Trinity research warns of damage to Irish agri-food sector from hard Brexit

A hard Brexit will cause serious damage to Ireland’s dairy and beef sectors, new research from Trinity College Dublin (TCD) Business School predicts.

According to research from Professor of International Business & Economic Development at the business school Frank Barry, the Irish beef and dairy sectors face significant challenges in the case of a hard Brexit.

With a default to World Trade Organisation (WTO) rules looking increasingly likely, agri-food businesses face losing market access as agriculture and food face particularly high tariffs under WTO rules.

Irish agri-food businesses would lose access to the UK market, and so would need to find new markets to sell to, according to the research.

The college research states that a key WTO rule is the ‘most favoured nation’ clause: In the absence of a substantive free trade deal, WTO members are required to charge each other the same tariffs they apply to other WTO member states.

As trade in agriculture and food is subject to particularly high WTO tariff rates – and tends also to be subject to burdensome non-tariff barriers – UK agri-food businesses are likely to face diminished access to the EU market.

Even if the UK chose to slash trade barriers to EU27 (member states) firms, it would, in this scenario, have to offer this same access to other WTO member states, so Ireland and the rest of the EU27 would face much harsher competition on the UK market.

Some advantages of Brexit

The UK also exports substantial quantities of beef and dairy products to the EU however.

The increased barriers the UK would face would leave a vacuum that would afford some opportunities for Irish exporters.

Revealed comparative advantage (RCA) analysis suggests that while Irish beef might be reasonably well positioned to replace British exports, this is not the case for dairy, where brand names are extremely significant.

A possibility suggested by the analysis is that Ireland’s industrial development agencies redouble their efforts to attract the firms that produce these brands to come to Ireland.

The policy implication applies much more broadly than just to the dairy sector.

Brands are extremely important in certain other sectors in which UK-based firms will also suffer diminished access to the EU market if no UK-EU trade agreement is reached over the coming weeks.

Professor Barry said: “We have a very strong record of attracting multinational companies to Ireland. This record of achievement can be leveraged to offset some of the damage to Ireland that Brexit will undoubtedly entail.”