Thread by @DmitryOpines

1/ No-Deal Brexit, Baa-d News for British Sheep Farmers, Tariff Thread

While the EU isn't hugely protectionist when it comes to tariffs, there are individual product types where the bloc is a bit of a fortress. Unfortunately for British sheep farmers, sheepmeat is one of them.

2/ The EU uses a system of tariff quotas for sheep meat.

As a reminder, quotas consist of two different rates, an 'in-quota' and an 'out of quota' rate.

Only a fixed volume (tonnes for sheep) of imports a year are eligible to receive the lower, in-quota rate. The rest are not.

3/ For sheep the in-quota rate is 0%, so tariff free, while the out of quota rate is 12.80% EUR + 171.30 EUR/100kg.

World prices are at around 500 EUR/100kg, so that out of quota rate is equivalent to about a 45% tariff. That's a pretty solid lockout from the market.

4/ So, who gets the in-quota rate?

This article provides the numbers on EU stingyness where the quota is concerned.

NZ, for historical reasons, gets a big quota.
Australia, a large producer, gets a smaller quota.
Everyone else gets almost nothing.

beefandlamb.ahdb.org.uk/market-intelli…

5/ What does this mean for UK sheep producers?

The UK is the largest producer of sheep meat in the EU, accounting for almost 30% of the blocs production. Only France (18%) even comes close.

As an EU Single Market Member, it can export tariff free without worrying about quotas.

6/ And it does!

In 2016, the UK exported $461m USD worth of sheep meat, 94% (!) of which went to the European Union.

Of all the sheepmeat produced in the UK in 2016, 35.8% ended up exported to the rest of the European Union (ya'll ate most of the rest).

7/ If the UK leaves the EU without a deal on March 29th (sorry, I meant on a Negotiated-Managed-World-Trade-Global-Prosperity-Deal), UK sheepmeat will immediately face the prohibitive out of quota tariff which as a reminder is at like 45%.

8/ But what about the WTO Quota? Can't the UK start competing for that?

Sure.

You know what it is? An almost insulting 200 tonnes per annum, for the whole world to fight over.

Even if that entire quota was taken up by the UK, it would be ~0.3% of previous UK exports. Yay?

9/ If you were a business, and overnight you lost access to 99.7% of your foreign customers, that would be a disaster.

That's what's coming down the pipe.

10/ **-- FAQ --**
Question: Doesn't the EU need UK sheepmeat?

Answer: The EU is in FTA negotiations with the world's largest producers (Aus and NZ). Expanded sheep quotas will be on the table, likely settled by 3 rounds of trade trivia between @AusEmBrussels and @VangelisVNZ.

11/
Question: Doesn't this just prove the EU is protectionist and worth leaving?

Answer: As a neoliberal shill, I think most tariffs are bad, including these. Luckily, the EU doesn't have many of them.

More immediately, this is large UK industry facing ruin.

12/
Question: Can't the UK export elsewhere?

Answer: It can certainly try. Problem is, almost half a billion dollars in annual exports is really hard to replace, and almost impossible to replace quickly.

13/
Question: You haven't mentioned delays at Dover, SPS checks etc? Are those factors too?

Answer: They could be, absolutely but frankly if the price of a kilo of UK lamb shoots up by 45% overnight, SPS delays at Calais are going to be the least of British farmer's problems.

14/
Question: Are you aware this uniquely screws Scotland?

Answer: I am. I am truly sorry.

15/ Correction: Have now been reliably informed it also really screws Wales, and the hill-farming communities thereof. I didn't know that, and apologize for my error.

16/
Question: Doesn't Wales deserve it for voting Leave?

Answer: Let me answer your question with one of my own, "what the hell is wrong with you?"