Britain threatens to favour Brazilian beef over Irish as new trade war looms
- Brazilian meat to escape tariff blockade
- UK tactics echo those used against de Valera
Britain has upped the ante in the battle over the Brexit backstop, by threatening to favour Brazilian beef over Irish using a system of tariffs and quotas.
The British plan, which echoes tactics used against the government of Eamon de Valera during the Anglo-Irish trade war of the 1930s, aims to allow beef-producing countries like Brazil to dodge the brunt of the new import taxes, or tariffs, after Brexit.
It will mean a huge quantity of low-priced Brazilian beef being pushed into the UK market, with quality Irish beef being priced out.
UK Food and Rural Affairs Secretary Michael Gove is leading the charge to protect British farmers, this week warning of onerous tariffs on produce flowing into the UK. But in a further escalation, it is understood Mr Gove is planning ‘tariff rate quotas’ to allow certain amounts of produce into the UK without tariffs.
This would apply to products like poultry and beef – and would benefit massive producers such as Brazil at Ireland’s expense. Brazil produces huge amounts of beef cheaply so would be able to flood the UK market.
But currently it is subject to World Trade Organisation tariffs when it sends beef to Britain, while Ireland is exempt as part of the EU single market, giving farmers here a €3 advantage per kilo of beef.
It is believed that Mr Gove is using the threat of tariffs on Irish farmers as leverage as the UK seeks a favourable deal. He hopes that the sizeable rural lobby in Ireland will exert pressure on the Government here to yield on the issue of the backstop.
The threat of harsh trade conditions has chilling echoes of the bitter Anglo-Irish trade war of the 1930s which saw 20pc tax duties on some imports including cattle.
In the case of a no-deal Brexit, the UK will fall back on WTO trading rules.
- Read More: More woe for Theresa May as three UK Conservatives quit party in protest at 'disastrous Brexit'
When it comes to agri-food, the WTO tariffs that would have to be imposed on Irish goods to the UK are severe, especially for the beef sector.
It would mean that Irish beef being exported to the UK would be subject to tariffs in the region of 70pc. Add in trade costs, veterinary checks and paperwork, and industry figures suggest the real cost could be in the region of 84pc.
That additional price will be added onto the product on the shelf, in effect pricing Irish beef out of the market.
The same will happen to other sectors.
But Mr Gove's latest proposals will propose a massive tariff-free quota for beef.
This will "level the playing field" meaning that Irish producers would have to massively reduce beef prices to compete with the likes of Brazil - with huge economic consequences.
Ireland's agri-food industry is responsible for 128,000 farms and accounts for more than 12pc of Irish exports - worth €12bn a year.
Ireland is hugely reliant on the UK market and more exposed than any other EU country to the impact of Brexit. The UK is Ireland's closest and best trading partner, with 37pc of all food exports going to the UK last year, up 2pc on 2017.
Ireland exports 90pc of the beef it produces - 556,000t - and, of that, 51pc (253,000t) goes into the UK. This is worth €1.3bn to the economy.
There are around 100,000 farmers involved in beef production, all reliant on the UK buying our beef.
While France remains our top market for lamb, the UK takes 24pc of Irish exports, worth in the region of €51m, while 56pc of our pork exports go the UK and are worth €400m.
Agriculture Minister Michael Creed has pledged to seek EU support if a no-deal Brexit comes to pass.
However, Meat Industry Ireland warned the industry here would suffer huge damage, "even if the UK decided to keep tariffs at zero and this applied to all global suppliers".
Cormac Healy, MII senior director, warned that "the suggestion of the imposition of import tariffs by the UK as alluded to by Mr Gove is extremely concerning and would be particularly damaging to Irish agri-food exports and our beef exports.
"The Irish Government and European Commission will need to introduce a tariff support mechanism to offset the detrimental effects on trade."
As a net importer, the UK has little choice if it leaves the EU with no deal but to sort a trade deal as quickly as possible or face food shortages.
While some firms have been stockpiling to alleviate a worst-case scenario, fresh food has a short shelf life and cannot be stockpiled.
UK farmers may enjoy an initial price boost, driven by supply shortages, but the obvious solution to meet the UK's food requirements will be to negotiate trade deals with countries outside the EU.
Meanwhile, Ireland would have to find a home for those excess exports that are so reliant on the UK. Only around 5pc of Irish beef exports go to countries outside the UK and EU, despite a dedicated food promotion agency, Bord Bia, whose remit is to promote Irish produce abroad.