Brexit, Trade Agreements and CAP Reform

Abstract

Summary Although a number of reforms have significantly changed the Common Agricultural Policy (CAP) over the past two decades, a defining characteristic of the policy is its prohibitively high import tariffs on a number of key commodities as tariff cuts have not formed part of CAP reform. These high tariffs, whilst protecting EU producers, complicate the EU's attempts to negotiate Free Trade Area (FTA) agreements around the world, and will likewise be problematic for agri‐food trade with a post‐Brexit UK, particularly over the politically sensitive border between the EU‐27 and the UK on the island of Ireland. An open border could be more easily secured if the UK's tariff barriers on CAP products matched those of the EU‐27. This, however, implies either that the UK will have to abandon its plans to pursue ‘free‐trade’ policies with other countries around the world, or that the EU‐27 needs to complete its reform of the CAP by unilaterally reducing its tariff barriers. It seems highly unlikely that the challenges posed by Brexit would prompt the EU to unilaterally reduce its excessively high CAP tariffs.

Brexit Impacts on Irish Agri‐food Exports to the UK

“…The market price prevailing on the UK market after Brexit will also depend on the UK's future trade agreements with non‐EU third countries (Swinbank, ). The UK government has emphasised its desire to quickly conclude FTAs following Brexit.…”

“…The EU maintains high tariffs on imports of some agri‐food products (Swinbank, ). As joint members of the EU customs union, Irish agri‐food exporters to the UK currently benefit from a ‘preferential trade rent’.…”

Agriculture and Brexit Britain's ‘No‐deal’ Tariff Plans

“…maximum tariff rates) by which it considered it would be bound; the tariff rate quota (TRQ) commitments it felt obliged to assume; the level of amber box (trade‐distorting) support to which it felt entitled (at €5.9 billion per annum); and – following the WTO Ministerial decisions at Nairobi in 2015 – a commitment not to subsidise its agri‐food exports (WTO, 2019). (For an explanation of tariff bindings, TRQs, etc., see Box 1 in Swinbank, ). The tariff bindings simply replicated those the UK had applied as an EU Member State, giving other WTO Members little excuse to object to Brexit‐induced changes, but rather oddly leaving the UK with tariff bindings denominated in euros.…”

“…The CAP has undergone a number of significant ‘reforms’ since its first incarnation. Despite modest tariff cuts in the Uruguay Round, one unchanged feature of support for European agriculture is the prohibitively‐high most‐favoured‐nation (MFN) tariffs that are charged on a number of products (Swinbank, ). Although the EU indicated its willingness to countenance substantial cuts in border protection as part of a Single Undertaking (embracing the notion that nothing was agreed until everything had been agreed) in the stalled Doha Round, it has given no indication of its willingness to undertake unilateral cuts.…”

EU and US Agricultural Policies Compared

“…A major focus of the CAP remains the protection of farm incomes despite growing demands for more focus on environmental protection. Import tariffs remain high, particularly on dairy products, beef and sugar, making access to the EU market very difficult in the absence of preferential agreements (Swinbank, ).…”