Trade uncertainties high on the list of worries

Farmers attending the LMC event this week to mark 25 years of the Farm Quality Assurance Scheme (FQAS) will have been encouraged by the views of food safety expert Pat Wall. He believes Brexit will create new opportunities for Northern Ireland to supply a premium product into the UK market. He insisted consumers would want that, rather than cheap imports from South America and elsewhere on the back of trade deals the government would conclude.

By The Newsroom
Saturday, 11th November 2017, 9:04 am
Updated Tuesday, 12th December 2017, 2:20 am

In uncertain times we will all hope this is correct, and that cheap imports end up in the food service sector or manufactured products, rather than supermarket shelves. Brexit will bring many uncertainties, and trade is high on that list. Making that uncertainty worse is the lack of direction from government ministers. On post-Brexit trade deals, they seem to be operating on the ‘it will be alright on the night’ principle. That may come true, but I would not like to bet on such a positive outcome. Ministers are gambling with their political futures but they know people have short memories. By contrast farmers and others in the food industry are gambling with their own money, by continuing to invest in their businesses. They deserve policies and not just fine words and spin from politicians.

The big prize the government wants is a trade deal with the United States, which is still the world’s biggest economy despite China catching up quickly. Before the referendum it was told it would be at the back of the queue in Washington, which favoured a trade deal with the EU. However the Trump administration is thinking differently. Its Commerce Secretary, Wilbur Ross, said recently that the UK could have a speedy trade deal after it leaves the EU.

There was however a condition attached to this, and that was accepting American standards. Examples cited included allowing the import of chlorine-washed poultry and a change of stance to support genetically modified food and crops. The message was that the UK should focus on a deal with the US and forget about the EU-27. The Commerce Secretary’s blunt warning was that the UK must not let a desire for a trade deal with the EU-27 dictate its policies on food imports. This ignores the reality than many consumers in the UK do not like these US technologies. This is not because there is anything wrong with them, but they have been demonised to the point where they are as unacceptable in Britain as in the EU-27.

This is far from good news for agriculture and food. It is easy to see the attractions of a US trade deal for the rest of the economy, but US interest in agriculture is more about exporting than importing. A well-performing US market is a big one for the wider economy, with less regulation than many alternatives. However on a head count basis so far as UK food exports are concerned the EU-27 is a bigger and growing market in terms of population. It is also the one with which we are used to trading, and is of course our nearest market. It will demand that post-Brexit UK food and farm products match the rules farmers there have to meet.

There has been criticism of the EU for insisting it will not dilute its food standards to accommodate the UK. If we had remained we would have expected nothing else, and we have gained from that approach as members. When the UK government talks enthusiastically about trade deals and food imports without tariffs, the EU is naturally suspicious. It is concerned the UK will be used as a back door route to get products into the EU-27. For that reason it will insist its standards are fully met and even exceeded for UK exports. That is a big challenge for the food industry which has a good track record for trade with the EU and will not want to be closed out of its nearest market.

Much as the government may want to tell the EU what to do, it is not going to change policies to accommodate a country that decided to leave. If we are to continue exporting into the EU we are going to have to accept some tough ‘either/or’ choices. That said, neither the UK or EU would gain from a trade war. That should be central to the debate, and for farming and food it is a more important debate than a politically attractive but economically questionable trade deal with the US.