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UK set to remain close to EU agri-food market under new Brexit deal – if approved

Customs union, single market, agriculture and GIs recognition all covered in 585 page document - but doubts over whether it will make it through Parliament

The United Kingdom will stay part of a ‘Single Customs Union’ with the EU for as long as is necessary post-Brexit to resolve the Irish border question – thus preventing the UK from doing its own Free Trade Agreements with third countries for agricultural and other products for a potentially indefinite period of time after 2020.

This is a key element within the UK-EU Withdrawal Agreement, the text of which was released late on Wednesday (November 14) following its approval by the cabinet of UK prime minister Theresa May.

Moreover, the text makes clear that, as an alternative to the so-called ‘backstop’ provisions to prevent a ‘hard’ border between Ireland and Northern Ireland, the UK may request an extension of the post-Brexit ‘implementation period’ beyond the current expiry date of December 31 2020. This would keep the whole of the UK fully within the Single Market for an indefinite period (albeit no longer within the Common Agricultural Policy).

However, the Withdrawal Agreement (WA) must now be ratified by the UK Parliament, where it faces the real risk of being voted down, given fierce opposition to the provisions of the new deal on the part of both pro- and anti-European MPs.

The deal also needs to be ratified by the European Parliament prior to adoption.

The 585-page agreement sets out in detail the terms on which the UK will leave the EU on March 29 next year. One of the most important provisions is that a transition period will apply from Brexit Day until December 31 2020, during which time the UK will be covered by most EU rules, even though it will no longer have formal representation in EU decision-making.

The UK will also participate in most aspects of the CAP during 2019 and 2020, and will continue to make its agreed funding contribution until the end of the 2014-2020 Multiannual Financial Framework period.

Single Customs Union as ‘backstop’ provision

The intention is that the terms of a future trade deal between the UK and the EU would be negotiated during the 21-month period between April 2019 and December 2020, to take effect from the start of 2021.

However, in light of widespread scepticism as to whether such a deal can be done in such a short space of time, the WA states that, in the absence of any alternative arrangements, the UK will remain within a Single Customs Union with the EU, as a ‘backstop’ arrangement which would last for an indefinite period.

During this time, the UK would comply in full with EU external trade policy. It would not be able to do its own trade deals, although this eventuality would also mean that the EU’s WTO tariff rate quotas (TRQs) would not need to be split between the UK and the EU27 for the duration of this provision.

N. Ireland would remain in Single Market

Meanwhile, a separate Protocol to the main agreement makes clear that, to facilitate trade across the Irish border, Northern Ireland would effectively remain part of the EU Single Market during any such ‘backstop’ period.

A long list of EU regulations and directives which would continue to apply in Northern Ireland are set out in the WA – these include virtually the entirety of EU food law, as well as provisions on topics such as on pesticide residues. Northern Ireland would however be entitled to operate its own agricultural support policy during this period.

Moreover, the Protocol also provides for the possibility of the UK requesting an extension of the transition (or ‘implementation’) period, as an alternative to the triggering of the ‘backstop’. If agreed, this would keep the whole of the UK within both the Single Market and Customs Union for an indefinite period.

“If the implementation period is extended the UK would cease to participate in the EU budget as if a Member State at the end of 2020, and the financial settlement [an exit payment of some €39 billion] would continue to apply as agreed. Instead, the UK would make an appropriate financial contribution for the duration of the extension, reflecting its status in transition,” a UK government explanatory note states.

“The UK would not be part of the CAP during the extension, and the UK would be free to introduce a new agricultural policy providing the payments remain within certain agreed limits,” it adds.

The latter provision guards against the (unlikely) scenario of the UK seeking to pay its farmers higher subsidies than those applicable in the EU27, and also provides a legal guarantee in the WTO context – given that UK subsidies would continue to count against the EU’s domestic support declarations under such circumstances.

UK will protect EU GIs

Meanwhile, the UK has finally conceded that it will automatically recognise existing EU Geographical Indications (GIs) after March 29, under the newly-introduced UK GI register. It had held out against agreeing this point during Brexit negotiations, in the hope of gaining leverage over an EU side which was anxious for reassurance on this point. But the WA makes clear that existing GIs will in fact be mutually recognised on either side.

One other provision which could impact on agriculture is a commitment by both the UK and the EU to prevent any reduction in the levels of either environment or labour protections, as they stand at the end of the implementation period. This ‘non-regression’ provision will safeguard against either side attempting to gain market advantage by relaxing its rules beneath the current level of EU protection.

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