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Post-Brexit trade agreements for agriculture analysis published

The full report can be found here...  The report looks at three scenarios -

•Bespoke Free Trade Agreement (FTA) with the EU;

•World Trade Organisation (WTO) default Most Favoured Nation (MFN) tariffs; and

•Unilateral Trade Liberalisation.

These scenarios are compared against a Baseline in which the UK is fully integrated within the Single Market. In comparison with the Baseline, the three scenarios differ only with regard to trade policy.  The report concludes that, the estimated changes are relatively small under the FTA with the EU scenario since this entails minimal disruption to trade. The projected impacts are larger under the other two trade scenarios. The high tariffs imposed under the WTO default scenario lead to significant adjustments in trade between the UK and EU-27. The changes in trade will have important consequences on domestic markets, with the direction of impact depending on whether the UK is a net importer or a net exporter of the relevant commodity. In the dairy, beef, pig and poultry sectors producer prices are projected to increase. Higher producer prices in these sectors would be likely to benefit producers as cereal prices are not projected to increase. However, there would also be knock-on consequences in the form of higher consumer prices, which would squeeze consumer budgets; this would probably have distributional effects due to the disproportionate impacts on the budgets of lower income households. On the other hand, the lower producer prices projected in the sheep sector would have major implications on profitability in this sector and could lead to significant restructuring in the medium to longer term.

All sectors experience price and value of production declines under the Unilateral Trade Liberalisation scenario. The impacts are particularly marked in the beef and sheep sectors. Producers in the rest of the world are very competitive in these sectors and the complete elimination of tariff protection would clearly impose great pressures on those sectors and lead to significant restructuring in the medium to longer term. The results in this scenario strongly indicate that there is a more pressing need to improve domestic productivity and competitiveness under this trade scenario since producers would be much more exposed to direct competition with overseas suppliers.

The Scottish Government released the following commentary on the report, which highlights that “no deal is not an option” -


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