Although the government remains confident that we will officially leave the EU on March 2019, it also appears that there is now a growing consensus that this will also mean that there will have to be a “transitional agreement” allowing us several years to disentangle ourselves from EU rules and regulations that are so intimately entwined with our own domestic regulations. This entanglement is nowhere more obvious than in farming where domestic agricultural policy has effectively been exported to the EU since we joined over 40 years ago.
Thus farmers are rightly concerned about what the future holds post 2019 and although the government has confirmed that they would maintain the same level of funding through to 2022, it has not been clear whether the rules for the allocation of these funds will change.
The easy option would be to continue with a UK agricultural support system that mirrors the existing CAP at least in the short term and this may be necessary, not only to prevent our farmers being at a significant competitive disadvantage to our European neighbours, but it may also be a requirement of the transitional arrangements which may ultimately be negotiated.
But, the most fundamental concern going forward will be the extent to which our farmers will have access to EU markets. It is difficult to see how we would ever negotiate enough non-new EU foreign trade deals in the short term to compensate for the sudden loss of free access to the Single Market and so the terms of any transitional arrangements that can be agreed are likely to be important.
In this context Philip Hammond, the Chancellor of the Exchequer has explained that, although the UK will leave the single market and customs union on 29 March 2019, the government would be seeking a “Turkish model” customs union agreement which would allow the UK to trade freely with the EU during the transitional period.
However, it remains to be seen how easy it will be to persuade the remaining EU member states to allow such free trade and one can only imagine any such access would also require compliance with most EU rules and possibly also some financial contribution to the EU coffers.
This is clearly something that many “Leave” voters would not have been impressed with on 23rd June but I suspect this is just the start of what is going to be an long period of brinkmanship where uncomfortable compromises will need to be agreed by all parties if a deal is ultimately going to be reached and in the meantime this will result in a continued period of uncertainty that is likely to last beyond our formal departure from the EU.