How will the EU withdrawal agreement affect farmers?

After two years of negotiations, Downing Street and Brussels have finally reached a draft agreement on the UK’s withdrawal from the EU, together with a joint political declaration on their future relationship.

In more than 500 pages, the document sets out the terms of the UK’s separation from the EU.

This includes a financial settlement of about £39bn to cover the UK’s outstanding money obligations, clarification on the rights of UK and EU citizens living in each other’s territories, and the continued protection of about 3,000 food products with designated origin status.

But the main aspect of the draft accord is the 21-month transition period, to 31 December 2020, during which further negotiations will take place to determine a new, long-term trading arrangement.

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During this transition, the UK will be obliged to accept the EU’s rules, but will have no say in making them.

But, according to an AHDB briefing paper, the UK will at least be able to start talking to other countries, such as the US and New Zealand, about potential trade deals.

“However, any implementation of such deals can only kick in after the transition period ends, unless the EU agrees otherwise,” says report author Luke Crossman.

Irish border issue

The other big issue, of course, is the so-called “backstop”, designed to ensure there is no return to a physical border between Northern Ireland and the Republic of Ireland, should the “future relationship” negotiations during the transition period falter.

If this backstop is activated, then a “single customs territory” between the EU and UK will be established.

But, according to the AHDB, this does not completely get away from Northern Ireland being treated differently to the rest of the UK.

“Whilst products originating in Northern Ireland can be sold in Great Britain under a UK origin label, those exported to the EU will have to be labelled as UK (NI),” says Mr Crossman.

Furthermore, Northern Ireland would stay more closely aligned to EU rules, while some products coming in from the rest of the UK would be subject to checks.

One of the biggest political sticking points is that, if this backstop arrangement is triggered, it can only be rescinded by mutual agreement.

A “joint committee,” made up of representatives from the EU and UK, will have the power to do that.

This committee will also have the power to extend the transition period, though this would need to be agreed by 1 July 2020.

Future relationship between the EU and UK

The political declaration about the future relationship between the EU and UK post transition is a shorter document – just seven pages.

It provides for a series of “partnership agreements” covering national security, foreign policy and, of most importance to agriculture, the economic partnership.

“Central to this is the intention to create a new Free Trade Area (FTA) with no tariffs, charges or quantitative restrictions across all goods,” says Mr Crossman.

“There will be deep regulatory and customs co-operation to ensure a level-playing field within the FTA.”

Despite this, there would still be some customs checks and controls on trade at the border. The extent of this will depend on the degree to which the UK and EU agree to align their rules and regulations.

“In this context, there is an intention to establish alternative arrangements on the island of Ireland, to ensure the absence of a hard border,” says Mr Crossman.

How this can be achieved in practice will be the subject of intense negotiation during the transition period.

Would an FTA be good for agriculture?

• An EU/UK FTA would be positive for agriculture, minimising disruption to trade with the EU, important to so many sectors.
• Despite this, there would still be checks at the border, increasing the costs to trade by an estimated 3-8%. In agriculture, these costs would benefit farmers in sectors that are net importers (pork, beef, dairy and horticulture), but adversely affect exporting sectors (notably sheep).
• The price to pay for the lack of restrictions on trade is “co-operation” on regulation, which farmers will have to abide by. If, post-Brexit, the UK started to make different rules, the EU might feel this has created an unfair advantage and mount a legal challenge.
• The same is true on customs. If the UK were to strike its own trade deal with a country the EU doesn’t have a trade deal with – the US, for example – the EU would want to check that any goods entering from the UK didn’t actually originate in the US.