Post-Brexit Agricultural Policy and Trade in the United Kingdom

Strategic Insights -

The United Kingdom's departure from the European Union in 2020 led to a significant shift in its agricultural production and trade policy. As a result, each of the devolved administrations in England, Northern Ireland, Scotland, and Wales is now responsible for its own agricultural policy framework, while the UK's trade policy is determined by His Majesty's Government. This report explores the trends in UK agricultural production and trade while considering the historical UK-EU coupling and potential trade opportunities post-Brexit.

Key Takeaways:

  • The UK's agricultural production and trade policy have diverged significantly since its departure from the EU, with each devolved administration setting its own policies and priorities.
  • The four nations in the UK (England, Northern Ireland, Scotland, and Wales) have different approaches to agricultural policy, with some continuing EU-style programs and payments, while others are phasing them out.
  • The UK's trade policy is determined by HMG, and the country has negotiated new trade agreements with partners such as Australia and New Zealand, with ongoing talks with other potential partners.
  • The EU-UK Trade and Cooperation Agreement eliminates tariffs on EU and UK-produced goods but includes rules of origin and regulatory hurdles that present challenges to UK-EU agri-food trade.
  • The UK is a net importer of agricultural goods, mainly from the EU, while China is the UK's third-largest agri-food trade partner, with exports to the UK remaining below the EU and the United States.
  • Historical investment trends led to a slowdown in agricultural productivity growth in the UK, which moved from the top quarter to the bottom quarter relative to other European countries over the last decade.

Statistics:

  • The UK negotiated 36 trade agreements representing 63 countries, with multiple new TAs finalized with key partners such as Australia and New Zealand.
  • The EU-UK Trade and Cooperation Agreement (TCA) was completed in January 2022, and the transition grace period for the UK was extended through 2023.
  • The TCA eliminates tariffs on EU and UK-produced goods, with few exceptions, such as rules of origin and regulatory hurdles.
  • The United States is the second-largest UK trade partner, with the UK maintaining a trade surplus with the US every year since 2000.
  • UK demand for US forest products increased on average by 17.7 percent annually between 2010 and 2020.
  • China is the UK's third-largest agri-food trade partner, with exports to the UK remaining below the EU and the United States.

Sources:

  • United States Department of Agriculture's Economic Research Service, "Economic Information Bulletin (No. EIB-250): UK Agricultural Production and Trade Post-Brexit"
  • UK government and Eurostat demographic and production data
  • Trade Data Monitor
  • USDA, Economic Research Service International Agricultural Productivity (IAP) data product
  • Agricultural policy documentation from the devolved administrations (England, Northern Ireland, Scotland, and Wales)
  • EU-UK Trade and Cooperation Agreement (TCA)