BREXIT: ONLY GOOD NEWS?

BREXIT: ONLY GOOD NEWS?

The good news is that an agreement was found on the Brexit transition period, lasting through end 2020. Till then the UK will be part of the EU Customs Union and Single Market, so there will be no disruptions to trade on agri-food products between the EU27 and the UK. Definitely that is good news, in the context of the inevitably of Brexit. It raises the prospects of a softer rather than a hard Brexit.

However the UK also obtained the right to negotiate and sign trade deals with third countries during the transition period. This means that as from 1.1.2021 the UK might open up its market to third countries under previously negotiated Free Trade Agreements. And most likely it will.

Even in the best scenario where there would be a Free Trade Agreement in place between the EU27 and the UK, the EU27 exports to the UK would face renewed competition, which can be determinant in such important sectors as beef, pork, poultry, dairy, sugar, wine, to mention a few. Inevitably EU27 exports would suffer.

A word of caution though: this relatively speaking best scenario is not guaranteed as formidable obstacles remain to an overall agreement – the Irish border issue being one that looks close to impossible to crack.

For the UK the possibility to negotiate and sign new trade deals whilst still in the EU Customs Union also adds leverage to its negotiating position, and gives comfort to those in the UK that are not prepared to accept post-Brexit terms that would keep the UK closely aligned with EU rules and decisions. They can argue that the UK can find alternatives to the EU27 market, and therefore should not yield too much on the post-Brexit terms of its relation with the EU.

The EU agri-food sector needs to be prepared to the upcoming events. The rosiest scenario means more competition and less exports to the UK, and the hard Brexit scenario means disaster.

Unfortunately that is not good news.

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O artigo foi publicado originalmente em Farm Europe.

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