Summary
An additional area of impact of Brexit which has to date been neglected when considering the consequences for ACP countries arising from the trade displacement. This would arise from two inter-related development: firstly the possible introduction of MFN tariffs on mutual EU27/UK trade in agro-food products; secondly the impact of new UK trade deals on the market position of EU27 suppliers on the UK market. Both of these developments could see export drives targeting ACP markets in the most seriously affected products, from sugar and dairy products to beef and poultry meat.
There are two major potential causes of trade displacement of concern to ACP countries in the agro-food sector arising from the Brexit process:
- the displacement of EU27 and UK agro-food exports trade as the result of a failure to conclude a successor trade agreement and this resulting in the imposition of MFN duties on mutual EU27/UK trade ;
- the displacement of EU27 agro-food product exports to the UK market arising from the UK’s pursuit of a more liberal agro-food sector trade regime in its relationships with non-EU countries.
These two processes overlap, with post-Brexit UK international trade policy choices impacting on the scope for an EU27-Uk trade deal which includes agro-food products. While the UK wants to become a global leader in free trade the question arises: what will the UK be able to offer prospective partners to make the opening up of their markets to UK exports attractive?
Given the inherited EU tariffs which the UK is committed to implement post Brexit, the main area for tariff reductions open to the UK government will be in the agro-food sector, since this is the area where the inherited EU tariffs are highest. A more liberalized UK agro-food sector trade policy with countries such as Brazil would see an intensification of competition for EU27 exporters on the UK market across arrange of agro-food products, with this probably displacing EU27 products onto world market.
A situation where in negotiating trade agreements with non-EU and non-ACP trade partners, the UK was more open to other countries agro-food product exports than permitted under current EU trade policies, would greatly complicate the process of negotiating a deep and comprehensive trade agreement between the UK and EU27 which includes agro-food sector products.
The exclusion of agro-food products from a new EU27-UK trade deal would drive both UK and EU27 exporters to find new global markets for current exports.
| Comment and Analysis
From an ACP perspective the biggest threat from this process of EU27/UK trade displacement is in the sugar and meat sectors (beef and poultry meat), although threats could also arise in the processed fruit and vegetable sector and the dairy sector. In an ACP context this needs to be seen against the background of the pending implementation of tariff and non-tariff commitments entered into under economic partnership agreements with the EU and the likelihood that the EU will seek the rigorous enforcement of African commitments on the elimination of non-tariff barriers to EU agro-food exports. It also places in context UK efforts to roll over existing reciprocal tariff liberalisation commitments entered into through the various EPAs, from the date of the UK’s formal departure from the EU. |
Sources:
(1) Farm Europe, ‘Brexit and Trade: a double challenge’, 26 April 2017
http://www.farm-europe.eu/travaux/brexit-and-trade-a-double-challenge/
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