Yesterday I came across a paper ‘World Trade Rules & the policy options for British agriculture post-Brexit’ by Alan Swinbank, Emeritus Professor of Agricultural Economics at the University of Reading. You can download it here.
It is a good read though in parts it is bewilderingly complicated. Trade agreements are complex to negotiate simply because what suits the UK won’t necessarily suit the country we are negotiating with. In addition the agreement the UK reaches with the EU27 must be agreed as a starting point and May has already hinted that we won’t be part of the Single Market. Running a scheme also to support farmers either by future subsidies or by ‘public money for public good’ schemes is also complex and governed by World Trade Organisation rules (the green, blue and amber boxes).
The paper conjured up in my mind the playing of a dozen games of 3D chess simultaneously….
Here are the key points from the summary
- The EU has influenced UK food supplies and prices, the profitability of farm businesses, the rural environment and land use, in a number of ways, for example through agricultural subsidies and a highly protective trade regime. UK agriculture is probably larger and less efficient than had it been less subsidized.
- Brexit is an opportunity to redesign policies to better suit the UK. Post Brexit, taxpayer support to the farm sector is likely to be reduced, and to become more focused on environmental goals. But WTO rules on financial support to agriculture would have to be respected.
- Maintaining a ‘soft’ border with Ireland could be difficult if trade barriers are erected between the UK and the EU.
- New trade deals with third countries could
be incompatible with any future UK-EU trade regime: and may expose UK farmers to tariff and quota-free access from highly competitive overseas suppliers.
- Food prices will be influenced by: the post- Brexit exchange rate; extra transaction costs involved in trading outside the Customs Union and Single Market; and the UK’s new food trade regime. Liberal, free-trade, policies could result in lower food prices in the UK, whilst a protectionist policy could see them increase.
And it concludes as follows
‘Farmers might reluctantly accept a drastic cut in direct income support (or greater emphasis on enhanced environmental outcomes) if tariff protection remained, but would probably protest vigorously if both tax-payer funded support and tariff protection were removed in a double-whammy. And Conservative MPs with rural constituencies could well support their cause.’
I now understand why some say it will take 10 years or more to sort all this out……