Brexit and Irish Agri-Food Trade Prof Michael Wallace University - PDF document

9/8/2018 Brexit and Irish Agri-Food Trade Prof Michael Wallace University College Dublin School of Agriculture & Food Science Agricultural Science Association Annual Conference 7 September 2018 Context • Ireland’s agri-food exporting success • Shaped by:  Globalisation  Frictionless EU trade environment • Threats: • Increasing protectionism • Brexit 1

9/8/2018 • Exposure to UK • Tariffs? • Non-Tariff barriers Challenges • Sterling exchange rate • Longer-term UK policy Key Challenges: Exposure to UK Food & 35 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑉𝐿 Beverage Ireland 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑥𝑝𝑠𝑚𝑒 30 Exports, Proportional Exposure (%) 25 Cyprus 2017 20 15 France Poland Italy Netherlands 10 Germany Belgium Denmark Greece 5 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑉𝐿 Portugal 𝑈𝑝𝑢𝑏𝑚 𝑑𝑝𝑣𝑜𝑢𝑠𝑧 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑥𝑝𝑠𝑚𝑒 0 0 0.5 1 1.5 2 2.5 3 3.5 4 Size Exposure (%) Source: UNCTAD-Stat Adapted from Smith et al. (2018) 2

9/8/2018 Beef Exports: Exposure to UK Market (2017) 60 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑉𝐿 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑥𝑝𝑠𝑚𝑒 Ireland 50 Proportional Exposure (%) 40 30 20 Netherlands 10 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑉𝐿 Poland 𝑈𝑝𝑢𝑏𝑚 𝑑𝑝𝑣𝑜𝑢𝑠𝑧 𝐺𝑝𝑝𝑒&𝐸𝑠𝑗𝑜𝑙 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 0 0 1 2 3 4 5 6 7 Size Exposure (%) Data Source: UNCTAD-Stat Dairy Exports: Exposure to UK Market (2017) 35 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑉𝐿 Ireland 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑥𝑝𝑠𝑚𝑒 30 Proportional Exposure (%) 25 20 Greece 15 France Italy 10 Denmark Spain Belgium 5 Germany 𝑇𝑓𝑑𝑢𝑝𝑠 � 𝑡 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 𝑢𝑝 𝑉𝐿 Netherlands 𝑈𝑝𝑢𝑏𝑚 𝑑𝑝𝑣𝑜𝑢𝑠𝑧 𝐺𝑝𝑝𝑒&𝐸𝑠𝑗𝑜𝑙 𝑓𝑦𝑞𝑝𝑠𝑢𝑡 0 0 1 2 3 4 5 6 Size Exposure (%) Data Source: UNCTAD-Stat 3

9/8/2018 Key Challenges: No Deal => Tariffs? 0% 20% 40% 60% 80% 100% 120% 020110 CARCASES, FRESH OR CHILLED Beef EU MFN Bound 020130 FRESH OR CHILLED, BONELESS * 020230 FROZEN, BONELESS Tariffs (WTO) Sheep meat 020422 FRESH OR CHILLED, WITH BONE IN 020423 FRESH OR CHILLED, BONELESS Ad valorem 020443 FROZEN, BONELESS equivalent at 020312 FRESH OR CHILLED HAMS, SHOULDERS Pig meat 2017 prices 020319 FRESH OR CHILLED, OTHER CUTS 020329 FROZEN, OTHER CUTS 040120 MILK OF FAT > 1% BUT <= 6% * 040210 SKIMMED MILK POWDER 040221 WHOLE MILK POWDER Dairy 040310 YOGURT 040510 BUTTER * * 040690 CHEDDAR CHEESE Sources: Eurostat, TARIC Key Challenges: Non-Tariff Barriers (NTBs) => Costs Tariff 20 Equivalent Trade Facilitation Costs % 15 Reflect barriers, e.g. customs costs, other border costs and 10 regulatory costs Cost of vet checks 5 and port clearance for meat approx. €625 0 per consignment Mach, equip, Chem, rubber, Other Motor vehicles Food & Drink Agriculture energy plastic manufacturing & parts (UECBV, 2018) products EEA-type FTA-type WTO Source: House of Commons Exiting the EU Committee (2018) 4

9/8/2018 Key Challenges: Other Factors • Managing Sterling risk • Sustaining integrated IRL-UK supply chains?  Dis-integration? => impacts on efficiency, duplication/investment • Evolution of UK’s trade and regulatory policy in longer-term…  Competition  Trust? – will any agreement on alignment be maintained by UK? What response ? • Brexit unequivocally negative - but disruption may create opportunities for some? • Defending ‘preferred’ supplier position in UK  Consumer trust, quality/provenance, long-established relationships, geographic proximity • Market diversification: market demand drivers globally  Key growth opportunities in non-EU markets (esp. Asia) • Proactive, cohesive national strategy: influence & preparedness  Safeguarding? e.g. EU assurance on ‘exceptional measures’ in event of chaotic Brexit? 5