Tariffs threat from Gove puts entire future of Irish beef industry on the line

MICHAEL Gove’s comments illustrate the many contradictions in the proBrexit position. It is at odds with the pro-free-trade ideology espoused by many Brexiteers. The problem for Irish farmers is that it crystallises the worst outcome of a no-deal Brexit. Tariffs on beef imports to the UK will hit Irish farmers in the no-deal scenario.

We are looking at 58pc additional cost on our beef exports and 52pc extra on cheese exports, at WTO tariff levels. The Government costs these tariffs at €1.7bn a year.

Here in Brussels, there is widespread frustration with the UK position. There is little sign of EU concessions on the Withdrawal Agreement, which is a logical response to the incongruity of Theresa May voting against her own agreement.

Moreover, the likely position of Brussels is to impose tariffs on UK imports as well, in the absence of an agreement outcome.

Meanwhile, Gove must decide whether to impose such tariffs on all UK food imports – which will cost UK consumers – or selectively apply tariffs to non-EU food imports. This is potentially illegal under WTO rules but might be justified on the grounds of national emergency and a calculation a WTO appeal could take years.

Either way, he risks antagonising countries such as Australia and Canada, which are prime targets for UK trade deals.

Gove’s comments will further intensify the pressure for a package to avoid a catastrophe for our farmers. ICSA has been pushing for such a package in Brussels. However, while the EU Commission is ready to help, the question of funding is not so simple.

Options could include a Brussels rescue package modelled on the support given in the aftermath of the Russian ban on EU food exports, but the scale of EU exports to the UK suggests a higher sum in the region of €10bn. This is complicated by the fact that most of current expenditure is accounted for and, critically, that the EU Commission budget proposals for the period 2020-27 have not been agreed by EU heads of state.

Another possible source of support would be to allow exceptional state aid. This could involve allowing Ireland to exceed its EU Budget Deficit rules. Even the form of a rescue package is difficult. Traditional instruments such as buying into intervention or export refunds are problematic to say the least.

Some form of compensatory payment to farmers is likely the most appropriate but by no means a straightforward mechanism.

Already, Irish beef farmers in particular, are suffering massive losses. Beef price to farmers is down up to 50c/kg year-on-year and this equates to €200 on a 400kg carcass. In a sector notorious for tight margins, such losses are not sustainable by Irish farmers.

It is still not too late to hope a compromise – probably involving some form of extension of Article 50 or a transition period – can be agreed. It is no exaggeration to say the future of beef farming in Ireland is on the line.

Eddie Punch is General Secretary, Irish Cattle & Sheep Farmers’ Association