UNITED Kingdom prime minister Theresa May’s postponement of the scheduled vote on the Brexit withdrawal bill in the House of Commons last week has cast further uncertainty around the UK’s messy departure from the European Union.
While free trade agreement discussions have started between the Australian government and the EU, and both the UK and Australia have expressed a willingness to pursue an FTA post-Brexit, a disorderly exit poses a range of short-term risks to Australian red meat exports in the interim, a Meat & Livestock Australia report says.
Australian exporters and EU-certified producers should be aware of these risks and closely monitor events over coming months when making business decisions, MLA warns.
Australia has two country specific red meat export quotas currently at risk:
Australia is a regular high-user of both quotas. Trading outside these quotas attracts a prohibitively high tariff.
The EU and the UK have separately proposed splitting all country specific tariff rate quotas between the EU and UK following the UK’s departure from the customs union. This proposal would see Australia’s HQB Hilton beef quota split 65pc and 35pc between the UK and remaining EU respectively, and the sheepmeat quota split 80pc and 20pc. Further quantitate restrictions between both markets is an erosion of Australia’s access and would have negative implications for Australian exports, MLA says.
In opposition to the split, the red meat industry has been working with the Australian Government to ensure the red meat trade is not collateral damage through this process. In October, the Government submitted its formal objection to the EU and UK through the World Trade Organisation. Despite, in theory, the combined tonnage to the UK and remaining EU-27 remaining unchanged, there is implicit risk in having a fixed split:
Australia is not alone and a wide range of commodities across a range of countries could also be implicated in this messy divorce, MLA says. However common ground can be found with the majority of countries with tariff-rate quotas adamantly opposed to the apportionment process. Negotiations will be ongoing however a resolution is unlikely to be resolved prior to the 29 March deadline.
Should the UK parliament pass the Brexit deal before the deadline, the UK will remain in the customs union temporarily (or permanently if the hard Irish border cannot be resolved) meaning the existing EU trading regime will remain in place for the time being. However, as time passes and the March Brexit deadline draws ever closer, no Brexit deal will spell an uncertain future for the EU, UK and Australia, MLA says.