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What would WTO rules mean for your sector?

With the UK Government standing its ground on leaving the single market, Abi Kay uses a series of AHDB reports to explore what WTO rules would mean for your sector. 



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What would WTO rules mean for your sector? #Brexit via @FGAbiKay

If the UK leaves the EU without having negotiated a free-trade agreement, it will fall back on to World Trade Organisation (WTO) rules.

 

This means the EU will apply its common external tariffs to UK exports and the UK will apply the same tariffs to EU imports.

 

What does this mean for your sector?


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Dairy

Most dairy imports into the EU are subject to tariffs, which are based on total weight or the weight of lactic matter in the product.

 

Tariffs on butter imports are €1,896/tonne (£1,635/t) and on cheddar are €1,671/t (£1,441/t).

 

Impact of imposing tariffs

 

  • Large volumes of milk are exported from the UK to Ireland for processing and resulting products are returned to the UK. New tariffs could make this trade unviable
  • The UK may find it difficult to process milk which was previously exported to Ireland
  • Barriers to EU exports could hit investment levels

 

Opportunities

 

  • Any UK tariffs could provide an opportunity to substitute imports with British milk
  • Targeting emerging markets may present growth opportunities

BEEF

The EU tariff is 12.8 per cent, plus a fixed amount ranging from €1,414-€3,041/t (£1,219-£2,622/t). This tariff adds 50 per cent or more to the value of imports.

 

Impact of imposing tariffs

 

  • In the short-term, UK supplies could tighten, causing prices for cattle and beef to rise
  • If prices become too high, demand may fall, which could have consequences if import barriers are reduced

 

Opportunities

 

  • Lower value cuts and offal with little value on the domestic market are a major opportunity for UK beef exports

 

SHEEPMEAT

The EU tariff is 12.8 per cent, plus a fixed amount ranging from €902-€3,118/t (£778-£2,689/t). This tariff adds 50 per cent or more to the value of imports.

 

As a result, sheepmeat is imported through a quota which allows tariff-free access to the EU market.

 

Impact of imposing tariffs

 

  • If UK sheepmeat was subjected to EU tariffs, exports could collapse. This could be mitigated by access to an import quota, although this limits opportunities for future growth
  • Reduced import access could mean tighter supplies, increasing price volatility; if prices of sheepmeat increase, consumers may switch to other meats

 

Opportunities

 

  • Lower-value cuts and offal which have little value on the domestic market present opportunities
  • There is potential for domestic lamb to replace imports

CEREALS AND OILSEEDS

EU tariffs on cereal imports depend on commodity, grade and origin. Compared to other goods, grains and oilseeds are relatively free-trading commodities globally.


Impact of imposing tariffs

 

  • Tariffs could have an impact on businesses processing cereals and oilseeds for export to the EU. For example, there are risks around exports of flour to Ireland, as flour tariffs are higher than wheat

 

Opportunities

 

  • If the UK maintained its own import tariffs, it could flex them in response to the specific needs of the UK market

Brexit timetable

  • June 23, 2016 - EU referendum
  • November 4, 2016 - High Court rules Government cannot trigger Article 50 of the Lisbon Treaty without Parliamentary approval
  • November 5, 2016 - Prime Minister says Government will appeal High Court decision
  • January 17, 2017 - Prime Minister says UK will leave the single market
  • January 18, 2017 - Trade Secretary Liam Fox announces UK has begun informal trade negotiations with 12 countries
  • January 24, 2017 - Supreme Court rules Parliament must sanction triggering of Article 50
  • January 27, 2017 - Theresa May meets US president to discuss US-UK trade deal
  • Early 2017 - European Union (notification of withdrawal) Bill laid before Parliament
  • Early-mid 2017 - European Union (notification of withdrawal) Bill debated by Parliament
  • May-June 2017 - ‘Great Repeal Bill’ laid before Parliament
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