Following intense negotiations in the European Council of Ministers on the UK’s future relationship with the EU, the Prime Minister has called a Referendum for 23rd June to decide whether the UK remains in the EU (Bremain) or leaves (Brexit).
Passionate arguments are being put forward on both sides. This is possibly the most important issue in a generation that we will have to decide on. However, there is much uncertainty about the implications, particularly around the Brexit option, and a hunger for objective information to better inform choices. In AFBI, we are particularly interested in what it might mean for the agri-food sector and indeed for AFBI itself.
In purely financial terms the net contribution of the UK to the EU in recent years – the difference between the UK contribution to the EU’s own resources and total expenditure from the EU budget in the UK – has ranged between €7 billion and €10 billion per annum, equivalent to between 1 and 1.3 per cent of annual UK public spending. An immediate impact on the EU following a Brexit would be the loss of this budget contribution. This could require some redistribution of budget contributions amongst the remaining members and/or some reductions in EU contributions to net beneficiaries.
If the UK votes to leave the process of exit would be governed by the provisions in Article 50 of the Lisbon Treaty. The UK Government would inform the European Council of its intention to withdraw; this would not happen immediately but must be completed within two years, during which the UK remains a member of the EU. Given the complexity of the issues in reaching a withdrawal agreement with the UK – not least the arrangements for withdrawing from the Common Agricultural Policy (CAP) and the crucial issue of negotiating future UK-EU trade relationships – it is likely that this process would require the full two-year period.
The prospect of exit from the EU is imposing further uncertainty on the farm sector in addition to the challenges it currently faces from price and income volatility. Throughout the UK – and especially in Northern Ireland – farm business incomes, particularly in the beef and sheep sectors, are heavily dependent on payments made under Pillar I of the CAP. In the event of a Brexit, transitional arrangements over a period of possibly two to three years would probably be needed to enable the industry to adjust to new national policy measures. Given the current very high level of agri-food trade integration between the UK and other EU member states – and especially with Ireland – the challenge would be to ensure that the competitiveness of UK farmers was not adversely affected relative to those in the EU. Depending on the nature of a future post-Brexit UK-EU trade agreement it is possible that land border controls would be needed on trade between Northern Ireland and the Republic of Ireland.
EU regulation has been a controversial aspect of EU membership for some in the UK. However, following a Brexit it seems unlikely that there would be much if any reduction in the level of regulation. The UK has actively co-operated in the implementation of EU Directives and has a strong underlying preference for the delivery of public goods in areas where there are no functioning markets, for example, environmental stewardship, greenhouse gas mitigation, food safety, animal health and workplace conditions. Of course, a Brexit might enable regulation to be more finely tuned to UK preferences for ‘smart regulation’ and seeking alternatives to legislation.
The implications of Brexit for research and development in the UK and for organisations such as AFBI could be significant. The European Research Area enables member state researchers to work and co-operate freely across borders and the UK is a very significant player in agri-food research and the Horizon 2020 programme. Any future involvement, however, would have to be via an ‘association agreement’ which would need to be negotiated as part of the withdrawal process; but it would not be a foregone conclusion as illustrated in the recent difficulties experienced by Switzerland following its decision to tighten its immigration policies. Association status would permit full formal participation in programmes such as Horizon 2020 and would require a financial contribution to the cost of the programme. It seems likely that the UK would want to continue to participate in Horizon 2020 and other similar networks. However, it may also see the need to enhance national research programmes which would be more under its control and more fully serve its needs; some of its savings on EU budget contributions could potentially be channelled in this direction.
Whether the UK decides to leave or remain, agri-food and land-use sustainability issues will undoubtedly continue to be major areas of government concern and involvement with an ongoing need for robust research evidence to inform policy development and industry decision making.
written by Professor John Davis (AFBI, Agricultural & Food Economics)