Farm Ireland
Independent.ie

Sunday 24 March 2019

Officials in Brussels to discuss 'potential bailouts' for agri-food sector

European Commissioner Phil Hogan. Photo: Reuters
European Commissioner Phil Hogan. Photo: Reuters
Cormac McQuinn

Cormac McQuinn

Senior officials from the Department of Agriculture were in Brussels yesterday meeting EU Commission representatives about potential bailouts for the sector in a worst-case scenario.

Making the case for supporting measures at EU level that recognise Brexit represents a serious disturbance to the Irish economy is a key pillar of the Irish Government’s response to Brexit.

There is a firm understanding at EU level of the unique and disproportionate impact that Brexit will have on Ireland and Ireland is expected to petition for cash injections and a loosening of strict EU rules on aid in order to combat the fallout from a chaotic Brexit.

The EU can drum up emergency aid, as it did following the Russian embargo on EU fruit and vegetables in 2014 - when €1.7bn was found from outside the agriculture budget to support (mainly continental European) growers.

A €2.8bn agricultural crisis reserve fund was set up under the 2014-2020 budget to deal with emergencies like the Russian embargo. And EU rules on "common market organisation" (CMO) provide for intervention in specific markets during a crisis, as the Commission did for skimmed milk powder in 2016 (although there is no advance funding set aside for this in the EU budget).

Another option open to the EU - and widely used during the banking crisis - is a suspension of competition rules, which dairy producers and cooperatives availed of during the milk price crash, when they were allowed to band together to limit production.

Agriculture Commissioner Hogan reiterated the EU’s readiness to respond and support Ireland, and we will remain in contact on these issues as the situation evolves.

In Washington, Taoiseach Leo Varadkar said Ireland has a cash pile of “between €10bn and €15bn that we can access should there be any market turbulence”.

He insisted Ireland is "well prepared for a no-deal" and the Government would support businesses, farmers and fishermen.

"There will be damage limitation, we will protect incomes, we will protect jobs and we will support businesses to overcome whatever happens in the next couple of weeks," he said.

The no-deal trade arrangements put forward by the UK are to be "strictly temporary" and introduced as part of efforts to maintain a free-flowing Border.

However, they represent only the UK side of what a post-Brexit Border would look like.

It will be for the EU to set out what tariff regime would apply to goods travelling North-south.

Mr Varadkar said the UK approach would not work for very long and the common external tariff will apply to any goods exported from the UK to the EU. He predicted that "within a matter of months that would lead to the need for checks at Northern Ireland's ports", which is essentially a border in the Irish Sea rather than a land border.

In a clear dig at the DUP, the Taoiseach said the UK tariff plan proposes "to treat Northern Ireland differently from the rest of the United Kingdom in a few weeks' time".

"Let's not forget one of the big objections to the backstop was that might happen in a few years' time."

Irish officials expressed relief that a no-deal crash-out is now the least likely scenario - but also acknowledged that preparations for a disorderly Brexit continue apace.

Tonight MPs will vote on a motion which states that if they agree to a Brexit deal by next Wednesday, then a short Brexit extension will be requested in order to allow the House of Commons to pass the relevant legislation.

If a deal isn't signed off in the coming days, Mrs May will seek "a much longer extension". This would require the UK to take part in European Parliament elections in May.

There is no guarantee EU capitals would sanction a lengthy postponement without a clear purpose, such as a second referendum.

The European Commission responded to developments in London by stating there are only two ways to leave the EU: "With or without a deal.

"To take no-deal off the table, it is not enough to vote against no-deal - you have to agree to a deal. We have agreed a deal with the prime minister and the EU is ready to sign it," a spokesman said.

Responding to another chaotic night in Westminster, Mr Varadkar said: "Things are looking a little brighter today than they did yesterday.

"The House of Commons has voted decisively against leaving the EU without a deal."

He now anticipates the UK will seek an extension and the EU will want to know "what the purpose of that extension is and for how long."

He also said the UK's tariff approach would not work for very long and the common external tariff will apply to any goods exported from the UK to the EU.

An EU Commission spokesman said the differential treatment of trade on the island of Ireland and other trade between the EU and UK "raises concerns".

"In the event of no-deal, the Union has already made clear that it will apply its normal third-country trade regime to all trade with the UK, and accordingly charge MFN tariffs on imports from the UK into the EU.

"This is essential for the EU in order to remain a reliable trade partner to the rest of the world, including upholding internationally-agreed rules on global trade," he said.

Mr Varadkar accused Brexiteers of "chasing unicorns now for a very long time".

Online Editors