Government plans for the UK’s future relationship with the EU, based on a free-trade area for goods, have come under sustained attack from across the political spectrum, raising questions about the chances of the policy surviving at all.
Within days of setting out its proposals in a White Paper, the government was forced to make a number of amendments to the Customs Bill in order to appease disgruntled Brexiteers, who believe the policy aligns the UK too closely with Brussels.
But for now the White Paper remains intact and continues to be supported by the Cabinet. International trade secretary Liam Fox told the BBC on Tuesday (17 July) that the amendments, which related to the collection of tariffs on goods coming in from abroad, did not make much difference.
He insisted that the White Paper honoured the original referendum decision, by taking the UK out of the single market, ending the free movement of people, returning sovereignty to the British courts and enabling the UK to devise its own agricultural policies.
So what does the paper actually say, and what is its relevance to farmers? The NFU has prepared a briefing, setting out the main points:
Free trade area for goods
At the core of the UK’s proposal is the establishment of a free-trade area for goods moving between the UK and EU. This would avoid friction at the border, enabling both sides to meet their commitments to Northern Ireland.
Facilitated Customs Arrangement
Another key component is a new Facilitated Customs Arrangement (FCA) with the EU, to allow for differences in tariff rates at external borders.
In this way, where a good reaches the UK border and it can be demonstrated that its destination is the UK, it will pay the UK tariff, but if it is intended for the EU, the EU tariff will apply.
But if a good reaches the UK border and the destination cannot be demonstrated, it will pay the higher of the UK or the EU tariff. If the good actually ends up in a lower-tariff jurisdiction, it will then be eligible for a repayment.
To work effectively, the UK and EU will need to agree a “trusted trader” scheme to help determine the good’s destination. The UK would also maintain a common rulebook with the EU for rules which require checking at the border.
Tariffs and rules of origin
In addition to the FCA, there would need to be an agreement not to impose tariffs, quotas or rules of origin on any UK-EU trade in goods.
This would recognise that goods coming into the UK would have faced the same treatment at the border as goods coming into the EU, so there would be no need for further restrictions.
Agriculture, food and fisheries
The UK’s proposal for a common rulebook on agri-food applies only to those goods which must be checked at the border. This is necessary to reassure the UK and the EU that agri-food products in circulation meet the necessary regulatory requirements.
This would remove the need for any physical inspection posts at the border between Northern Ireland and the Republic of Ireland. A common rulebook would also protect integrated supply chains.
The government says it is not necessary to check marketing and labelling rules at the border, because these do not govern the way in which products are produced, only how they are presented to consumers.
The UK hopes to set up its own scheme after exit, offering continuous protection of UK geographical indicators (GIs), such as Welsh lamb and Scotch whisky, in the UK. There is no mention of protection or recognition for UK GIs in the EU, however.
Common Agricultural Policy and animal welfare
The government argues that farm support is not relevant to the EU/UK trading relationship, so would not be covered by the common rulebook.
The UK will therefore be free to design agricultural policies that deliver the outcomes most relevant to its market, within the confines of World Trade Organization (WTO) rules.
The UK would also have the freedom to apply higher animal welfare standards that would not have a bearing on the functioning of the free-trade area for goods.
Movement of people
The UK intends that free movement of people will end following the completion of the implementation period in December 2020.
But the White Paper also proposes that there should be a “framework for mobility”. This will allow citizens to travel freely, without a visa, for tourism and temporary business activity.
There will also be provisions which support businesses to move their talented people, for students and for UK citizens living in the EU.
The UK would make an upfront commitment to maintain a common rulebook with the EU on state aid. This does not include future payments to farmers and other land managers for environmental benefits, or the UK’s future public procurement policy.
The UK and the EU should at least maintain existing environmental standards, says the White Paper, and continue to co-operate in this area. On climate change, the UK’s domestic laws are more stretching than those arising under EU law anyway. The UK proposes to maintain these standards after exit.
Delivering independent trade policy
The proposed UK-EU relationship would allow the UK to negotiate new international trade agreements during the implementation period, and to bring them into force from January 2021.
The common rulebook for goods would limit the UK’s ability to make changes to regulation in those areas covered by the rulebook. If the government wanted to make a change in the light of trade negotiations with other partners, it could discuss this with the EU.
Independent member of WTO
The UK would have its own seat and vote in the WTO, with the right to set its own trade schedules and strike its own trade deals. The UK says it will seek the reduction of barriers to trade.
Continued participation in EU agencies
The UK wants to continue participation in those EU agencies that provide authorisations for goods in highly regulated sectors, including the European Chemicals Agency, accepting the rules of these agencies and contributing to their cost.
Mixed reaction from farming groups
Despite the political furore surrounding publication of the White Paper, the four main farming unions have welcomed the proposals which provide additional clarity on what the future trading relationship with the EU will be.
A joint statement from the NFU, NFU Scotland, NFU Cymru and the Ulster Farmers Union said: “If British farmers are to continue playing their part in providing high-quality and affordable food to the British public, as well as delivering for the environment, the principle of a free-trade area for goods, including agri-food, is vital.
“British farmers produce food to some of the highest production and animal welfare standards in the world. It is imperative that the UK’s independent trade policy does not seek to undermine those standards. Establishing a close relationship with Europe will enable those standards to be continued.”
The CLA said it also wanted to see exports of UK food outside the EU grow and said it supported any new free-trade deal which met that ambition.
The Soil Association also saw it as a “step in the right direction”, saying: “It’s likely to be positive that future EU decisions on farming and food policy will be heavily influenced by the two remaining big economies, Germany and France, which have tended to be more pro-organic than the UK.
“This also means decisions on dangerous pesticides and risky GM crops will be taken by the EU.”
But the Irish Farmers Association has described the White Paper as “seriously flawed and totally unacceptable to Irish farmers”.
“The UK White Paper is explicit that outside the CAP, the UK would have an ability to change tariffs and quotas in the future on agri-food products,” IFA president Joe Healy said. “This would enable the UK to negotiate its own trade deals at prices that would undercut European beef, dairy, pigmeat, lamb and poultry producers. That would destroy the livelihoods of tens of thousands of Irish family farmers and millions across Europe.”
He urged EU agriculture commissioner Phil Hogan and Brexit negotiator Michel Barnier to oppose the UK plan.