Brexit row: EU’s unprecedented farming demand threatens to derail crunch trade talks

Brexit row: EU’s unprecedented farming demand threatens to derail crunch trade talks

Trade talks between Britain and the European Union hit a stumbling block after a clash over €70 billion in subsidies handed to European farmers. The Government is concerned that there is no way to protect British farmers from cut-price imports from the bloc after the transition period expires at the end of the year. The EU is demanding a commitment from the UK to not launch retaliatory tariff strikes on European goods even when it is deemed that British farmers are being unfairly undercut by their continental rivals.

UK officials fear that heavily subsidised European farmers will be able to exploit the biggest shake-up in the agriculture industry in over 40 years.

One clause in the EU’s proposed trade deal with the UK would suggest subsidy funds are not price distorting and cannot be reacted to with “anti-subsidy proceedings nor be subjected to price or cost adjustments in anti-dumping investigations”.

David Frost, the Prime Minister’s chief trade negotiator with the bloc, has argued this could hamstring the Government’s ability to defend Britain’s farm industry.

Under the EU’s Common Agriculture Policy, the bloc has increased subsidies handed out to farmers across the continent.

The unprecedented spending accounts for around 34.5 percent of the EU’s entire €168.7 billion budget for this year.

For the duration of the current parliament, the Government has pledged to fund farmers at the same rate as the EU – around £3 billion a year.

Under World Trade Organisation rules, there is no cap on payments to farmers that “do not distort trade, or at most cause minimal distortion”.

The EU has previously attempted to secure similar arrangements, known as “peace clauses”, in trade deals with Australia and New Zealand.

But such provisions were quickly scrapped, making the demand for Britain to sign up to something similar unprecedented.

Negotiations are expected to be intensified when they resume next week with Mr Frost scheduled to meet Michel Barnier, the EU’s chief negotiator, in Brussels.

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Jorg Kukies said: “The strategy of hope for the best, plan for the worst, I think is very prudent here.

“Every financial institution has to make sure that they are prepared for a hard Brexit, if and when it happens.

“We don’t want that and we hope that it can be avoided. But anyone who listens to the progress updates of the negotiating teams has to take into account that there is a very significant risk that we will go into a difficult situation.”

Published at Tue, 23 Jun 2020 17:33:00 +0000