Brussels Notebook: Border brings complications

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With the benefit of hindsight it was probably inevitable we would have to leave the Single Market as a result of the Brexit decision, writes Richard Wright.

This is something that concerned the farming industry from when the referendum result emerged last June. But now we know it is going to happen it is a matter of making sure the best possible deal emerges.

A complication here is that regardless of politics, the border between Northern Ireland and the Republic will become a border between the EU and a third country. No matter what politicians may say about special arrangements that will bring huge complications for agriculture. Those arise because agriculture traded as an all island industry long before the UK and Ireland became members of the then EEC in the 1970s. Since then trading links have become stronger, with products crossing the border in both directions for processing, while cross-border ownership of processing facilities is economically important here and south of the border. Without a Single Market those relationships will be more difficult. No matter how determined the governments here and in Dublin are to maintain a ‘business as usual situation’ that will not be possible. That has huge implications for agriculture. The situation farmers here face is unique within the UK, which will make it hard for the issue to be as high on the agenda as it needs to be, since it is of little interest to others parts of the UK.

Take away the problem of cross border trading here and the threat from the end of the Single Market is probably not as serious as some have suggested. There has been a lot of hostility from some other EU member states, and some suggestions that outside the EU the UK cannot expect benefits, such as market access. That may be true, but it overlooks some realities. High on the list is the fact that the UK imports more from the EU than it exports. It is easy to see the loss of the Single Market in terms of the problems the UK will face, for example, in selling beef, lamb and dairy products to France or Germany, where farmers opposition may well be a fact of life. However behind the rhetoric is the reality that France want to sell wine, cheese and cars into the UK, while for Germany the UK is a prime market for Mercedes, Audi and BMW while the UK is Ireland’s biggest export market for food.

The UK has made it clear that it wants to be an ally of the EU and a key trading partner. The economic realities of this will eventually be accepted in the 27 member states that, for now, will remain in the EU. They know they need to trade with the UK; they know it makes sense to treat Britain as an ally and not as an enemy. Like a separation before a divorce they feel a lot of anger as the party the other person, in the shape of the UK, decided to leave. To continue this analogy, their concern is that if the UK enjoys the benefits of marriage without the responsibilities, others will want to go down that road. This is why there is such hostility towards the UK, given that elections in Germany and France could irrevocably change the EU and its federalist aspirations.

Trade barriers are akin to the Cold War nuclear weapons stand-off. They are about mutually assured destructions if tariffs or unreasonable rules are used to restrict market access. Many who voted Leave last June did so in expectation that we could be out of the EU, but in the Single Market. Politics now dictate that we have to abandon the Single Market, but it should not be the end of the world, although it will make things more difficult. This is because products will not be sold in Europe of right, but because of a political deal. This will make them liable to protectionist action when country of origin labelling is becoming the norm in Europe. Time will decide the difference between being in Europe of right or by invitation, but the prospect of leaving the Single Market can only increase the uncertainty farming faces. We now face a hard Brexit – but how hard it ultimately proves to be depends on whether the UK can retain good relations with EU member states as friends and allies.