Brexit shocks Europe, questions raised over trade affairs and CAP budget

Friday, 24th of June will remain in history as the day after the unprecedented referendum that left Europe in confusion, as citizens of the UK have decided to exit the European Union (52% voted in favour of a “Brexit”). While stock markets all around the world reacted negatively, showing clear signs the negative speculation being spread across the european continent,  market and trade specialists expressed their concern over consequences of the latest developments. The Panhellenic Exporters Association (Greek association of exporting companies) issued an announcement on Friday, referring to the questions and “shadows” that are being cast this very moment, after the British poll. As far as CAP is concerned, some worry that the first to witness the negatice results of Brexit will be farmers of small nations within UK, such as Nothern Ireland or Wales. Then, there’s a question of the impact Brexit will have on the CAP from a budgetary point of view.David Cameron resigns, EU makes a joint statement

While UK Prime Minister David Cameron announced his resignation on Friday, the European Commission made on the same day a joint statement, following recent developments : EP President Martin Schulz, European Council President Donald Tusk and Dutch Prime Minister Mark Rutte met Friday morning in Brussels at the invitation of EU Commission President Jean-Claude Juncker. They discussed the outcome of the United Kingdom referendum and made the following joint statement:

“In a free and democratic process, the British people have expressed their wish to leave the European Union. We regret this decision but respect it.

This is an unprecedented situation but we are united in our response. We will stand strong and uphold the EU’s core values of promoting peace and the well-being of its peoples. The Union of 27 Member States will continue. The Union is the framework of our common political future. We are bound together by history, geography and common interests and will develop our cooperation on this basis. Together we will address our common challenge to generate growth, increase prosperity and ensure a safe and secure environment for our citizens. The institutions will play their full role in this endeavour”

You can read the full statement here

Exporters worry,  specialists speak of minor consequences for the CAΡ

The Panhellenic Exporters Association issued an announcement, stating the negative prospects for Greek – British bilateral trade: “specialists are afraid of a further british sterling drop that may raise prices of  European and Greek products, making them less appealing for the british market. Negative consequences are also expected, if tradeduties are applied on both EU and UK trade affairs, especially if a special solution won’t be applied,  like trade agreements  between EU and Norway / Lichtenstein”.

While these arguments are reasonable for all member countries that have been trade partners of the UK for decades, some specialists believe that Brexit won’t be a serious blow for the CAP from a budgetary point of view. Mr Luc Vernet, Communication expert from the “Farm – Europe” think tank explains: “Is Brexit a serious blow for the CAP from a budgetary point of view ? Taking into account the British rebate and the return on contributions level, it’s NOT. The CAP is the policy area to which the UK is the least net contributor.

The impact of a Brexit is first and foremost concentrated on the UK’s farming sector and on trade with many uncertainties, mainly for UK farmers. The UK is an important contributor to the overall EU budget, but it’s less the case when it comes to the Common Agricultural Policy. It supplies 10,5% of the global EU budget, but a more precise analysis shows that it provides only 5% of the CAP headings”.

You can read the full analysis of Mr. Vernet here

On the other hand, European Commissioner Phil Hogan, had spoken of the dangers British farmers would confront should they choose to leave the Union, during his presence at the Oxford Farming Conference: “…However, outside the EU, agricultural spending would be subject to the same annual review by the British Treasury as any other departmen. Can farmers compete with doctors, nurses and schools in such a review?“ Hogan asked the audience.

Reentering the EU’s internal market is another challenge for British farmers. Would the British Exchequer [the government department that is responsible for receiving and dispersing the public revenue] be prepared to pay a price that fully guaranteed your access for agricultural products?  Would it expect farmers to pay part of the access fee through higher taxes?” he asked with emphasis.






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