Dr. Kevin Hanrahan:

Senator O'Reilly asked about veterinary standards and the possibility they may diverge and the UK may adopt different standards.

Until they leave, they have to satisfy the acquisand there will be no difference. My own assessment is that the UK will be slow to move away from European standards given how high they are as a function of crises that occurred in the UK in the 1990s and early 2000s. There are grounds for guarded optimism that the UK will not pursue lower standards of regulation on the food, animal and veterinary standards side. One thing the UK will have to do, however, is develop its own capacity to licence businesses that export to the UK market in terms of veterinary standards. That is all currently taken care of by the EU. Britain will have to up its game radically in terms of having the capacity to do that on its own.

In terms of the tariff levels that might prevail post-Brexit, I note that the UK is a member of the WTO just like Ireland. While I am an economist and not a lawyer, my understanding is that when it leaves, the UK will inherit the EU's bindings at the WTO. Those set the maximum tariff rates the UK can apply to trade with other WTO members outside of a notified free trade agreement, or FTA. If, outside of an FTA, it wants to apply lower tariffs to a WTO member like Ireland, it must offer those lower tariffs to everybody. The cost to Irish agriculture is really in the loss of preferential access to the UK market. It is the access to the UK market that is protected by high tariffs, in effect. Even if we have free access to the UK market post-Brexit and there are no tariffs, it will also mean under WTO rules that no tariffs will apply to imports from the rest of the world as long as they meet the UK's standards of food safety, animal welfare and so on. That will be a much more challenging market than we are currently exporting very successfully to. Those countries and industries internationally with lower costs than Irish and European farmers face will have access in that scenario to the UK market and we will be severely challenged in that space. Recent research by Teagasc on the competitiveness of Irish agriculture underlines the point that while we are globally competitive in the dairy space due to our pasture-based production system, we are not as competitive at all in respect of cattle and sheep as countries like New Zealand, Australia, Brazil, Argentina and parts of North America. Obviously, we benefit from being beside Britain and there are costs to getting product from Brazil, for example, even if it meets all of the standards we require and which the British are likely to require. It is a long supply chain. However, technology will move on. Things we could not have imagined happening 20 years ago are now quite common in terms of fresh beef or lamb coming from the other side of the world onto what we consider our markets. To assume technological changes that shorten supply chains and distances will stop happening would be unwise.

The question was asked about us having a special status and what benefits that might deliver for the island of Ireland. There would be benefits if the trade flows North and South were unimpeded relative to where we are starting from right now. That must be set in the context, however, of the overall Ireland-UK trade. While the North of Ireland is important in a whole-economy context and for the agrifood space, it is - "dwarfed" might be the wrong word - much less important in terms of value at an economy level than the east-west flow. At a regional level in the Border area, the North-South dimension is perhaps way more important. For the industry as a whole, however, the east-west axis dominates the North-South in terms of the value of trade. While an arrangement which allows for free trade on the island of Ireland would mitigate the cost of Brexit for the agrifood sector, the cost of tariff or non-tariff barriers to trade on an east-west dimension will not be avoided. They will still be there and those are the ones which will really drive the large trade costs which could flow from a very hard Brexit. While we may end up in that position, we hope we do not.

Most commentary suggests the European Union and the United Kingdom want to avoid a relationship based on WTO rules. However, it seems likely from my perspective, albeit it may be beyond my competency in terms of the politics of it, that we will not be where we are currently. We are currently in the deepest imaginable free trade agreement, the Single Market. We will not be in the Single Market together and the UK may be outside the customs union. There will be additional non-tarriff costs to trade as well as possible tariff costs. Even if there are not WTO tariff levels, they may be somewhere between where we are now, which is none, or very low, but very low for every producer in the world. That will make the competitiveness challenge Irish agriculture already faces much more intense.

It is hard to know what tack the UK will take in terms of its agricultural policy and whether it will go back to a 1950s model. At that time, they were importing foodstuffs from their former colonies at, in effect, world prices, which was the disadvantage for Irish farmers. It was one of the great benefits of joining the EEC in 1973. If I had to bet, I suspect they will go some way towards it but not all the way because they will also want to protect their farmers' interests. In so far as they lower barriers to trade with non-EU countries, that will disadvantage UK farmers and also Irish farmers. Many of our standard commodities are as, if not more, competitive than those of the UK versus South American producers, but I expect that will be cold comfort.

On the budgetary issue, the dependence of Irish, UK and, in particular, Northern Irish farmers on the single farm payment and CAP. If Brexit had not happened, we would still be facing a challenge in that the next iteration of the CAP will see the newer member states from central and eastern Europe looking for a greater share of the budgetary pie that goes to agriculture. Other policy areas within the EU will also be looking for a bigger share of the overall EU budget and to see agriculture get a bit smaller. As such, we would be facing a challenge to maintain the levels of support Irish farmers get from CAP, even if Brexit was not an issue. Brexit doubly underlines that issue because of the size of the UK's net contribution to the EU budget. It places the onus on Irish civil servants and officials to do their normal brilliant work in that process. While we are often worried about what the outcome will be, Ireland has always done very well if history is any guide to that negotiation process at European level.