Tuesday, 26 March 2019

Questions (55)

Martin Kenny

Question:

55. Deputy Martin Kenny asked the Minister for Agriculture, Food and the Marine the results of negotiations with the European Commission regarding the threat by Britain to apply full WTO tariffs to agrifood products from Ireland in the event of a no-deal Brexit; and if he will make a statement on the matter. [13995/19]

View answer

Oral answers (6 contributions) (Question to Agriculture)

I ask the Minister to outline the results of negotiations with the European Commission regarding the threat by Britain to apply full WTO tariffs to agrifood products from Ireland in the event of a no-deal Brexit; and if he will make a statement on the matter. I particularly want to focus on the tariff issue because it will have the biggest impact on the whole agrifood sector, in particular the beef sector, given we export over 50% of the beef produced in Ireland to Britain. At the moment, we are looking at a tariff of between 75 cent and €1.60 per kilo, which is very serious.

I point out first that the tariff proposals announced by the British Government, somewhat regrettably, very late in the day, relate to a no-deal scenario, which is by no means certain at this stage. We have been aware from the outset that a tariff regime will significantly impact on the competitiveness of the Irish agriculture sector. Any tariff regime is unambiguously very serious for Irish agrifood exports to the UK and most particularly for the beef sector, which would be worst affected. That is why we have worked so hard to secure the withdrawal agreement that would enable both sides to negotiate a future relationship agreement with the aim of avoiding tariffs and quotas.

The UK proposals are complex and the Government is continuing to analyse the detail, as well as assess the potentially serious and negative impact for industry. However, it should be stressed that no option would be as good as what is available on the table in the withdrawal agreement. The Government has been engaging very closely with the European Commission regarding the potential impact of a disorderly Brexit and the need for the Commission to be ready to deploy a range of measures to help mitigate the potential impacts on farmers and processors. The Common Market Organisation regulation, which was put in place under the Irish Presidency of the EU in 2013, provides a comprehensive toolbox for dealing with market disruption. This includes measures such as intervention, aids to private storage and exceptional measures.

At recent bilateral meetings that I have held with Commissioner Hogan, he has confirmed the EU’s readiness to respond and to support Ireland. This process of engagement is continuing and the Government will not be found wanting when it comes to supporting the Irish agrifood sector.

The core issue is that mentioned by the Minister, that of exceptional measures. Everyone is aware of intervention and the various other market disruption measures that can be taken at any time when we have disruption somewhere in the market. Brexit is unique and is something we have not encountered at any time in the history of the EU. The exceptional measures are what we need to get to. How can Irish farmers be sure of what will happen in the next six or eight months, or in two years, even if there is not a crash-out and there is a deal? All we are talking about is an insurance policy until a proper arrangement is put in place but we do not know what that proper arrangement is going to be. If the past is a reflection of the future, it looks like it will be a very poor arrangement because the ability of the British Government to date to negotiate something which is serious and worthwhile, and which will bring a dividend for everyone, has been very poor.

As the Deputy rightly said, what we want to get to is a situation where, preferably through a withdrawal agreement and a transition arrangement, we negotiate a comprehensive free trade agreement. However, it is also the case that even if the UK crashes out by a more circuitous route, we will end up back in a situation where we sit down and negotiate. The Government's position has always been that it is preferable to do that sooner rather than later and to approve the withdrawal agreement.

On the tariff regime that was published, we had estimated that if the UK applied the full WTO tariff to the Irish agrifood offering to the UK, it would have cost in the region of €1.7 billion on our exports of €4.5 billion in 2018. The UK has not done that. Instead, it has taken a rather à la carte approach to tariffs. Obviously, what we would have calculated on a full WTO tariff of around €700 million on the beef side is somewhat less in the context of what it has proposed, but nonetheless damaging. For example, on sheepmeat, it has taken a position to apply the full tariff because it has a significant market in France and it is trying to protect its home market, given it is losing that French market. It has been designed to suit the UK's purpose. Our response will be tailored and, obviously, the beef sector, because it would take the biggest hit, although not as bad as it could have been if the UK had applied full WTO tariffs, would have to be assessed as to what the price impact is for producers who are finishing cattle, and how we would direct responses to those farmers.

We are all aware of the huge amounts of Irish beef that cross the channel to Britain. I have been speaking to people in the industry, in particular those working in the processing factories, so I know the same processors that own factories here own factories in the UK. Is there a situation where, rather than bringing meat across, they will bring the cattle across and do the processing over there? Many of the workers they have employed are transient because it is not like the past. When I was growing up, many people worked in meat factories and went around wearing white aprons, but none of them work in meat factories anymore. There are very few Irish people working in them and most of the people working in the meat factories are Brazilians or from other countries because it is a low wage sector. The danger is the processors could move everything, lock, stock and barrel, across the water and bring the cattle across to avoid these tariffs. That would be very detrimental for a whole sector of our meat industry and for the spin-off it has in the economies where factories exist. We need to arrive at a situation where we can get certainty, not just for the farmer but also for the people involved in the industry, to make sure we do not see the detrimental effects of these tariffs on the entire industry.

Our objective is to make sure we protect the beef industry because it is a very significant engine in the rural economy. It is interesting to note that there is a lower tariff schedule for live exports. Of course, we do not want the impact on the beef producers but neither do we want it on the broader economy which supports them, given 16,000 people are working in the meat processing sector generally. We are aware of all of the possible consequences. The exceptional aid was deployed previously under the Common Market Organisation regulation when the Russian market was closed and there was a particular impact on the Baltic states. I think the UK departure is much more significant for the EU market generally. However, the principle of exceptional aid was deployed then and the Commissioner has said the Commission stands ready in the context of exceptional aid, apart altogether from things like aids to private storage and intervention, which are the stock response for normal - if I might use the term - market disturbances. These will also be necessary but exceptional aid is where the game is at in the context of a hard Brexit in particular.