As it stands, the UK is due to leave the EU on 31 January 2020 after the Prime Minister’s Withdrawal Agreement Bill was passed by MPs on 20 December 2019. The Bill is now progressing through the Lords. The leaving date marks a period of transition where trade deals will be discussed and struck.Return to menu
The Withdrawal Agreement is a legally binding international treaty between the EU and UK. Essentially it is the legal divorce between the two parties and primarily covers six main areas:
- Citizens’ rights – provides the ability for citizens in either jurisdiction to apply for settled status.
- Separation provisions – such as what happens to goods already on the market (e.g. in transit) at the point of exit.
- The financial settlement – the so called ‘divorce bill’, it does not put a value on the figure but sets the mechanism for working it out. The National Audit Office expects this to be in the region of £39 billion, although this figure may have dropped a little to take account of ongoing payments made during the current extension.
- Implementation period - the Withdrawal Agreement provides for an “implementation period” (also known as a “transition period”) of 11 months, starting from the point of exit (31 January 2020) and ending on 31 December 2020.
- Institutional arrangements – these set out how the agreement will be governed.
- Protocol’s on Cyprus, Gibraltar and Northern Ireland
The implementation period as provided for in the Withdrawal Agreement will last 14 months, starting from the point of exit (31 January 2020) and ending on 31 December 2020. If the future relationship negotiations have not concluded there is scope for the Implementation Period to be extended once for a period of one to two years. The EU – UK Joint Committee which oversees the implementation period (made up of EU and UK representatives) must agree an extension of the implementation period before 1 July 2020.
The UK has ruled out seeking an extension to the implementation period and has enshrined this position in law. This means the implementation period is due, by UK law, to end on 31 December 2020.Return to menu
The Protocol on Ireland / Northern Ireland has been agreed to ensure that in the event that the future relationship between the UK and the EU is not in place by the end of the implementation period, the Good Friday Agreement will be upheld and there will be no hard border on the island of Ireland.
Customs: The Protocol states that NI will remain a part of the customs territory of the UK, but it will apply EU customs legislation, including the application of EU tariffs. This means that there will be no tariffs nor quantitative restrictions applied between NI and the EU.
Goods that move directly from another part of the UK to NI will not attract any duty unless there is a risk of said goods moving onward into the EU, or being processed into another product and then moving into the EU. In some instances, this may be achieved by traders paying duty and then receiving a subsequent rebate if the goods have not moved onwards. Goods from the UK that move to NI and are deemed to be at risk of moving to the EU will have the appropriate EU customs duty levied. There are criteria given for which products are at risk of onward movement to the EU, but this will be further defined by the EU and UK jointly during the transition period.
Goods coming from outside the UK and that either remain in the UK or move to NI and stay there will have the UK’s tariff levied upon them. Goods that come from outside of the UK and then move to the EU via NI or other routes will have the EU’s tariff applied to them.
There will be “unfettered access” for goods moving from NI to other parts of the UK, although the government has recently confirmed that additional paperwork will be required, and associated fees charged, for goods traded between NI and GB. While not detailed in the protocol, there will be a need to differentiate between where goods are destined to ensure the correct tariff is collected.
Regulation: NI will continue to apply a number of EU rules, for example those related to food safety, pesticides and animal welfare. Regulatory checks on goods moving between NI and the rest of the UK will be minimal and the UK and EU will jointly agree ways of these checks taking place away from ports and airports. Application of EU laws in NI will not prevent access of NI goods to the rest of the UK market. The UK or NI government will govern areas of regulation that are not listed in the protocol, for example most elements of agricultural policy.Return to menu
Yes but there is no “upfront consent” for the people of Northern Ireland ahead of the Protocol coming into effect. In effect the earliest opportunity for consent will be November 2024.
The protocol will apply at the end of the transition period in full if no future UK-EU relationship is agreed to come into force that supersedes it in whole or in part. If the protocol does come into force then it will apply for an “initial” period of four years. Within 2 months of the end of that period, the Northern Ireland Assembly will vote to ascertain if there is consent for the provisions related to customs, VAT, state aid and regulations to continue to apply.
If the Northern Irish Assembly votes by majority to maintain the elements of the protocol, the elements will continue to apply for a further four years following that decision. If in fact there is cross community support for maintaining the protocol meaning that there is a majority of those Members of the Assembly present, including a majority of unionist and nationalist designations present and voting, or there is a weighted majority (60%) of the Members of the Assembly present and voting, including at least (40%) of each of the nationalist and unionist designation present, the protocol shall remain in place for a further eight years.
If the is a majority in favour of ending the protocol, it will cease to apply after two years from the end of the initial four (or subsequent four or eight year periods). In effect this means that the Protocol could remain in place for an indefinite term for as long as there is support in the Northern Ireland Assembly.Return to menu
During the implementation period: freedom of movement of people remains, UK and EU citizens are free to travel, live and work in either jurisdiction as they are now. All UK nationals residing in the EU, and EU citizens living in the UK at the end of the implementation period, will be protected by the same rights they have now. These rights extend to these citizens’ families and family members who may still move freely to reside with others as under current EU law.
EU citizens, UK citizens and their respective family members who move to the UK or an EU state will be able to acquire permanent residence in the host state if they reside there for a continuous period of 5 years. This includes people who move to a host nation before the end of the implementation period. Once they reach the 5 year threshold they too will have the right to reside permanently.
Irish / Northern Irish Protocol: There is nothing to stop EU citizens travelling across the Irish border as the Common Travel Area between the UK and Ireland would remain in place. This does not extend to rights to jobs or social benefits, and the UK would seek to administer immigration through controls in the workplace and welfare regime.Return to menu
What happens to budget allocation during implementation period and if the Irish protocol comes into effect?
Implementation period: For the year 2020, the UK shall contribute to and participate in the implementation of EU budgets
If the implementation period is extended the UK would cease to participate in the EU budget as if a Member State at the end of 2020. Instead, the UK would make an appropriate financial contribution for the duration of the extension. The UK-EU Joint Committee would agree the amount and a schedule for making payments as part of the decision on extension.
Irish / Northern Irish Protocol: If the “backstop” is invoked there is no commitment for the UK to contribute to the EU budget. However, if the UK chooses to participate in EU programmes during this time then relevant contributions may be due.Return to menu
During the implementation period (31 January 2020 – 31 December 2020) the UK will continue to receive a rebate as we do now. If the implementation period was extended past 2020 the UK would no longer receive a rebate. This is because post 2020 there will be a new EU budget which the UK will not be contributing to. If the implementation period is extended the UK-EU Joint Committee would agree the value of our contributions based on EU services used, so it would essentially become ‘pay-as-you-go’ and as such we would not be a net contributor so would not be due a rebate.Return to menu
Implementation period: The UK government has been clear that when we leave the EU we will also leave the Common Agriculture Policy (CAP), however many of the rules relating to the CAP will remain in place during the implementation period (up to 31 December 2020), although this does not apply to the specific regulation governing Direct Payments after 31 December 2019. The government will be required to introduce legislation that will continue the Basic Payment Scheme across the UK for the calendar year 2020. The government will also reintroduce an Agriculture Bill that will establish the future of the BPS and the introduction of a new agricultural policy from 2021 onwards.
Irish / Northern Irish Protocol: Northern Ireland would be outside of the CAP and would be free to implement its own domestic agricultural policy as per any policies stemming from the UK’s Agriculture Bill.Return to menu
Can we enter into new Free Trade Agreements (FTAs) during the implementation period or during backstop?
The UK can negotiate FTA’s but we cannot sign or implement these agreements. Any agreements negotiated would have to come into force after the implementation period.
Irish/ Northern Irish Protocol: Northern Ireland will remain a part of the UK customs union. This means that it will benefit from any international trade agreement that the UK secures. It remains unclear how complex rules of origin will operate in practice and whether the EU will require safeguards against cheap imports entering GB and potentially accessing the EU market through the NI /ROI border.,Return to menu
Implementation period: during the implementation period any international agreements (including FTAs) which the EU has negotiated will continue to apply to the UK as if it were a member state. The UK and EU have taken a co-operative approach and provided a deal is concluded the EU will notify third countries of this intention. In preparation the UK has been engaging with all relevant third countries and the vast majority support this approach. At the end of the implementation period the UK will need to start operating on its own UK only agreements with these third countries.Return to menu
The Political Declaration is a statement of intent from both the EU and UK and sets out how they envisage the future relationship might work once the implementation period (as provided for in the Withdrawal Agreement) is over and the UK is no longer bound by EU rules. The Political Declaration is not legally binding on either party and the document is not all encompassing; meaning that the future relationship may encompass areas of cooperation beyond those described in the document if it is in their mutual interest.Return to menu
The EU and UK envisage a future trading relationship which is ‘as close as possible’, but how close is as close as possible?
The UK and EU agree to develop an ambitious, wide-ranging and balanced economic partnership. This partnership will be comprehensive, encompassing a Free Trade Agreement, with zero tariffs, fees, charges or quantitative restrictions across all goods sectors (including agri-food) with appropriate and modern accompanying rules of origin. The deal struck by Boris Johnson differs from his predecessors (Theresa May) in so far as the political declaration describes the future relationship as “ambitious”, rather than “as close as possible”, which suggests a relationship that is looser than the Future Economic Partnership outlined in the previous political declaration.
The changes to the Political Declaration can be seen to demonstrate the current UK government’s desire for a looser relationship with the EU than the previous administration, allowing greater freedom to strike trade deals with third countries.Return to menu
If the Withdrawal Agreement is passed, negotiations on the future relationship will begin on 1 November 2019. It should be noted that if no FTA is agreed between the EU and the UK by the end of the implementation period the new special arrangements will apply to NI only, and so the rest of the UK would effectively be subject to a “no-deal” Brexit at that point.
The future relationship between and EU and UK will be negotiated after the UK has officially left the EU, this is because the EU cannot negotiate trade deals with member states. In the Political Declaration both the EU and UK commit to beginning the formal process of negotiations as soon as possible after the UK leaves with EU, with the aim of the new arrangement coming into force by the end of 2020.
Each side commits to “expeditiously” identify those areas that;
- are likely to require the greatest consideration and the associated legal and technical issues that will need to be addressed, in order that the necessary technical preparations can be made on both sides;
- draw-up a full schedule for the negotiations, taking into account relevant internal processes; and
- consider the logistical requirements of the formal negotiations.
Reviewing progress: with the aim of agreeing actions to move forward in negotiations on the future relationship both Parties will convene at a high level in June 2020 for the purpose of “taking stock” of progress.Return to menu
The Political Declaration makes it clear that the freedom of movement of people will end after the implementation period. In the declaration both parties commit to the aim of visa free travel for short term visits and suggest similar arrangements would apply to students, exchanges or researchers. However, there is no commitment about those citizens wishing to live and work long term in either jurisdiction.Return to menu
No deal and tariffs
As a member of the EU and its single market, we trade freely with the EU. This means there are no tariffs or restrictions on goods moving from the UK to the EU, and vice versa. The EU currently charges non-EU members (that do not have a specific trade agreement in place with the EU) significant import tariffs. In the event of a no-deal Brexit and we leave without an agreement in place, the EU has said it will apply those same significant tariffs to product entering the EU from the UK. On the other hand, the UK has set out its plans to apply much lower tariffs, and in many cases no tariff, on product coming into the UK from the EU. Under the WTO rules, the tariffs applied to EU imports must also apply to imports from the rest of the world, significantly liberalising the UK market.Return to menu
We understand that the UK government used three principles to guide it in this decision.
Firstly impact on consumer prices, secondly impact on domestic producers and thirdly impact on future negotiating capital. In short the UK government tasked itself with trying to find the sweet spot where tariffs wouldn’t increase prices for the consumer, wouldn’t damage domestic producers and finally doesn’t give everything away now (and therefore leaves leverage to secure concessions for the country in future trade negotiations). This was not an easy task. These three principles sit against the backdrop of the World Trade Organisation (WTO) Most Favoured Nation principle, which means that one country cannot discriminate against another so we cannot, in the event of no deal, offer the EU a preference (for example free market access or a lower tariff) without offering that concession to everyone else.
It is for each individual trading nation to set its own import tariffs. The UK currently imports 40% of its food, with 30% of UK food supply coming from the EU. The EU is more than self-sufficient in a number of agricultural products and applies significant tariffs to imports of agri-food products in order to protect EU farmers that produce food to high animal welfare and environmental standards. If the UK applied the same level of tariffs to imports that the EU does, food prices may increase in UK shops. In the event of leaving with no trade agreement in place the EU cannot, under the WTO’s Most Favoured Nation rules, discriminate in favour of the UK. If it offered lower tariff access to the UK, it would have to offer the same to the rest of the world and it will not do that.Return to menu
Why doesn’t the UK government change import tariffs to protect our farmers if export tariffs are applied by other countries?
The UK currently imports 40% of its food, with 30% of UK food supply coming from the EU. It has sought to balance the interests of consumers, domestic producers and maintain some leverage for negotiating free trade agreements in the future. If it applied the same level of tariff that the EU currently applies to imports, it is likely that we would see price increases for consumers and significantly higher commodity prices for farmers.Return to menu
If less British produce goes from the UK to the EU (because they don't want to pay the higher tariffs), does that mean more British produce will end up on British shelves?
Yes it could mean that we seek to sell product that historically there has been limited demand for here in the UK, for example dark poultry meat, pork bellies, offal and greater quantities of lamb.Return to menu
Wouldn't farmers having access to other international markets instead of just the EU ones be a good thing?
The UK is currently party to hundreds of international agreements through its membership of the European Union, including around 40 Free Trade Agreements (FTAs) with over 70 international partners. These agreements are worth more than £2.8bn in agri-food exports. When the UK leaves the EU we also leave these agreements behind. In order to provide continuity the UK government is seeking the agreement of our international partners to roll these agreements over. If we leave the EU with a deal the EU agreements will continue to apply during the transition period and we have that time to agree new post Brexit UK-third country agreements which would come into force at the end of that period. However, if we leave the EU without a deal these new agreements must be ready to go from the point of exit or we face a hiatus.
If the agreements cannot be transitioned before the point of exit then the preferences agreed under these deals will be lost. This means that the UK will revert to trading with these partners on WTO non-preferential terms. UK agri-food businesses have been benefiting from the provisions of these EU agreements and have built a customer base who now demand Great British food and drink.Return to menu
Japan is not a significant producer of lamb and there is no tariff on imports of lamb to Japan. This trade in UK lamb would in theory continue in the event of a no-deal Brexit, but the size of the market is relatively small - worth a projected £10m per year for UK lamb sales in comparison to the EU market worth £389m. The bigger picture is that Japan has said that it will not 'roll over' its EU trade deal to the UK in the event of a no-deal Brexit, meaning that other British products such as beef, beer and whisky would be subject to high Japanese import tariffs.
Other popular questionsReturn to menu
There are a number of reasons why the NFU believes a disorderly Brexit would have severe impacts, not just on farm businesses and fragile rural economies, but on the wider food industry and the entire UK public who enjoy and rely on a safe and affordable domestic supply of high quality food.
While the precise impact can never be predicted with complete accuracy, it is clear to us that for food and farming, and more broadly for our natural environment and rural communities, there are serious implications of a no-deal Brexit. They include:
Exports: In a no-deal scenario, EU legislation relating to trade with third countries would effectively result in a trade embargo on the export of UK animals and animal-based products (meat, eggs, dairy, and so on) to the EU. This is because the EU requires third countries to be listed as an approved country for export to the EU. This is not currently the case for the UK, and it could take months after Brexit for such status to be granted. In 2017 the total value of agri-food exports in animal and animal products was £3.15 billion. The lamb industry would be particularly impacted given that in 2017, 31% of domestic sheep meat production was exported and 94% was destined for the EU.
Export tariffs: In 2017 60% of UK food, feed and drink exports were to countries within the EU. In a no-deal scenario, UK exports to the EU would face the same tariffs as goods entering the EU from third countries without a preferential trade agreement. Those EU tariffs are set out in the EU’s Common Customs Tariff (CCT) and are particularly high in relation to many agricultural products. For instance, the equivalent ad valorem tariff is 27% on chicken, 46% on lamb, and 65% on beef. The impact on these sectors and many others, all of whom export substantial quantities of product to the EU, would be devastating.
Import tariffs: The no-deal applied tariff policy announcement from the UK government confirms the NFU's view that to leave the EU without a deal in place would be a catastrophe for UK farming. We have very significant concerns with regards to the damage this policy will cause to our farmers as well as to the wider British public. We are deeply concerned that the approach to tariffs published in March 2019 will mean a greater reliance on food produced overseas and with it a diminution of our high environmental and animal welfare standards, a scenario that will not best serve the interests and expectations of the British public.
Inputs: Many farm inputs and supplies are distributed via closely integrated and fast moving European supply chains, including fertilisers, plant protection products, machinery parts and animal feed. For example, we import over 90% of our animal vaccines and medicines and it has been estimated that 20% of veterinary medicine products could face shortages, especially vaccines and biological products. For many of these products it is simply not possible to stockpile, as products have strict sell by dates and often require refrigerated storage.
Organic produce: In a no-deal scenario, the EU will no longer recognise UK organic certification bodies, and so we will not be able to export organic products to the EU. The process for applying for approval can only commence after we leave and can take up to nine months. The overall export value of organic products in 2016 was around £188 million. Organic exports are particularly important for the dairy industry, accounting for around 20% of total organic sales.
Jobs, prosperity and the economy: Agriculture is the bedrock of the UK’s largest manufacturing industry, food and drink, worth £108 billion. Volatile farm prices and interrupted supplies risks the jobs of the 4 million people employed in the supply chain. The agricultural implications of a no-deal go well beyond the farm gate and the rural economy.
The NFU is determined to work on behalf of its members to get the best possible outcome for British farming from Brexit. Avoiding a no-deal scenario is the first of the NFU’s six core principles to achieve this. Top of this list is to avoid a disorderly withdrawal from the EU. We have created a dedicated Brexit hub on NFUonline, including a Brexit toolkit which seeks to answer a number of questions and provide help for our members to navigate Brexit. We have written to all MPs in the UK setting out our concerns. We have set out our concerns on the UK’s import tariffs to a letter to the Chancellor and we have engaged in the government’s no-deal preparedness operations to ensure that the concerns and position of UK farmers is taken into consideration. We continue to engage through our offices in Westminster and Brussels, and through the media, to influence decision makers and ensure that the voice of British farming is heard loud and clear.Return to menu
The NFU continues to make the positive case for British food and farming in the media, reaching millions of shoppers through TV and radio interviews, newspaper articles and the associated websites and social media. On top of this the NFU connects with 100,000s of shoppers every week through its Facebook, Twitter, Instagram and Youtube channels. And the NFU's Countryside magazine which is read by 100,000 members of the public every month, proudly tells the positive story of British food and farming in print and online, giving consumers reasons and ways to buy British food and back British farming. Its mission is to champion British food, farming and rural affairs.Return to menu
Do we have national storage capacity if the government were able to buy up surplus beef and lamb that should have been exported to EU post Brexit?
There have been reports in the media that suggest civil servants are planning for government to buy excess lamb and beef at a predetermined price. The NFU’s priority is to make sure that the EU market remains open for UK beef and lamb and that our product remains competitively priced on the EU market. We don’t believe simply freezing, storing and paying for excess products (which ultimately will return to the market and depress prices at some later point) is the right strategy for government to pursue at this point in time, nor do we believe that there would be sufficient storage facilities in the country to deliver such a plan in practice. Indeed the industry body which represents businesses that store frozen and chilled food show they are at capacity and "full to bursting".Return to menu
The NFU is working closely with government to determine how best to ensure that the financial viability of all UK farmers is not called into question as a result of a disorderly Brexit. This includes specific aid schemes for farmers in the most affected sectors, rapid payment of all existing farm support payments due, protection from imports of food produced to lower standards and turbo charging investments in productivity and growth to ensure that post Brexit opportunities for the sector are realised.