23 June 2017

Brexit's impact a year later still uncertain

Almost 12 months after the United Kingdom voted narrowly to leave the European Union, British politicians have not yet come to a consensus on what that means and what they want out of the negotiation that has to happen. Article 50, the rule which starts the two-year leaving process, was invoked on March 29, but then-U.K. Prime Minister Theresa May called an election, bringing the British political world to a halt while the politicians try to get re-elected on June 8.

The issues are immense. Britain’s trading relationships depend on its E.U. membership. Its standards and regulations for food and farming are set as part of its E.U. membership. Its farming depends on subsidies under the E.U.’s Common Agricultural Policy. Its food and farming industries are heavily dependent on labor from other E.U. countries.

May is telling voters a bigger majority will enable her to negotiate a better deal from the E.U. and the ruling Conservative party is expected to do well, largely because of the disarray of the main opposition Labor party, under its left-wing leader Jeremy Corbyn.

The government has announced plans for what it calls a Great Repeal Bill, which would put E.U. laws into U.K. law and make it possible for the U.K. parliament to amend them once the U.K. has left the E.U. It has not said what type of deal it wants.

Some of May’s language has been confrontational, but food processing organizations and agricultural groups share with most of business a desire to see a smooth transition to a new arrangement that would make continued trade possible.

Alex Waugh, director general of the National Association of British and Irish Millers (nabim), sees the government’s official line as helpful.

“We know that the government, the previous government let’s say — let’s hope it remains consistent for the next government — said that its starting point will be to take the existing rules and existing tariffs and start with them when the U.K. leaves the European Union,” he told World Grain. “So that means in our sector, if that is to be believed, that we will start where we are now.”

It would mean no initial change in tariffs, for example.

“That is the starting point, which means that if you start off with the same tariffs you are in a better position to agree a free-trade agreement with the remaining 27,” he said.

He did not expect a final deal to be in place by March 2019.

“With that as a starting point, then the question is will that be done by 2019?” he asked. “The betting is probably not.”

Given the shortage of time, a transitional arrangement would be needed.

“Can we nevertheless agree that we are going to carry on as we are until we have agreed?” he asked. “That is not an impossible outcome and perhaps one that is made easier by the timing of this general election in the U.K., meaning that the electoral cycles in Europe are pretty much aligned in France, Germany and the U.K.”

Source: http://www.world-grain.com