03 May 2017

The Brexit Noose Tightens

The UK now faces a Brexit bill of €100bn (£84bn), according to an article in the Financial Times. The sum was calculated after a request from several member states, such as France and Germany, who asked for revision on the liabilities Britain has to meet before leaving the Union. The new bill includes payments of subsidies to farmers and fees for the EU administration.

The news was met by an abrupt response from the main UK negotiator, David Davis, who in an interview for ITV said that Britain has “come to the end of paying vast sum of money to the EU.” Mr Davis underlined that so far, the country hasn’t been presented with any specified sum, whether it is €60bn or €100bn. He told the reporter that Britain is ready to pay its legal obligations, but not by “the best guesses and wishes of the Commission.”

However, it seems that there are other pressing issues the UK Government has to take into consideration before sitting relentless at the negotiation table. A report conducted by the House of Lords’ EU energy and environment sub-committee, warns that up to 97% of British food and drink exports could be badly affected if Britain went through a “hard Brexit”, criticising the government of giving mixed messages to the agricultural sector. At the moment, 70% of consumer agricultural products are exported to EU member states.

According to the 92-page report, the Government’s vision for the UK is “a leading free-trade nation with low tariff barriers to the outside world does not sit easily with its declared commitment to high quality and welfare standards in the UK farming sector.”

The members of the committee are concerned that the agricultural sector is uncertain about its future, highlighting that the EU could apply high tariff barriers if no preferential trade agreement is achieved. The report received the backing of different farming and agricultural associations around the country. “Farms in Wales could be wiped out, unless the next government matches the current subsidies under the EU’s common agricultural policy (CAP) pound for pound,” the president of the Farmers’ Union of Wales stated.

Currently, the UK has 27 agricultural agreements covering 38 states, which must be renegotiated separately after Brexit for the exports to continue to benefit from low tariffs. If no new trade deal materialises, which EU officials have said is unthinkable before Britain is officially out of the Union, then the only option for country is to rely on its membership with the World Trade Organisation (WTO). The WTO is known for its high tariffs on many agricultural products, such as products in the dairy industry which can reach up to 30%.

An earlier report from the Environment, Food and Rural Affairs (EFRA) committee, emphasised on another possible obstacle for a post-Brexit farming sector – labour shortage. According to the report, there are currently 75,000 temporary migrant workers, mainly from EU countries such as Bulgaria and Romania. The committee predicted that the demand for seasonal workers would increase and would rise to 95,000 people by 2021. “Unless urgent measures aren’t taken to fill the gaps, British agriculture is facing a crisis,” the report concluded.

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