By Cillian Doyle.
Consider this scenario: the year is 2020, Britain has left the European Union and signed a free trade deal with the United States, and the Irish poultry industry now faces stiff competition in its chief export market from highly subsidised US producers.
Now ask yourself, how much of a risk does this scenario pose to the Irish economy? Given the lack of debate, you might think the answer was not much. Considering that the managing director of Manor Farm, one of our biggest producers, told RTÉ he thought Brexit could be good for the industry, you could have been forgiven for thinking Britain’s difficulty was Ireland’s opportunity.
Sadly the industry and, by extension, our economy could be in for a bit of a shock if the above scenario came to pass – and it is increasingly looking likely.
The Trump administration has been pushing hard for favourable access to the market for Britain’s most popular meat. The recently published US/UK Summary of Specific Negotiating Objectives (2019), states the reduction or removal of tariffs and other “unwanted barriers” for US agricultural produce is paramount.
Judging by the recent comments of UK International Trade Secretary Liam Fox, it looks like they are pushing on an open door.
Ireland is one of the UK’s biggest suppliers, exporting around 129,000 tonnes a year, and thus stands to lose much from such an arrangement. The Central Statistics Office doesn’t breakdown its agricultural export data by poultry alone, but we can from the table see below that meat exports have performed strongly since the last crisis, enjoying their highest year on record in 2018.
Unlike much of the statistically distorting ‘virtual’ exports from big tech multinationals domiciling intellectual property here for tax purposes (think copyrights, patents and trademarks) these exports are real; they support real ancillary businesses and broader distribution networks. And they are now facing a real threat.
Given that 43 per cent of our agricultural exports go to Britain and agricultural exports make up around 10 per cent of total exports, if we scale this up then around 4.3 per cent of exports could soon be under competitive threat.
If we want to look at this in terms of its potential impact on GDP – always risky given the problems with Irish GDP figures – this could potentially place 5.4 per cent of our GDP at risk. And this is before we even consider the multiplier effect on those ancillary businesses and industries.
Competing with subsidised US factory farms
So with a lot to lose, let’s take a look at these US competitors. The US likes to present the industry as small family-run farms in harmonious free-market competition. In reality oligopolistic players like Tyson and Perdue call the shots, supported all the while by massive government subsidies.
A study by Tufts University found that the industry received US$1.25 billion in taxpayer-funded subsidies over an eight-year period. The Federal Government even acts as a “buyer of last resort” for the purposes of “surplus removal” when the industry produces more chickens than it can sell.
Being unencumbered by more stringent EU health and safety regulations allows for greater intensification of production within the industry in the US, although now without concerns for animal welfare and human consumption.
This is the competitive threat Irish exporters face, and a powerful network of commercial and political interests, tied to a range of partisan think tanks, are working day and night to see it become reality.
The US government’s trade agency has been inundated by requests from the US agricultural lobby to slash food standards as part of any free trade agreement. The move would play well with Trump’s base, hence the appointment of Greg Doud as the US’s chief agricultural trade negotiator, himself a former lobby bigwig.
Last Monday, Liam Fox reiterated his desire for scrapping EU food standards in an effort to get a trade deal signed, again dismissing the health concerns from the use of chlorinated chicken.
Fox, along with Boris Johnson and Environment, Food and Rural Affairs Secretary Michael Gove, is affiliated with the recently established pro-Brexit think tank The Initiative for Free Trade (IFT). The IFT is linked to US right-wing think tanks such as the Cato Institute and a range of others funded by the billionaire Koch brothers, who are singing from the same hymn sheet.
The ground is now moving pretty quickly beneath Ireland’s feet. I am not saying that Irish policymakers have not made the appropriate contingency plans. I am just saying I have yet to see evidence that they have. Ireland stands to lose more than any other EU state from such a US/UK free trade agreement, yet our government has left all responsibility for the handling of the negotiations to the EU.
We have all heard that well-worn expression about Ireland being economically closer to Boston than Berlin. But in reality we were always closest to Britain. Now with a US/UK bloc looking like it’s going one way, and the EU (our negotiator) going another, our failure to try take our destiny into our own hands means a lot of chickens could soon be coming home to roost.
Cillian Doyle is a doctoral student.