Michael Creed (Cork North West, Fine Gael) | Oireachtas source

The UK is by far our largest single trading partner. According to CSO figures, in 2015 we exported almost €5.1 billion worth of agricultural products and imports from the UK were worth €3.8 billion. The prospect of a UK vote to leave the EU therefore has serious implications for the agrifood sector. That is borne out in the reports that have been produced in recent months on the potential impact of Brexit on Ireland. An ESRI report last year estimated that the potential reduction in bilateral trade flows could be as high as 20%, with an even higher impact on agriculture, food and beverages. Teagasc, at the request of my Department, carried out a deeper analysis on the Irish agrifood sector. It found that, depending on the assumptions made, the minimum impact could be a reduction of 1.4% or €150 million per annum in the value of Irish agrifood exports, with a possible worst-case scenario involving a reduction of more than 7%, or €800 million, per annum. However, it is important to note that there would be no dramatic change straight away and that the actual impact of Brexit would depend on the post-exit relationship that will have to be negotiated between the EU and the UK, should the UK decide to leave. The Treaty on European Union provides for a period of two years of negotiations, with extensions possible where agreement is not reached in the initial period.

My Department has been considering the likely arrangements to be made in the event of an exit vote. There are four main areas from an agrifood perspective, namely, tariffs and trade arrangements, the EU budget, standards and customs controls. Potential differences in tariffs after a UK exit could restrict trade in both directions and affect traditional supply practices, particularly for raw materials. Once the exit negotiations have been completed, the UK would be free to negotiate free trade agreements with other third countries. That is particularly relevant in relation to meat imports from South America.

The UK is a net contributor to the budget and a UK exit could result in a loss of the UK contribution of between 5% and 10%. Given that the Common Agricultural Policy, CAP, accounts for some 37% of the EU budget, we could expect additional pressure for further contraction in CAP funding in the years ahead. Currently, the EU operates a common regulatory regime and the rules of the Single Market allow free movement of goods between member states. While the EU and the UK may wish to keep such arrangements in place for as long as possible, deviations between UK and EU standards could give rise to trading difficulties and additional costs.

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