Implications of Brexit for developing countries’ agri-food trade

Back to Brexit, I’m afraid, but I thought readers of this blog might be interested in a recent working paper I have written on this topic. Brexit (the UK’s exit from the European Union) will have important repercussions for the agri-food trade of developing countries because of the UK’s size (it is the sixth largest economy in the world) and its important role as an importer of agri-food products (it accounts for 12% of the EU’s imports from developing countries). These effects will occur through a variety of different channels.

Some of the key conclusions of the paper are:

• There will be higher trade costs for UK-EU27 trade.

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Co-financing CAP Pillar 1 payments

After a couple of Brexit posts, it is time to return to the debate on the future of the CAP and its financing. Early last month, I wrote a post making the case for co-financing CAP Pillar 1 payments in the forthcoming MFF proposal from the Commission. I have since fine-tuned the arguments and the result has appeared as a policy brief published by the Swedish Institute for European Policy Studies.

From the summary:

The idea of national co-financing of the EU’s income support to farmers was introduced into the debate on the next Multi-Annual Financial Framework (MFF) in June 2017 in the Commission Reflection Paper on the Future of EU Finances.

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The Brexit negotiations on the future trade relationship

On 23 March 2018, the European Council in its Art. 50 formation welcomed the agreement reached earlier last week by the negotiators on parts of the legal text of the Withdrawal Agreement covering citizens’ rights, the financial settlement, a number of other withdrawal issues and the transition. Prime Minister May wrote following that agreement to European Council President Donald Tusk giving her full support to the draft Agreement and highlighting, in particular, her support for efforts to solve the Ireland border issue. The European Council was therefore willing to set out its guidelines with a view to the opening of negotiations on the overall understanding of the framework for the future relationship, which will be elaborated in a political declaration accompanying and referred to in the Withdrawal Agreement.

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Brexit Withdrawal Agreement forwarded to UK

The EU Commission yesterday forwarded a draft Withdrawal Agreement to the UK authorities for negotiation. This draft builds on the initial draft submitted by the Commission for approval by the Council (Art.50) and the Brexit Steering Group of the European Parliament on 28 February last. To accompany that initial text, the Commission published a helpful Q&A as a guide to the withdrawal process which still remains valid today. Press reports have highlighted that governments tweaked the initial text in some minor ways but retained the broad thrust of the document.

Negotiators are expected to work on the draft over the weekend and in Brussels on Monday and Tuesday next week.

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Measuring changing farm structure in the EU

A particular type of farm structure is not an explicit policy objective of the EU’s Common Agricultural Policy (CAP). However, facilitating structural change is an objective of the CAP, set out in Article 39 of the Treaty on the Functioning of the European Union, as a way of ensuring a fair standard of living for the agricultural community and increasing the individual earnings of persons engaged in agriculture (the Treaty language speaks of “ensuring the rational development of agricultural production and the optimum utilisation of the factors of production, in particular labour”).

However, there is a widely-shared view that it is desirable to maintain the family farm model of European agriculture.

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A Tale of Two Policy Documents: DEFRA vs. Commission Communication

The Commission published its Communication The future of food and farming in November 2017 following an extensive public consultation process. Legislative proposals accompanied by an impact assessment are expected at the end of May. At the same time, the UK is preparing for life after Brexit. To this end, the UK Department for the Environment, Food and Rural Affairs (DEFRA) published a Command Paper (consultation document) on February 27 seeking views on a future post-Brexit agricultural policy. The paper provides a clear direction of travel for UK, or at least, England’s future agricultural policy, and will result in a White Paper and legislation in the form of an Agricultural Bill later in this parliamentary session.

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