Ireland has responded with alarm to UK plans for tariffs and quotas on agri-food imports in a no-deal Brexit, as worries grow about the potentially grave impact on the country’s annual €4.5bn food and drink sales to Britain.
Leo Varadkar’s government is facing demands to seek emergency aid from Brussels after Michael Gove, UK environment secretary, said reports that Britain would operate a zero-tariff regime in a no-deal were “not accurate”.
Mr Gove is preparing tariffs and quotas on beef, lamb and dairy products ahead of Britain’s scheduled exit date of March 29, sending shockwaves through an industry that sends 37 per cent of its exports to the UK. Irish beef could be hit with tariffs of up to 53 per cent if Britain applied World Trade Organization rates, which would translate into a €750m hit in the beef sector alone.
No-deal fears have spurred deep anxiety in Irish business amid concern in government that the failure of Brussels-London talks — which have recently shown little sign of movement — would trigger a “substantial slowdown” in Ireland’s economic growth.
Michael Creed, Irish agriculture minister, told the Financial Times he had already discussed “the kind of assistance that will be required” with the European Commission if Brexit talks failed.
Industry and farm organisations have pressed for a definitive commitment from Brussels to support a sector that fears big output cuts and the loss of thousands of mainly rural jobs if UK tariffs are applied.
“[Tariffs] would decimate much of Ireland’s agri-food exports to the UK,” said Paul Kelly, director of Food Drink Ireland, an industry lobby that has called for a special stabilisation fund to help offset any UK tariffs. He added that, for the €4.5bn of food and drink that Ireland exports to Britain, the UK could place an additional €1.7bn in tariffs.
Mr Creed said Phil Hogan, the Irish national who is EU agriculture commissioner, has reiterated Brussels’ “readiness to respond and support Ireland” to meet the challenges facing farmers and food producers, adding: “We are in regular contact on these issues and that will continue as the situation evolves.”
A senior European Commission official cited the precedent of special aid for European food producers hit by a Russian ban on EU imports in 2014.
“We’ve had crises in the past such as the Russian embargo and we responded. The potential scale of the response is difficult to gauge just now, but we’ll deal with whatever arises,” the official said.
The clamour for European support comes as two of the biggest Irish food companies, Kerry and Glanbia, warned of increased Brexit risks despite global expansion that has seen them reduce their reliance on UK markets.
Kerry said it was concerned about weakening UK consumer demand since late last year. The company had moved to stockpile “weeks” of raw material supplies in Britain and mainland Europe in a bid to trade smoothly through a no-deal, even though it believed a “managed transition” was still the most likely outcome to Brexit talks.
Edmond Scanlon, chief executive, said that, if the UK imposed WTO tariffs on food imports, the likely impact “would be extreme”. He added that the company would seek to pass on price increases to customers.
“A no-deal Brexit, if that’s the outcome . . . is going to have grave consequences to the broader food market here in Ireland,” he told reporters.
Glanbia expressed concern about its Irish dairy processing and UK cheese joint ventures. The UK cheese business has factories in Northern Ireland and Wales that rank among the largest mozzarella suppliers to British and European markets.
“The fundamental issue here is just one of uncertainty — and from a corporate point of view it’s really difficult to know because in truth we actually definitively don’t know what the tariff regime will be,” Siobhán Talbot, managing director, told the FT. She added that Glanbia still hoped for a negotiated UK transition from the EU.
“The disruption potential here of course is there. We’re like other organisations, looking at our stockholding position — sometimes of ingredients, sometimes of raw materials — trying to plan as best we can with our customers,” she added.
