The big Brexit challenge for Irish firms will be maintaining market share in the UK, according a senior trade policy analyst and ex-World Trade Organisation (WTO) official.
Stuart Harbinson said the prospect of the EU and the UK agreeing a free trade deal was high, given the amount of trade involved, which is said to be worth €600 billion.
This would mean Ireland and other EU countries have a good chance of retaining tariff-free access to the UK market after 2019, which is a priority for the Government here.
However, with the UK intent on exiting Europe’s customs union and forging its own trade deals, the prospect of other non-EU countries being able to trade on more favourable terms with the UK is also high, Mr Harbinson warned.
This would have serious implications for Ireland in terms of increased competition in its largest export market and may result in the displacement of certain products that are currently protected by EU customs.
Most vulnerable to this type of outcome are Irish agricultural products such as beef, which rely heavily on the UK market and will struggle to compete with cheaper imports from the United States, the UK 's prime target for a post-Brexit trade deal.
Mr Harbinson, a former WTO chief of staff and special adviser to two directors-general, has recently taken up a role with Ireland’s largest public relations firm, Hume Brophy, advising clients on the implications of Brexit.
He is optimistic that a EU-UK free trade deal, separate from the formal divorce talks, can be forged within a relatively short space of time, even within two years. This is because there is already “free trade and full regulatory compatibility” between the EU and the UK.
However, he cautioned that a free trade deal was inferior to a customs union. In a customs union, once goods are inside it, they can move across borders tariff-free. For example, if a US good enters France if can travel onwards to Italy or Germany without having to pay additional taxes.
Country of origin
However, in a free trade arrangement, non-EU goods coming into the UK won’t be eligible for re-exporting into the EU because of strict “country of origin” rules. This is likely to prove one of the biggest headaches for the UK, he said. “The UK government has acknowledged the problem through stating its aim to have as seamless a border [particularly with the Republic] as possible and a new customs agreement with the EU.
“However, the technicalities are daunting and add yet another layer of complexity and the UK has not given any detail on how this might be solved,” he said.
A traditional sticking point in trade talks internationally has always been agriculture, Mr Harbinson said, noting previous EU free trade deals have included restrictions on certain agricultural products.
“This is because it is bound up with people’s livelihoods, traditional ways of life and culture, so it’s always been a very sensitive area, and of course people are very concerned about things like food safety.”
Currently about 37 per cent of Irish agricultural exports, worth €4.2 billion, go to the UK each year. The Irish Government understandably will be lobbying hard to ensure agriculture is not excluded from any tariff-free arrangement.
Nonetheless, future UK trade deals are likely to result in increased competition from Australia and New Zealand, as well as the US, which could affect the prospects for Irish exports to the UK and the EU, Mr Harbinson said.
Sacrificial lamb
“The phrase sacrificial lamb might take on a new and wider meaning for farmers,” he said, while noting Irish producers would still have the advantage of proximity, quality and freshness, “vital considerations for many agricultural products”.
He said food safety standards were likely to be an issue in any future US/UK trade deal. “Would the UK accept US exports of hormone-treated beef and ractopamine-treated pork? What about the use of GMOs?”
Given the asymmetrical relationship between the UK and the US, and the urgent need the UK will have to forge a post-Brexit deal, he said the UK was likely to prove more tractable on these issues than the EU has been up to now.
