Explainer: Why the UK's no-deal tariffs could be 'devastating' for Irish farmers

Britain will slash tariffs on a range of imports from outside the EU if MPs vote to leave without a deal (Andrew Matthews/PA)
Britain will slash tariffs on a range of imports from outside the EU if MPs vote to leave without a deal (Andrew Matthews/PA)
Ciaran Moran

Ciaran Moran

The UK government has published details of its temporary tariff regime that would be implemented in the case of a no-deal Brexit, which it says is designed to minimise costs to business and consumers while protecting vulnerable industries.

This regime is temporary, and the UK government would closely monitor the effects of these tariffs on the UK economy. It would apply for up to 12 months while a full consultation and review on a permanent approach to tariffs is undertaken.

What goods are to be hit with tariffs?

British businesses would not pay customs duties on the majority of goods when importing into the UK if we leave the European Union without an agreement.

Under the temporary tariff, 87pc of total imports to the UK by value would be eligible for tariff-free access.

However, tariffs would still apply to 13pc of goods imported into the UK including key agriculture products.

What are the main tariffs farmers need to be worried about?

Beef

The UK proposals suggest tariffs ranging from approx. €1,500 per tonne on manufacturing beef up to over €2,500 per tonne on steak exports.

Half the cheddar made in Ireland goes to the UK
Half the cheddar made in Ireland goes to the UK

This level of tariff would severely undermine trade.  On top of this, the UK Government has proposed zero tariff import quotas, that on the one hand fall massively short of existing beef import volumes entering the UK market and on the other hand open these quotas to all global suppliers. 

Dairy

The proposed tariff of €221/t on cheddar- will result in a possible €20m per year tariff cost for Irish cheddar going into the UK market.

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However, related factors such as customs costs, currency issues and an increase of international competition mean that the final bill for industry and farmers will be a multiple of this.

The €22m proposed tariff on Irish butter would be similarly multiplied, with a €605/t tariff slapped on initially but a range of other costs could see that figure inflating.

'A study of the impact of a no-deal Brexit on the EU's agri-food industry has claimed that beef and cheese exports from Ireland to the UK could collapse by up to 90pc with the loss of over 3,500 jobs.' Photo: Frank Cornfield
'A study of the impact of a no-deal Brexit on the EU's agri-food industry has claimed that beef and cheese exports from Ireland to the UK could collapse by up to 90pc with the loss of over 3,500 jobs.' Photo: Frank Cornfield

At the same time, tariffs on third country products, such as dairy products from New Zealand, would see their current tariff of €2,313/t on New Zealand butter reduced down to €605/t - making butter from Ireland and New Zealand carry the same level of tariff in the UK.

What will it mean for the price of Irish beef in the UK?

Tariffs on manufacturing beef, which would typically end up as burgers would see such products increase in price by 45pc. The tariffs on Irish steaks in the UK would see consumers hit with a 20-25pc price increase.

The key issue for Irish meat exporters is how this increase in price would be passed on - whether it would be passed onto consumers at retail level, or back onto suppliers. The latter would mean a lower return from the market and lower cattle prices in turn for Irish farmers.

What about the border between Northern Ireland and the Republic?

Although tariffs will be payable on goods passing from the EU to mainland Britain, via Northern Ireland, customs officers will rely on intelligence and compliance work, rather than checks on cargoes, to impose the levies.

Under a temporary and unilateral regime announced by Theresa May's government this morning, EU goods arriving from the Republic and remaining in Northern Ireland will not be subject to tariffs.

The UK government insists that this will not create a border down the Irish Sea, as there will be no checks on goods moving between Northern Ireland and Great Britain.

Instead, "normal compliance and intelligence methods" will be used to detect any traders attempting to abuse the system.

Already, commentators are saying this could lead to a smugglers dream as exporters could look to avoid tariffs that would be imposed on direct transport between mainland Britain and the Republic of Ireland, by transporting such goods through Northern Ireland. 

What are the Irish authorities saying?

Plans by Britain to levy import tariffs on beef, lamb and dairy products if it crashes out of the EU without a deal would be potentially disastrous for Irish farmers, Agriculture Minister Michael Creed has said.

"This is potentially a disaster, yes," Creed told national broadcaster RTE.

"We're involved now in a very detailed analysis of what the implications are (and) ...it's not a pretty picture... But this is in the event of no deal and we're not there yet."

Creed said officials from his department were in Brussels on Wednesday for further discussions on interventions that would be required in response.

The Department of Agriculture said the document published by the UK Government in relation to the border, states the proposed arrangements would be temporary and they would need to engage with the EU.

In other words, they would need to agree a deal on how to deal with the border long term.

It also said the UK documents do not take account of WTO obligations. In a crash out scenario, the UK would have to comply with WTO rules.

"We will continue to ensure that our support for companies evolve in line with changing circumstances, recognising in particular, the vulnerability of the Irish agri-food sector.

"In the event of no deal, the government will look for further relaxation of state aid rules and for EU supports for business and agribusiness," it said.

How have farmers reacted?

IFA President Joe Healy said the tariff regime in the event of a no deal Brexit would be a disastrous scenario for Irish farmers.

After last night’s defeat in Westminster, the IFA President said the prospect of a no deal has moved closer. “Our most exposed sectors, particularly beef, simply will not survive the kind of tariffs being talked about. This would have a devastating effect in the rural economy,” he said.

“We export over 50pc of our beef to the UK.  If this is subject to tariffs, it will be a ‘direct hit’ of almost €800m on the sector,” he said.

The President of Irish Creamery Milk Suppliers Association (ICMSA) said that the impact of the tariffs would be catastrophic and would severely impact on a centuries-old and multi-billion euro food trade between Ireland and Great Britain.

Pat McCormack said that the immediate effect would be on Irish beef and dairy products where UK consumers’ prices would have to rise substantially and, even then, the level of tariff would make the trade completely unviable.

How has Ireland's meat and dairy industry reacted?

Cormac Healy, Senior Director of Meat Industry Ireland (MII) said in a Hard Brexit scenario, Irish beef exports to the UK would now face tariffs that will undermine the viability of trade and is also being presented with a very restrictive import quota regime.

"This level of tariff would severely undermine trade. On top of this, the UK Government has proposed zero tariff import quotas, that on the one hand fall massively short of existing beef import volumes entering the UK market and on the other hand open these quotas to all global suppliers.

"Very quickly we can expect to see an erosion of our position in the UK market in both volume and value terms, due to stiff competition from lower-priced beef from other regions of the world,” said Mr Healy.

Meanwhile, Dairy Industry Ireland said the proposed tariff level would put Irish butter and cheddar under severe pressure in the UK markets at current consumer price rates and would necessitate increases at the consumer level in the UK- something that their government desperately wishes to avoid.

"Worryingly, the British proposals again offer no solution for the Island of Ireland milk origin issue or the regulatory divergence threat.

"In 2018, 804m litres of northern milk flowed south for use in a vast range of products in our integrated island of Ireland supply chain," it said.

Online Editors


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