The decision by UK voters to leave the European Union will complicate the contentious negotiations for a U.S.-EU free trade agreement. And it could redound on regulation of pesticides such as glyphosate and neonicotinoids.
With its free-market philosophy, Britain routinely has been a U.S. ally in trade talks. In the short term, “Brexit” will supersede any work on a trans-Atlantic agreement and in the longer run, deprive the United States of a partner on European ag issues. Already looming over the free-trade talks is the impending departure in January of the Obama administration, meaning little time to complete an agreement.
“We are evaluating the impact of the United Kingdom’s decision on T-TIP (Transatlantic Trade and Investment Partnership) and look forward to continuing our engagement with the European Union and our relations with the United Kingdom,” said U.S. trade representative Michael Froman.
In agriculture, negotiators are at odds over U.S. use of growth promotants in beef production, EU claims to ownership of the names of foods such as Parmesan cheese, and whether to grow GMO crops.
As a bloc, the 28-nation EU is the fourth-largest U.S. farm export market, forecast to buy $11.5 billion, or 9 percent, of ag exports this fiscal year. The two biggest customers, Canada and China, each buy 14 percent. Exports provide about 20 cents of each $1 of farm income, so fluctuation in sales to the EU, or its departing member, Britain, would be relatively minor.
Meurig Raymond, president of the National Farmers Union, the largest UK farm group, told the Express newspaper that he was concerned about the impact of Brexit on farm exports to the EU, the UK’s largest market, the impact on availability of farm labor, and the prospect that science, rather than “emotion,” would decide issues such as regulatory approval of continued use of glyphosate, the popular weedkiller.
“Because I do believe we are going to be more isolated, farming and food production should move up the Government’s agenda,” Raymond told the Express.
The Guardian said controls over neonicotinoids might be loosened when the UK was out of the EU orbit.
In Scotland, farm leaders told the Herald Scotland that they expected government leaders to live up to promises to keep farm supports at the levels set by the EU. “We need to know that the CAP (Common Agriculture Program) or its equivalent funding will continue in the short-term – ideally until the end of its present term at the end of 2020 – which will provide some necessary breathing space to plan beyond that period,” said David Johnstone, chairman on a landowners association.
Richard Dixon of Friends of the Earth Scotland predicted “a huge fight” over environmental protection. “Many of the politicians backing the leave vote are climate sceptics and against renewable energy, and much of the ‘red tape’ they complain about are the laws that have given us cleaner air and water, and forced companies to reduce pollution,” said Dixon.
Agrimoney, based in London, said land prices could benefit “as a safe haven asset” due to turmoil over Brexit, which also could prolong the run of low interest rates, both a boon for agriculture. “The rise in dollar (another safe haven asset) of some 2% on Friday is bad news for farmers in US, in cutting the affordability of their crop exports, as well as for growers in countries, such as coffee and rice exporter Vietnam, whose currencies are tied to the greenback,” said Agrimoney.
But farmers could suffer if turmoil leads to protectionism and trade barriers, said the commodity news and analytics company.