TRADE AND MARKET I NG Prepare for two years of Brexit uncertainty The UK and the European Union are finally getting down to the business of negotiating Britain’s exit from the 28 country union. What might it mean for the potato sector, asks Cedric Porter. T UK potato trade in € millions he formal process of the UK leaving the EU began in March 2017 and is expected to end with Brexit Day in spring 2019. Between now and then the UK and the EU will need to determine what the relationship between them will look like after Brexit. Trade relations between the UK and EU will be key to those negotiations. The UK has already said that it will not seek to remain a member of the EU’s single market and customs union that allows goods and services to trade freely within the union. Membership of the single market and customs union includes the right to freedom of movement of people between countries and the UK Government is not prepared to make that commitment. If no deal can be struck, then it is likely that trade between the UK and EU will be done under World Trade Organisation rules. That would add a 14.4% tariff on frozen fries, a 4.5% tariff on seed potatoes and an 11.5% tariff on fresh potatoes. Potato and food trade deficit The UK has trade deficits for most potato and potato products and is one of the world’s largest frozen fry markets importing nearly 600 000 tonnes of product a year. The UK has a trade surplus in seed potatoes and in crisped potatoes. The UK is a large market of 65 million people in an area the size of the US state of Michigan and is a significant importer of many goods as well as potatoes and potato products. In 2016 the UK imported €50.4bn worth of food and exported €24 billion. Of those imports 70% were from 100 200 300 400 500 600 700 800 0 2006 2007 2008 2009 2010 UK potato exports 2011 2012 2013 UK potato imports 2014 2015 2016 Monthly UK food trade in £ million 500 1000 1500 2000 2500 3000 3500 4000 4500 0 2012 2013 2014 2015 2016 2017 Exports Imports the EU with 60% of UK exports shipped to the EU. Total imports of all food and non-food products was €564 billion in 2016 with exports of €365 billion. Around half that trade is with the EU. The UK’s reliance on imported products means that the EU would have to pay much higher tariffs than the UK if no trade deal is done. That has led many to believe that it would be very much in the interest of the EU to ensure a trade deal is down with the UK. If no trade deal is down and the WTO rules come into play, then, based on 2016 figures, that would add €64.8 million to the €450.1m cost of fry imports from the EU and €6.6m to the €45.6m cost of UK fry exports to the EU. The cost of tariffs on ware trade would be similar for the UK and EU. The UK exported €74.5m of ware to the EU in 2016 which would attract a tariff of €8.6m, while EU imports to the UK were at €75.4m and would attract a €8.7m tariff. Only €13.1m of the UK’s €57.9m seed potato exports in 2016 were to the EU so that would add a tariff of just €589,500 based on 2016 figures, while EU seed imports to the UK would have attracted a tariff of just €454,500 in 2016. UK chip/ crisp exports to the EU were at €67.4 million in 2016 with imports at €17.0 million. Chip/crisp exports would attract a tariff of €9.5 million and imports a tariff of €2.4 million. 50 Potato World 2017 • number 2 Pagina 49
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