Skip to content

Irish food firms fear the hard Brexit inevitability

After slumping in recent days, sterling was uplifted by the fresh wave of Brexit optimism, after comments of the EU’s chief negotiator, Michel Barnier, that a deal was a “realistic” prospect by early November.

Yesterday, the UK currency was again troubled by reports that Brexiteers were launching a challenge to depose UK prime minister, Theresa May.

Regardless, Ireland’s food industry remains sceptical and continues to push for support to prevent a meltdown, if sterling slides further.

Many food exporters believe a hard Brexit continues to be the most likely outcome — even if Mr Barnier manages to get a deal agreed with other EU member states — because of the ever-more-vocal eurosceptics within Ms May’s government.

The significance of the UK market to the Irish economy cannot be underestimated. Ireland’s trading relationship with the UK, in the agri-food sector, can be summarised in one simple statement: The UK is the largest external buyer of food and drink from Ireland and it has a population of 66m to feed.

Prepared consumer food products employ 20,000 people, across 500 companies. It is a typical example of both the dependence Ireland’s food-makers have on the UK market and the opportunity it presents.

Over 60% of prepared food products go to the UK, or €2.8bn in exports last year. That’s a 40% increase in just over five years.

Brexit represents the toughest challenge ever for the whole of Ireland’s agri-food industry, according to the many companies attending the annual Food and Drink Business Europe conference last week.

The industry sees Brexit evolving into a perfect storm of tariffs, shipping delays, new customs documentation, and new UK standards, not to mention that wildly volatile sterling-euro rate.

Many took comfort from the comments of Food Minister Andrew Doyle, who opened the conference by saying the Government would do whatever it took to ensure that Ireland’s key “asks” from the Brexit negotiations would be delivered.

The first ask is continued free access to the UK market, without tariffs and with minimal additional customs and administrative procedures.

The second ask includes minimising the risk from UK trade agreements with third countries; the third, on fisheries, involves maintaining access to fishing grounds in the UK zone in the Irish Sea, the Celtic Sea, and north of Donegal, as well as protecting Ireland’s quota share for joint fish stocks.

The big ask is, of course, maintaining access to the UK market. This boils down to the Chequers proposal, which Ms May is trying to get Brussels to accept.

Irish politicians have to speak out clearly on that matter.

Government ministers have also been remarkably quiet on the second issue, of minimising the risk from UK trade agreements with third countries.

On Brexit day, the 750 international trade agreements the EU has negotiated will all fall away. By law, Britain will overnight be excluded from those EU arrangements with third countries.

This is a formidable and little-understood challenge, not just to Brussels, but to Irish businesses, as they try to understand and react, deal-by-deal, to each new agreement the UK strikes with third countries.

Ireland effectively will find itself at the diplomatic starting line, with the status quo up-ended and all sides reassessing positions and trying to protect their interests.

Britain’s trade secretary, Liam Fox, has started preliminary discussions with over a dozen countries that he believes are interested in a fresh deal with the UK.

His list includes New Zealand, Australia, South Korea, Switzerland, and Norway.

Ireland’s fresh market-access initiatives have targeted priority markets, such as Indonesia and Malaysia, amongst others. A more focused approach would appear to be necessary.

On fisheries, maintaining the current access to fishing grounds around the UK is not an easy task, either.

There is a complex web of tariff quotas and red tape, under the existing EU arrangements, with many vested interests from seafaring nations, such as Norway, Spain, and France (as the recent spate over scallop-fishing rights in the English Channel has shown).

We all understand the unique exposure of the agri-food sector to Brexit impact. Uncertainty about the final outcome can make planning for the future difficult.

But we can be sure of one thing: Food businesses and farmers need very focused support from the Government to survive the Brexit challenges and grow their businesses.

John Whelan is a leading consultant on Irish trade

John Whelan © Irish Examiner 2018