Brexit impact

Five trade options for life after Brexit: AHDB

Five options could determine the UK's trading relationship with the EU

Five possible scenarios could determine the future of the UK food and drink sector’s trading relationship with the EU after Brexit, according to the Agriculture and Horticulture Development Board (AHDB).

The AHDB highlighted the five options in the first of a series of reports looking at the potential implications for the food industry of the UK’s decision to leave the EU.

Its first analysis in the new ‘Horizon’ series examined five possible trading relationship between the UK and the EU post-Brexit.

The AHDB highlighted the importance of the trading relationship, as nearly two thirds (62% by value) of UK agricultural exports are sent to the EU. Also 70%, measured by value, of agricultural imports are supplied by EU producers.

The UK is a high net importer for dairy products, pig meat and vegetables, while 90% of beef and lamb exports and 70% of pork exports go to the EU, it said.

It predicted that the UK could be viewed as a “third country” if it failed to join the Single Market or negotiate a preferential agreement with the EU.

It said: “Much will depend on the terms of exit that are negotiated and, at present, many issues are unclear. In the meantime, the UK remains a full member of the EU.

“This means the UK continues to be bound by existing rules and regulations and the free trading relationship with the EU will remain in place.”

Five post-Brexit options

First, it highlighted the Norway option, which provides tariff-free access to the EU’s Single Market but freedom to control its own external trade policy. If adopted this would mean that the UK would stay in the Single Market, there would be a reduced contribution to the EU budget and migrant workers would be able to work in the UK.

However, there would be some pitfalls as the UK would still have to follow the majority of EU rules and regulations but would not have any representation.

AHDB also predicted it might take up to 10 years to set up trade deals with third parties that the EU already had agreements with.

Second, was the Swiss option, based on Switzerland trading outside the Single Market and the EU customs union. The country had fmultiple free-trade agreements with EU states and was able to negotiate deals with countries outside the EU.

It also had its own agricultural policy and migrant workers were allowed to work in the country.

However, it still had to follow most EU rules. The nation had no voting rights but was still obliged to contribute to the EU budget, but at 60% less per capita than EU Member States.

The Turkish option

Trading in the same way as Turkey would allow for free movement of goods within the EU, with no regulations linked to the Single Market.

However, it is thought that if the UK were to adopt this approach, EU migrant workers would find it harder to work in the agricultural industry, it said.

The UK could adopt EU external trade policy for imports. But it would not be able to access future EU deals with third countries for exports, the AHDB warned.

The final two options included operating in the same way as the US/Canada or through the World Trade Organisation (WTO) agreement.

The US/Canada option would mean a complete break away from the EU with no requirements to contribute to budget or follow EU rules. That could mean that tariffs would be likely, the UK would no longer be party to any trade agreements with third countries and it would be harder for EU workers to come to the country, the AHDB warned.

Lastly, the WTO option would see a complete break away from the EU but there could be tariffs on UK exports to the EU.

AHDB head of strategic insight David Swales said: “There is a huge thirst for knowledge out there as we stand on the brink of a new era for UK agriculture. Obviously at this stage we can’t give any definitive answers but we can paint a picture of what the future may look like for our levy payers.

“Horizon will sit alongside our sector Market Intelligence offering, which will continue to keep the industry informed on the short term impacts on commodities and inputs markets.”

Meanwhile, read more about the AHDB ‘Horizon’ series.


Five trading options for life after Brexit
  1. The Norway option
  2. The Swiss option
  3. The Turkish option
  4. The US/Canada option
  5. The WTO option

Source: AHDB

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