Brexit and Agriculture in Northern Ireland Contents

3Trade, cross-border supply chains and North-South cooperation

97.In this chapter we examine how the UK’s agri-food trade relationships may change following Brexit, and how trade policy can support the agriculture sector. We consider:

98.At present, the UK’s trade relations are largely determined by its membership of the European Union. As an EU Member State the UK enjoys free trade across the EU, where tariffs and the vast majority of non-tariff barriers have been eliminated by the Single Market. The UK is also party to various free trade agreements which have been agreed between the EU and third party countries. Northern Ireland and the Republic of Ireland’s common membership of the Single Market means that, they are both required to conform to the same set of regulatory standards regarding animal health, food quality and environmental protection. Goods produced on either side of the border can therefore be assumed to meet the requirements to be sold in either jurisdiction. This means that most non-tariff barriers do not apply to North-South trade, and there is no need for goods to be checked at the border.

99.Once the UK leaves the European Union it will be able to reshape its trading relationship with the rest of the world. It will be able to set its own independent trade policy, and to strike trade deals with countries in the rest of the world under World Trade Organisation (WTO) rules. The UK will also be able to set its own tariffs on goods—again within WTO rules. This means that the UK will be able to pursue a trade policy that reflects its own economic priorities and supports different sectors of the economy. At the same time, once the UK leaves the European Union its trading relationship with the EU will change, and it may become subject to tariff or non-tariff barriers that did not apply previously.

100.The Health and Harmony White Paper outlines the Government’s approach to future agricultural trade. The paper says that the Government will seek to continue existing trade arrangements with third countries, and to secure a “deep and special partnership with the EU.”184 Clause 27 of the Agriculture Bill provides the Secretary of State with powers to ensure the UK’s compliance with the WTO’s Agreement on Agriculture.185

Current imports and exports

101.Agri-food is a crucial export sector for Northern Ireland, accounting for £3.3 billion of sales to Great Britain and the rest of the world in 2015, the most recent year for which figures are available.186 Northern Ireland exports the majority of food it produces: nearly three quarters of agri-food produce is sold to markets outside of Northern Ireland.187 While international exports are significant for the Northern Ireland agricultural sector, Great Britain is the largest market, being the destination for 64.1% of exported agri-food products and 48.9% of all agri-food products produced in the province.188 The Republic of Ireland is the next biggest market, accounting for 19.1% of exports, and 31% of all Northern Ireland’s sales to the Republic of Ireland are in agri-food, more than any other sector.189 A further 12.7% of exports go to the EU, and the remaining 4.2% to the rest of the world.190

102.Beef and sheep meat are the most significant exports, accounting for just over £1 billion (32%) of total sales, £813.3 million of which are to other parts of the UK. Trade with the EU and the rest of the world is most important to the dairy sector, where £380.5 million (42.1%) of sales in 2015 were to destinations outside the UK—principally on the EU mainland. Some sectors are more focused on the domestic market and the Republic of Ireland: over 90% of eggs produced in Northern Ireland are for these markets.191

103.Imports are also important to Northern Ireland’s agriculture sector. Its sizeable livestock sector requires large supplies of animal feed which cannot be met by domestic supply alone, and Northern Ireland therefore imports maize and soybean products from the United States and South America, as well as barley and wheat from Western Europe.

104.Northern Ireland’s reliance on imported grain means there is a possibility that grain prices could increase after Brexit. Sarah Baker of the Agriculture and Horticulture Development Board told us that the effects of higher grain tariffs would be complex. On the one hand, local growers would be able to increase their prices and might be able to take advantage of opportunities for import substitution. On the other, a rise in feed prices would push up production costs in the livestock sector.192

Cross-border trade

105.Northern Ireland’s agri-food sector is closely integrated with that of the Republic of Ireland, and agricultural produce crosses the border frequently. Northern Ireland exported £899.5 million worth of food and live animals to the Republic in 2017, more than any other sector and 33% of its total exports to the country.193 Northern Ireland also imported £835.8 million of food and live animals from the Republic over that period.194

106.Agricultural produce frequently crosses the border during the production process, and supply chains are highly integrated both at the inter-firm and intra-firm level.195 Many companies operate premises on both sides of the border, or rely on suppliers from the other side of the border as part of their supply chains. We heard numerous examples—set out below—of industries where raw produce from one side of the border would be transported to the other for processing or packaging; in some cases the finished or packaged product might then cross the border again on its way to be sold.

107.One example of this type of integration is the dairy sector. We heard from Dairy UK that around 30% of the raw milk that is produced in Northern Ireland is transported to the Republic of Ireland to be processed.196 Dairy UK told us that Northern Ireland does not have the processing capacity to handle all of the raw milk produced on its own dairy farms, and that only by making use of the processing capacity available in the Republic could it meet customer supply requirements.197 William Irvine told us that his Armagh-based farm supplied its milk to Lakeland Dairies, a co-operative based in the Republic. He told us that Lakeland owns production facilities on both sides of the border, but that his milk was processed in Kildallan in County Cavan.198

108.Ian Duff, of the Northern Ireland Stakeholder Potato Promotion Group, told us that cross-border supply chains were also found in the potato sector, and that the larger potato packers in Northern Ireland grew their potatoes in the Republic of Ireland before transporting them north for processing and packing. Many of the packaged potatoes would then be exported back to the Republic for sale.199 Mr Duff told us that this supply chain enabled packers in Northern Ireland to satisfy country of origin requirements in the Republic. In doing so this gave businesses access to an additional market while also allowing them to benefit from economies of scale at their processing facilities north of the border.200 Elaine Shaw of Northway Mushrooms described a similar process in which mushrooms were moved from southern growers into northern packhouses, and from there to depots in the UK.201 We also heard from the Agriculture and Horticulture Development Board that wheat from the Republic of Ireland was imported into Northern Ireland, then exported back across the border as flour once it had been processed.202 Waste products also cross the border: Thomas Douglas told us that litter from his farm was transported to the Republic for use as fuel in Anaerobic Digestion/biogas plants, while hatchery waste was transported to Dublin.203

109.Northern Ireland, the Republic of Ireland, the United Kingdom and the European Union will each lose out if cross-border trade is disrupted as a result of the UK’s withdrawal from the EU. While avoiding additional barriers between Northern Ireland and Great Britain is the absolute priority, arrangements that will ensure as frictionless as possible cross-border trade between Northern Ireland and the Republic of Ireland should be imperative for ongoing negotiations.

Live animal exports

110.Livestock is moved across the border in large numbers. It is estimated that over 5,000 lambs are exported to the Republic of Ireland each week, with 1,000 cattle and 10,000 pigs moving in the other direction.204 The Government launched a consultation on a potential ban on live animal exports in April 2018, and has asked the Farm Animal Welfare Committee to review existing standards.205 The Agriculture Minister told the House in February that the Government’s preference was “to see animals slaughtered as near as possible to their point of production, as a trade in meat on the hook is preferable to a trade based on the transport of live animals.”206

111.Although animal welfare is a devolved matter, movement of livestock is one of the areas identified by the Government that may be subject to common frameworks between the devolved administrations. It is therefore possible that a UK-wide approach to live animal exports will be employed.207

112.Witnesses told us that the two-way movement of live animals across the border was important to the sector.208 The UFU told us:

The two industries, Northern Ireland and the Republic of Ireland agri-food, are highly integrated and they move both ways. I think you mentioned pigs coming to Northern Ireland from the Republic of Ireland, and beef cattle. Equally, we put lambs and milk into the Republic of Ireland. That two-way movement is a historic thing and it is essential.”209

Sarah Baker of the Agricultural and Horticultural Development Board said that processing capacity in the Republic was important to the red meat sector:

In pigs, for instance, you will get live sows going across the border for slaughter and then back again. Northern Ireland lost a significant amount of its processing capacity for red meat after the BSE crisis, so the processing will take place in the south and then it will come back to the north.210

113.The UFU told us that cross-border movement was not only important for Northern Ireland’s trade with the Republic, but with other countries as well. Chief Executive Wesley Aston told us that calves from Northern Ireland destined for France are regularly transported through ports in the Republic.211 Similarly, CBI Northern Ireland told us that food suppliers in Northern Ireland used ports in the Republic to ship goods to the South East of England, as this was a more direct route and allowed them to meet shorter delivery deadlines.212

114.The EU currently requires exporters to meet various welfare standards when transporting livestock. Journeys of more than eight hours or 65km are subject to additional restrictions. High-profile campaigns in favour of greater UK restrictions on animal transport, from organisations like the RSPCA and Compassion in World Farming, have called a ban on live exports from the UK and for journeys of longer than eight hours—by any mode of transport—to be banned entirely.213

115.The focus of campaigners’ concern is on the transportation of animals to continental Europe via boat, rather than shorter road journeys.214 However, the Government has not indicated whether any future controls would discriminate between exports to the EU by sea and those by road. As the only EU Member State which shares a land border with the UK, the Republic of Ireland is an exceptional case, but the Government has not yet said whether this will be taken into account despite the clear animal welfare differences between transporting animals across land and sea borders.

116.It is important for the Northern Ireland agriculture sector that trade in live animals with the Republic of Ireland should be allowed to continue. The Government’s ongoing consultation on controlling live animal exports is therefore worrying for farmers in Northern Ireland. A blanket ban on live animal exports to EU countries would prevent the transportation of livestock between Northern Ireland and the Republic, even in the case of short, routine road journeys. This type of trade is an exceptional case and clearly not the target of the proposed ban. It is concerning that the Government has not clarified whether trade with the Republic will be exempted from any future controls.

117.We recommend that trade in live animals from Northern Ireland to the Republic of Ireland should be allowed to continue. The Government should clarify as a matter of urgency whether this is its intention and, in its response to its consultation on controlling live animal exports, set out specifically what exemptions it will apply—if any are needed—to ensure that this trade can continue unimpeded.

Trade and cooperation with the Republic of Ireland and other EU states

118.The Government has recognised the closely integrated nature of the agriculture sectors in Northern Ireland and the Republic of Ireland, and the importance of maintaining cross-border trade on the most frictionless terms possible.215 The Department told us that it wants to reach an agreement with the EU:

which addresses the unique circumstances of Northern Ireland and protects the Belfast Agreement in all its dimensions, including cooperation on agriculture between Northern Ireland and protecting Northern Ireland’s place in the UK internal market.

In the context of trade in goods, the UK Government has said that this means “no return to a hard border as a result of any new controls placed on the movement of goods between the UK and the EU.”216

119.The UK’s first preference is for the objectives of avoiding a hard border and protecting North-South cooperation to be met through the overall UK-EU relationship.217 In the event that it is not possible to agree arrangements for this before the end of the transition period, the UK and the EU have committed to a “backstop” solution to avoid a hard border being imposed while a more permanent solution is reached. The December Joint Report of the EU and the UK proposes that in such a scenario the UK would “maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement.”218

120.On 12 July the Government published a White Paper on the UK’s future relationship with the EU (“the Chequers Agreement”). This included a proposal for “a free trade area for goods” to facilitate continued trade with minimal friction. The features of the proposed free trade area include: a “common rulebook for all goods including agri-food”; a “joint institutional framework to provide for the consistent interpretation and application of EU-UK agreements by both parties”; and a “phased introduction of a new Facilitated Customs Arrangement that would remove the need for customs checks and controls between the UK and the EU as if a combined customs territory.” The White Paper says that the proposal “would see the UK and the EU meet their shared commitments to Northern Ireland and Ireland through the overall future relationship.”219

121.We were told that frictionless movement of goods across the North-South border was key to maintaining agri-food supply chains, and that even short delays arising from new barriers to cross-border trade could be costly and disruptive. Dr Mike Johnston of Dairy UK told us that the estimated cost of delaying a milk tanker at the border was around £1 per minute, and that with 30,000 tanker loads of raw milk crossing the border each year the cost of an hour’s delay each way could be £3.5 million for raw milk alone.220 We also heard that raw milk (as well as other perishable produce) needs to be processed quickly, and that additional delays at the border could result in more produce being distressed or spoiled at a cost to the industry.221

122.There was little desire from our witnesses for Northern Ireland, or any other part of the UK, to diverge significantly from EU food standards. There was a broad recognition that UK food quality and animal welfare standards were exceptionally high, and that this was a unique selling point for UK produce in the global marketplace.222 The UFU told us that they did not want to see additional non-tariff barriers to North-South trade, and that “we have to maintain the same standards in order to minimise trade disruptions.”223

123.Clarity over the future of cross-border trade was a priority for many of our witnesses. Wesley Aston of the UFU set out the industry’s view:

Our clear position as Northern Ireland agri-food plc is that we do not want any border—north/south, east/ west—i.e. additional controls of any description, whether they are tariffs or whether they are phytosanitary controls. We have to maintain the same standards in order to minimise trade disruptions.224

He said that farmers had not been given a definitive answer to the border question, and that clarity was needed soon so that they could plan accordingly.225 The livestock farmers we spoke to all highlighted the border as a major concern. Peter Gallagher told us that his farm was very reliant on cross-border trade and he would be concerned about any barriers that prevented the free movement of animals across the border. Thomas Douglas told us that the poultry and pig industries were “looking for [ … ] clarification as quickly as possible so we know what we are doing.”226

124.Farmers and their representatives told us that businesses on both sides of the border were committed to continued cooperation across the Northern Ireland and Republic of Ireland agri-food sectors.227 They told us they believed it was in all parties’ interests that trade should remain as seamless as possible, and that there was goodwill between farmers to ensure that this could happen.228 We heard the view that the border issue was being employed as political leverage, and that among farmers themselves there was widespread agreement over the need to continue cross-border trade and what needed to be done to achieve this.229 Some witnesses warned that regulatory divergence could adversely affect Northern Ireland producers’ competitiveness; Dairy UK told us that Northern Ireland would always be in the position of “having to diverge to the highest common denominator”, and would have to bear the costs associated with that.230 Others believed that there was unlikely to be significant divergence in practice, but were concerned that the process of checking and authorising goods could be a bureaucratic burden costing time and money. Ian Duff told us that meeting phytosanitary (plant health) requirements is “quite a bureaucratic process to have to go through every time you move something across the border.”231 Dr Simon Doherty of the British Veterinary Association told us that there was likely to be some level of risk-based checking at the border even if sanitary and phytosanitary (SPS) rules remained closely aligned.232 He also suggested that additional veterinary capacity would be needed to meet the additional demand for certification.233

125.The alignment of regulatory standards across the EU also enables Northern Ireland and the Republic of Ireland to collaborate to meet shared challenges, particularly with regard to environmental protection and disease control. For example, common standards for water quality help to protect bodies of water that cross national boundaries. For Northern Ireland and the Republic of Ireland, this helps to facilitate environmental management and disease control on an all-island basis. The UFU noted that the island is considered a single epidemiological unit, and witnesses from the horticulture sector told us that having a single plant health regime amplified the benefits that Northern Ireland and Ireland already enjoy from being on an island.234 Both governments have long recognised that their shared physical geography is a strong incentive to work together to meet environmental challenges, and animal and plant health, environmental protection and waterways are all highlighted as areas of North-South cooperation under the Belfast Agreement.235

126.The North-South Ministerial Council has previously established working groups in a number of areas relating to environmental management and animal health and welfare, and in 2001 commissioned an All-Island Animal Health and Welfare Strategy to support closer cooperation between Northern Ireland and the Republic.236 These institutions cannot operate as designed, however, in the absence of ministers from Northern Ireland.

127.We heard support for continued North-South cooperation on environmental issues and matters relating to animal and plant health. The UFU told us that they supported all-island cooperation with “an overarching strategy” for the eradication of diseases like Bovine Tuberculosis. They noted that, at present, although Northern Ireland and the Republic have shared strategies in this area, there are often differences in process on either side of the border.237 Dr Mary Dobbs told us that there would need to be at least some degree of cooperation on documentation and record-keeping on both sides of the border, so there would have to be “minimal elements that are at least equivalent, if not necessarily identical.”238

128.The National Office of Animal Health (NOAH) raised a specific concern about the supply of animal medicines if medicinal standards were to diverge. They told us that if the UK and the EU were subject to different medicine regulations it could restrict the availability of such medicines in the UK, as medicines that are currently tested for the whole EU market would have to pass a separate test before they could be sold in the UK.239 NOAH also said that regulatory divergence could increase the potential for the illegal movement of medicines across the border.240 The UK has stated that it wishes to maintain membership of the European Medicines Agency (EMA), and the Prime Minister indicated in her Mansion House speech that the UK would be willing to make “an appropriate financial contribution” to do so.241 The EU has not yet indicated whether it would accept such an arrangement.

129.The Government’s White Paper on the future relationship between the UK and the EU proposed a “common rulebook for goods including agri-food, covering only those rules necessary to provide for frictionless trade at the border.”242 The White Paper also says that the UK would make “an upfront choice to commit by treaty to ongoing harmonisation with EU rules on goods.”243 In areas where shared standards are not required to facilitate trade, the UK would be free to set its own rules. The Government says that this arrangement would “remove the need to undertake additional regulatory checks at the border—avoiding the need for any physical infrastructure, such as Border Inspection Posts, at the border between Northern Ireland and Ireland.”244 Such a proposal could minimise non-tariff barriers to North-South trade. However, the White Paper acknowledges that “a common rulebook for goods would limit the UK’s ability to make changes to regulation in those areas covered by the rulebook” suggesting that the UK would be unable to make certain regulatory changes without EU consent.245 The White Paper also proposes a continued role for the European Court of Justice in interpreting disputes under the common rulebook.246 Both of these proposals present political obstacles, and could limit the ability of the UK to pursue its own trade deals with non-EU nations. The Minister acknowledged that the White Paper proposals were “controversial” but told us that the Government’s ambition remained to maintain frictionless trade:

If we can secure frictionless border trade in agri-food goods and in industrial goods by making that commitment to have regulatory alignment only on those rules that require border checks but with the freedom to diverge and legislate in other areas as we see fit, we think that will probably be a sensible compromise to deal with what is a difficult situation and a difficult problem to square, which is that we want control and we want the ability to make our own laws again but we also want to have frictionless trade and a tariff-free free trade agreement with the European Union.247

130.If no final agreement on border arrangements is reached by the end of the transition period, the UK’s intention is that the “backstop” agreement should allow North-South trade to continue without disruption. The Joint Report of December 2017 explains that this will mean the UK “maintain[ing] full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protections of the 1998 Agreement.”248 On 28 February the European Commission published a draft legal text for the backstop, which proposed that a “common regulatory area” be established between Northern Ireland and the Republic and that Northern Ireland “be considered to be part of the customs territory of the Union.”249 However, the Prime Minister told the House that:

The draft legal text that the Commission has published would, if implemented, undermine the UK common market and threaten the constitutional integrity of the UK by creating a customs and regulatory border down the Irish sea, and no UK Prime Minister could ever agree to it.250

The Government published its own technical note on 6 June 2018 outlining how the customs element of the backstop would operate. It is yet to present proposals for a joint solution on regulatory standards, which the paper notes will also need to be addressed.251

131.Although access to EU markets might be more restricted post-Brexit, this may mean that some sectors have the opportunity to consolidate their position in the UK market, if competition from the EU is affected by new trade barriers. For example, at present mushrooms produced in Northern Ireland face competition from Polish and Dutch produce, and we heard that it may be possible for domestic growers to displace those rivals and increase their share of the domestic market.252 We also heard that the ornamental and cut flower sector could benefit from the opportunity to displace imported stock from the Netherlands.253 In some sectors there may also be significant opportunities to consolidate Northern Ireland’s market share in Great Britain, as any barriers to trade between the UK and the EU would give Northern Ireland producers a competitive advantage over their equivalents in the Republic of Ireland when selling to the UK. We heard that producers in the Republic of Ireland would be eager to preserve trade links with Great Britain as this was a major market for their produce.254 Were Northern Ireland to indirectly benefit from any additional barriers to trade between Great Britain and the Republic, the effect could be most profound in key sectors like beef and dairy where both Northern Ireland and the Republic export significant quantities of produce to Great Britain.

132.The Government has not yet brought forward proposals for maintaining regulatory alignment in the event that no final agreement on the future trading relationship with the EU is reached before exit day. These proposals are essential to enable near frictionless trade between Northern Ireland and the Republic of Ireland to continue, if this is not achieved through a wider UK-EU agreement. The Government should bring forward proposals as soon as possible for how regulatory alignment would be maintained in the absence of a UK-EU agreement being reached by exit day, as it indicated its willingness to achieve this in paragraph 49 of December’s UK-EU Joint Report.

Protected Geographical Indicators

133.Concern was raised about the status of products which are currently the subject of Protected Geographical Indicators (PGIs) under EU rules. PGIs allow the names of certain distinctive products to be protected, so that only produce made in a specific area can bear that name. PGIs are seen as a mark of quality, and can give produce an advantage in the marketplace and help farmers get a better price for their products. Three Northern Ireland products bear PGIs: Comber Early potatoes, Armagh Bramley apples and Lough Neagh eels.255 Ian Duff, speaking on behalf of the potato sector, told us that farmers would be very keen to see these products retain protected status.256

134.The Minister told us that the Government’s intention was to continue the existing protections for these products, and that the EU (Withdrawal) Act would allow the rules governing the current scheme to be transposed into UK law. He noted that the EU already allows third countries to seek protected food names, and this would allow the UK to continue to apply for future protections for its produce within the EU market in the future.257 In its White Paper on the future relationship between the UK and the EU, the Government confirmed its intention to establish its own geographical indicator scheme after Brexit.258 The EU could choose to recognise any protections designated by UK law. It is also reportedly keen to have European PGIs recognised in the UK market.259 It would be unacceptable for the EU to expect the UK to recognise European PGIs without it offering equivalent recognition to protected UK products. The EU has mutual recognition agreements with other countries’ geographical indicators schemes—for example Switzerland’s260—and the UK and the EU may wish to pursue a similar arrangement.

135.Geographical Indicators help Northern Ireland farmers to distinguish their produce from the competition and are generally accepted by consumers as a mark of authenticity and quality in a crowded marketplace. We were told that farmers wanted to maintain this advantage after Brexit. The Government should seek to secure the continued application of Protected Geographical Indicators after Brexit, and agree with the EU how reciprocal arrangements will work, including on new applications for UK products.

Cross-border trade in a no deal scenario

136.The Government’s guidance on trade arrangements in a no deal scenario acknowledges the need to “respect our unique relationship with Ireland.”261 It says that:

In such a scenario. the UK would stand ready to engage constructively to meet our commitment and act in the best interests of the people of Northern Ireland, recognising the very significant challenges that the lack of a UK-EU legal agreement would pose in this unique and highly sensitive context. This would include engagement on arrangements for land border trade. We will provide more information in due course.262

The guidance outlines some of the additional steps businesses trading with EU countries would need to take in the event of a no deal. For firms trading with the Republic of Ireland, the guidance says: “We would recommend that, if you trade across the land border, you should consider whether you will need advice from the Irish government about preparations you need to make.”263

137.Dr Viviane Gravey told us that a no deal scenario would mean live animals and fresh milk would not be able to cross the border,264 The Agriculture and Horticulture Development Board also told us that a no deal scenario could disrupt cross-border trade in cereals and flour.265 However, we also heard that, given the EU’s commitment to upholding the principles of the Belfast Agreement, it was not clear whether it would necessarily adopt as strict an approach as at other land borders.266

138.The Minister told us that the Government’s preparations for a no deal scenario included steps to facilitate border checks and trade. He told us that a replacement for the TRACES (Trade Controls and Expert System) border check system was at “an advanced stage” and that the Government had examined the additional capacity that would be needed to issue export health certificates.267 He acknowledged that in a no deal scenario, companies exporting goods from Northern Ireland to the Republic of Ireland would need to complete additional paperwork. However, he added that this requirement would have a far greater effect on exporters—many of whom already trade globally—than farmers themselves.268

139.We heard from the Minister that in a no deal scenario, the Government would be able to decide what level of border checks it wanted to impose on imports coming across the border. He said that, in theory, the Government could choose not to put routine border checks in place, but instead take an “intelligence-led surveillance approach.”269 He acknowledged that there was no guarantee that the EU would reciprocate.270 The Minister told us that, in the Government’s view, this was consistent with WTO rules, which prevent members from adopting preferential trade arrangements which do not form part of a wider free trade agreement.271

140.The UK Government’s guidance for businesses on preparing for a no deal Brexit does not clarify its intended approach to the issue of land border trade. Agri-food businesses in Northern Ireland urgently need to know what preparations they need to make for exit day, and so need clarity on what cross-border trade will look like in a ‘no deal’ scenario. The UK Government, the Republic of Ireland and the European Union must, as a priority, consider arrangements that will allow the intent set out in the December 2017 joint report—including the upholding of the Belfast Agreement—to be met in a no deal scenario. The UK Government must confirm for businesses in Northern Ireland how—if at all—trade with the Republic will differ from trade with other EU Member States, so that the business which rely on this trade can prepare accordingly.

Future trade deals with third countries


141.While the focus of debate in Northern Ireland has been on the implications of Brexit for North-South trade, the UK’s departure from the EU will also have significant implications for future trade with non-EU nations. Post-Brexit the UK will be able to pursue new free trade agreements with non-EU nations in accordance with its own interests, although any agreements would need to comply with WTO rules.

142.Under the proposals set out in the Government’s White Paper on the future relationship, the UK and the EU would share a common rulebook for goods, including agri-food.272 The White Paper acknowledges that this would restrict the UK’s ability to negotiate deals with third countries in areas where those countries’ standards are incompatible with the EU rulebook, unless an exception could be agreed with the EU.273 It has been reported that trade deals with the United States and India would be among those prohibited by the adoption of a common rulebook.274 However, the White Paper specifically identifies the United States as a target country for a bilateral trade agreement.275 The Secretary of State for Environment, Food and Rural Affairs has said that while animal welfare or environmental standards might constrain the UK’s ability to make trade deals, he was confident that trade agreements of some form could still be made with third countries.276

143.We asked witnesses which countries might be lucrative markets for agricultural produce from Northern Ireland. Dairy UK identified a number of third country markets where Northern Ireland dairy companies had been able to do increasing business in recent years, primarily in Africa, the Middle East and South East Asia.277 Farmers told us that some countries were seen as lucrative trading partners because they provided a market for parts of carcasses for which there was little demand in the UK. In the pig sector, for example, China is an important market for “fifth-quarter” products such as offal, tripe and trotters and add significant value to each pig.278 Thomas Douglas told us that in the poultry sector, UK consumers’ strong preference for white meat such as chicken breast means that processors like Moy Park have to sell dark meat to countries where there is demand for it, such as China and countries in Eastern Europe and Africa. This increases the value of each animal and increases farmers’ profits.279

144.Certain markets can also make up shortfalls in domestic demand. Thomas Douglas told us that in the months immediately before Christmas each year hatcheries cut back on their output, leaving them with a surplus of hatching eggs for which there is no domestic market. However, these eggs are sold to countries like Saudi Arabia where Christmas is not widely celebrated and so demand for hatching eggs is not affected. We were told that retaining access to these markets would help farmers to maintain this important income stream.280

145.At present the UK trades with a number of third countries on terms negotiated between those countries and the EU. Under article 124(1) of the draft Withdrawal Agreement, the UK will continue to be treated like a Member State party to these trade agreements during the transition period.281 Once the transition period ends the UK will no longer be party to these agreements, and consequently there is a risk that barriers to trading with those third countries may increase, at least until a favourable trade deal can be reached. Giving evidence on the future of the land border, Dairy UK told us that tariffs on exporting dairy products to expanding markets like Thailand and Malaysia would double if the UK were to trade on WTO terms, and “effectively kill that business.”282

146.The Government has introduced a Trade Bill which aims to allow for the continuation of existing UK trade arrangements—including trading relationships the UK entered into as a party to EU free trade agreements—after the UK leaves the EU.283 The Bill received its Third Reading in the Commons on 17 July 2018 and received its Second Reading in the House of Lords on 11 September. However, the UK would still need to formalise with third countries any trade deals that sought to recreate the trade relationships that existed as a result of the UK’s membership of the EU. Under article 124(4) of the draft Withdrawal Agreement, the UK will be able to negotiate, sign and ratify international agreements during the transition period, provided that these agreements do not come into force until the transition period has ended.284

147.Northern Ireland’s agri-food sector depends on exports and needs to have access to foreign markets for its produce if it is to grow and prosper. Maintaining access to current markets—including non-EU markets where Northern Ireland’s agri-food sector is already taking advantage of new opportunities—and seeking new trade partners will present significant growth opportunities for the sector. By contrast, if access to these markets were to be closed off, this could curtail growth by denying producers a market for products for which there is little or no domestic demand. The Government should carry out research to determine how the market for Northern Ireland agri-food exports will be affected by Brexit, and identify subsectors which stand to be most affected. It should report its findings to the House by 21 December. The Government should also identify markets where there is demand for agri-food produce that could be served, or is already being served, by Northern Ireland, and pursue trade deals that secure access to these markets as a priority. The Government should also seek to agree with third countries, before the end of any transitional period, the replication of trade agreements which the UK is currently party to because of its membership of the EU.


148.Livestock farmers and meat processors raised concerns that future trade deals could open up the UK market to lower quality produce, compromising food standards and undercutting domestic producers’ position in the market.285 Industry representatives told us that produce from Northern Ireland was of the highest quality, and met stringent standards of animal welfare and environmental protection.286 However, they told us that price was often the overriding factor in determining consumer choice, and that cheaper, lower-quality meat could therefore displace high-quality domestic produce.287 The UFU told us that this was a greater concern for their members than export opportunities:

We all hear about maintaining standards, but what does that actually mean? We have to be able to compete on an equal footing with our competitors and, if we have all these standards to meet, then surely the general public in the UK should expect those standards from all the products that they consume and, therefore, that we import. Imports are out big concern, not necessarily exports.288

149.The Minister told us that the Government did “not want to diverge or change our food standards in any great way.”289 The Secretary of State has also said that there should be “no compromise on high animal welfare and environmental standards.”290 However, we heard concerns from farmers that there was a tension between the Government’s commitment to maintaining food and animal welfare standards and the political imperative to keep living costs down. Thomas Douglas told us his concern was that

If, after Brexit, the cost of living is going up, the Government, no matter which Government they are, will look at ways to reduce the cost of living. If that is importing cheaper chicken from America that is chlorinated, that is what they will do to keep the consumer happy.291

Peter Gallagher added that allowing lower quality produce into the UK market would risk turning high quality domestically produced meat into a “niche product.”292

150.Farmers were clear that they needed to be able to compete on a level playing field with imported produce, and that imported food must be held to the same high welfare and quality standards as farmers in Northern Ireland are expected to maintain. When striking future trade deals, the Government must ensure that it does not allow the import of produce that falls below the welfare and quality standards expected of UK farmers’ produce.

184 Department for Environment, Food and Rural Affairs, Health and Harmony: the future for food, farming and the environment in a Green Brexit, p 61

185 Agriculture Bill, Clause 27

188 Ibid., p 58

189 Ibid., p 58; Northern Ireland Statistics and Research Agency, Overview of Northern Ireland Trade, 20 December 2017, p 11

191 Ibid., p 58

193 HMRC, HMRC Regional Trade Statistics, Accessed 8 August 2018

194 Ibid.

197 Dairy UK, evidence to Committee’s inquiry into The future of the land border with the Republic of Ireland (BDR0021)

200 Mr Ian Duff (AGR0013)

204 Bord Bia, Brexit Briefing Document, June 2016, p 9

206 Ibid.; HC Deb 26 February 2018, Col 252WH [Westminster Hall]

212 CBI Northern Ireland (AGR0011)

213 Compassion in World Farming, Live Exports from the UK must stop, Accessed 12 September 2018

214 Ibid.

215 HM Government, Northern Ireland and Ireland: Position Paper, 16 August 2017, p 14

216 Defra (AGR0012)

218 Ibid., p 7–9

235 HM Government, The Belfast Agreement, April 1998, p 16

236 Republic of Ireland Department of Agriculture, Food and the Marine, All Island Animal Health and Welfare Strategy, 2001

239 National Office of Animal Health (AGR0005)

240 Ibid.

244 Ibid., p 23

245 Ibid., p 49

246 Ibid., p 93

250 HC Deb, 28 February 2018, Col 822 [Commons Chamber]

251 HM Government, Technical Note: Temporary Customs Arrangement, 6 June 2018, p 1

260 Official Journal of the European Union, I. 297/3, 16 November 2011

261 HM Revenue and Customs, Guidance: Trading with the EU if there’s no Brexit deal, 23 August 2018

262 Ibid.

263 HM Revenue and Customs, Guidance: Trading with the EU if there’s no Brexit deal, 23 August 2018

273 Ibid., p 49

282 Evidence to the Northern Ireland Affairs Committee inquiry, Future of the land border with the Republic of Ireland, Q236–237

283 Trade Bill [HL Bill 127]

290 Evidence to the Environment, Food and Rural Affairs Committee, Brexit: Trade in Food, Q564

Published: 22 October 2018