mean for the Irish market

Outlining unpleasant-looking tariffs that will cost Irish farmers dearly could cause the alliance between Ireland the other EU member states to creak a little, says Noel Baker.

Q&A: What post-Brexit tariffs of up to 83% could mean for the Irish market

Outlining unpleasant-looking tariffs that will cost Irish farmers dearly could cause the alliance between Ireland the other EU member states to creak a little, says Noel Baker.

Q. What’s happened?

A. We woke up yesterday morning to proposals from the UK regarding the tariffs it would impose on key sectors in a no-deal scenario. A general sense of alarm ensued, particularly in the agricultural sector.

Q. Wait a minute, I thought there was a vote last night in the Commons to take the prospect of no deal off the table?

A. Yes, but even in the event of that vote succeeding, it does not in itself mean a no-deal Brexit is impossible. If there’s literally no deal, with the clock ticking down to March 29, the UK could stumble into one by default.

Q. Tremendous. So what are the tariffs about then?

A. As taxes applied to goods that are traded on international markets, Irish produce is particularly vulnerable, especially agri produce. The tariffs outlined by the UK are based on the ‘Most Favoured Nation’ principle from the World Trade Organization — that the same tariffs must be applied to any trading partner, unless an exception applies, such as a trading agreement. The new tariff regime would mark a shift in favour of products from non-EU countries, with 82% of imports into the UK from the EU tariff-free, down from 100% currently.

Q. But I thought the UK said there would be no tariffs on produce going from the Republic into the North?

A. Correct. But the tariff-free movement of goods to the North won’t help Irish exporters who send more produce direct to the British mainland, even though it’s thought unlikely that sufficient checks could take place in such a scenario to ensure goods taken north across the border couldn’t continue on across the Irish Sea.

Q. Right. What kind of tariffs are we talking about here?

A. They range from 0.6% on precious stones and jewellery to 53% on beef, 60% on poultry meat, and a potential 83% on milled and semi-milled grains.

Q. Oh-oh. Presumably farmers are not happy?

A. Absolutely not. While the focus has consistently been on ensuring there was no hard border, groups such as the Irish Farmers’ Association (IFA) and the ICMSA were flagging that east-west cross-channel trade was much more important to livelihoods than the south-north trade flow. In the week of Cheltenham, it’s fair to say some believe the Government backed the wrong horse.

Q. But we don’t know for sure these tariffs will apply?

A. That’s correct, but as March 29 looms into view, we can’t say it won’t either. As one person in the agri sector said to this newspaper: “Is touching the brake between Dundalk and Newry worth €5bn?”

Q. Who’d be worst affected by all this?

A. The aforementioned beef sector would be all but wiped out, according to the IFA. Of that €5bn in total annual agri-food exports to the UK, only around €750m of that goes to the North. Beef farmers’ main business is across the water and, in an already struggling sector where prices have already taken a hammering, the imposition of tariffs would be a potentially fatal blow.

Q. But I thought there had been an increased focus on non-UK markets?

A. That’s true, but as the IFA pointed out, despite those efforts, 37% of our agri-food exports went to the UK last year, up 2% from the 2017 figure. Half of Irish beef goes to the UK.

Q. There’s a lot of focus on beef, but who else is affected?

A. Take your pick. There would be a 13% tariff on pigmeat, the same again on cheddar, a 32% tariff on butter, almost a 12% tariff on fish and seafood, with smaller tariffs on products such as wood, footwear, textiles and machinery.

Q. What’s the Government got to say about it?

A. Minister for Agriculture, Food and the Marine Michael Creed said “any tariff regime is unambiguously very serious for Irish agri-food exports to the UK, and most particularly for the beef sector which would be worst affected”. However, he said the majority of those in the House of Commons were still opposed to a no-deal Brexit, so it’s not nailed on to happen and the Government’s objective is a negotiated and orderly Brexit.

Q. Will that calm the worries?

A. Doubtful. As some commentators have pointed out, whether by accident or design, the British government has played a strong card here — in a week when Government ministers are on planes to locations around the world for the St Patrick’s Day celebrations, it’s cranked up the pressure on both Ireland the the rest of the EU27 by outlining just how grim a no-deal Brexit might be. With ministers absent, stress levels around this announcement have gone through the roof.

Q. So is it a case of who blinks first?

A. Quite possibly. Outlining these unpleasant-looking tariffs could cause the alliance between Ireland the other EU member states to creak a little, in theory. As one person told this newspaper, the proposals put the Government “in a bit of a pincer movement” — even if the EU holds firm, in a no-deal situation the backstop will not come into play and it would be left to the Government to impose a border — on behalf of the EU. For its part, the EU is thought unlikely to simply allow tariff-free transport of goods from the south to the north when its other member states wouldn’t have access to a half-open backdoor. It would more likely impose its own EU-wide tariff regime on UK goods.

Q. Who will ride to the rescue then?

A. The hope is that a no-deal Brexit does not come to pass. But Tánaiste Simon Coveney has said recently that measures would be put in place to help those affected by a no-deal Brexit, and in particular the beef sector. Farming groups have heard something similar from the EU and its Commissioner for Agriculture and Rural Development, Phil Hogan, but no-one as yet knows the detail, outside of a pledge of cash supports, greater flexibility within and relaxation of state aid rules, etc.

Q. So there are known unknowns and maybe some unknown unknowns. What happens now?

A. Following last night’s vote, attention will turn to the next crunch House of Commons vote on a possible extension, due to take place today. But if the Commons can’t agree what it is seeking an extension for — and it has struggled to define that up to now — an accidental crash-out Brexit would still happen.

Q. So after all that, where are we?

A. We are where we are.

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