Photo : AFP
01 January 2022, Saturday | NIAS Europe Daily Brief #87
IN FOCUS
By Padmashree Anandhan
One year of Brexit: What does it mean for European exporters to the UK?
A recent report of the European Commission shows that the value of the EU agri-foods exports to the UK has barely changed with only a 0.4 per cent reduction in the first eight months of 2021 when compared to 2020. Although the report draws a comparison between 2020 and 2021, the struggle was real between the exporters of the EU and the UK. Keeping the pandemic period away for the comparison, the difference in trade between both countries widens when 2019 and 2021 are considered. For the UK exporters, it was a rough path as the borders were redrawn, but it was the same even for the EU exporters. Despite the exclusion of tariffs and quotas, the exit of the UK from the bloc created barriers while affecting cost and the advent of new import controls. The farming sector was one such industry that was hit due to Brexit.
Major issues in exports to the UK
First, farming and agri-food. A major exporter of such products to the UK is Brittany, located in northwest France, whose entire exports fell by 19 per cent with a loss of EUR 53.2 million. It had a larger effect on the local farming industry of Brittany where cheese and dairy product exports declined by 58 per cent while that of beef and pork fell by 43 per cent in 2021. There are various reasons behind the drop. One, dairy products have a short storage life and with borders in place it increases the delivery time, thereby, raising the cost. Two, apart from facing new measures of the UK government, before the exit Britain stockpiled the necessary products. Three, it also restricted its exporters from selling dairy products outside the country. Hence, domestic production kept the UK afloat.
Second, cooked meat and vegetables. While the farming products saw a decline, the cooked meat, fresh vegetables, and other vegetable products were highly exported to the UK. This particular set of products saw a rise in exports mainly due to the shortage in the workforce that the UK faced. The gardeners of the UK were forced to leave their fresh farms to rot as it did not have workers to harvest the yield.
Third, small firms versus large firms. Many large companies like Laita and Arla Foods had better winning rates than other small firms which struggled to keep up with the Brexit and the COVID-19 effect. The reason behind the variance is that the small firms never ventured their products out of Europe and the UK had remained a major consumer of their products. Therefore, big firms were able to strive through both Brexit and the pandemic by establishing alternative channels of transport to export their products despite some challenges.
Fourth, seed potato. While farming and dairy products faced a downfall of exports, the production of seed potato collapsed. This was a hard hit for the Dutch producers since it was completely excluded from the Brexit trade deal. This failure was due to the inability to reach an arrangement on regulatory terms and the end of six-month exemption for the EU exporters to the UK. Industrial experts state that the lack of political will and flexibility led to a dead-end. A solution to the export situation could be if the UK made a dynamic alignment like Switzerland, but the political scenario is not in favour.
What is ahead?
The after-effects of the post-Brexit period have pushed France and the Netherlands to depend on the EU’s EUR 5 billion emergency fund to cope with its businesses while searching for alternative markets. Here, the question of sustainability plays a vital role. The UK has been a viable market for many countries to export; however, venturing into new markets holds the question of how well the EU products will sustain there. Even if new companies in the EU decide to launch branches into the UK, Britain’s new rules will create complications.
Meanwhile, many are ready to adapt to the new system of import control by the UK as they consider the British market as potent as ever. Another reason is that the UK still remains one of the biggest importers of the EU products and as the interdependency exists, it is expected that the trade between both will continue to grow with new rules.
References:
Alasdair Sandford, “A year since Brexit: How has it affected European exporters to the UK?,” Euronews, 27 December 2021.
IN BRIEF
By Joeana Cera Matthews and Ashwin Dhanabalan
AUSTRIA
Kurz to join Thiel Capital
On 30 December, former Austrian Chancellor Sebastian Kurz joined the investment firm Thiel Capital as a global strategist. Peter Thiel is a German-American billionaire who owns Thiel Capital. An early investor in Facebook and co-founder of PayPal, Thiel also backed former US President Donald Trump during his tenure. After being implicated in a corruption scandal, Kurz resigned from his post and left politics entirely as he wanted to spend more time with his family. Concerning the implications, the New York Post reported: "Austrian authorities are investigating claims that Kurz and his political allies used public money to publish doctored polls in a bid to retain power. Kurz has denied wrongdoing". Kurz will be receiving EUR 300,000 in his new job role as he plans to commute between Europe and the firm headquartered in the US. (Thomas Barrabi, "Peter Thiel hires disgraced ex-Austrian chancellor Sebastian Kurz," New York Post, 30 December 2021; Thibault Spirlet, "Ex-Austrian Chancellor Sebastian Kurz to work for tech billionaire Peter Thiel," POLITICO, 30 December 2021)
FRANCE
Use of plastic in packaging and single-use plastics banned in the country
On 31 December, France passed a law to ban plastic in packaging fruits and vegetables. As reported by The Guardian: "From New Year's Day, France will ban supermarkets and other shops from selling cucumbers wrapped in plastic, and peppers, courgettes, aubergines and leeks in plastic packaging. A total of 30 types of fruit and vegetables will be banned from having any plastic wrapping, including bananas, pears, lemons, oranges and kiwis.”' French President Emmanuel Macron called this "a real revolution" and stated how "France was taking the lead globally with its law to gradually phase out all single-use plastics by 2040". According to a poll organized in 2019 by the World Wildlife Fund (WWF), Paris cited that 85 per cent of French people wanted to ban single-use plastic products and packaging. The citizens were supportive of the initiative and further said this was "a positive step in the right direction". (Angelique Chrisafis, "That's a wrap: French plastic packaging ban for fruit and veg begins," The Guardian, 31 December 2021)
RUSSIA
Moscow Court orders close of MHRC after Memorial International
On 29 December, Moscow court Judge Mikhail Kazakov declared the closure of the Memorial Human Rights Center (MHRC) since it failed to label all its publications as “foreign agents”. The prosecutors stated that the Memorial “creates a false image of the USSR as a terrorist state and denigrates the memory of World War II”. The ruling garnered international responses including those from the UN Human Rights Office and the UK Foreign Minister Liz Truss; they expressed concern over the ruling, stating that it “further weaken(ed) the country's dwindling human rights community”. The Director of Human Rights Watch (HRW) Kenneth Roth said: “(the closure) speaks to the fears of the Russian government that it is no longer willing to tolerate the honest and objective accounting of its conduct that Memorial provides.” This ruling followed the ban on the main organization, Memorial International, on similar charges. The MHRC, which plans to appeal against the ruling, advocated for “political prisoners, migrants and other minorities” while concentrating on rights violations in the North Caucasus. (“Moscow court orders Memorial Human Rights Center to be banned,” Deutsche Welle, 29 December 2021; Andrew Roth, “Russian court orders closure of another human rights group,” The Guardian, 29 December 2021; “Moscow court orders closure of Memorial human rights centre,” France24, 29 December 2021)
CLIMATE-CHANGE
Spain: Record-breaking temperatures experienced across the country
On 31 December, Spain experienced record-breaking temperatures of 24 degree Celsius in the lower areas of the country while the Alps registered temperatures of 15 degrees Celsius. A meteorologist Luca Mercalli said: "At the moment it is about 15C in areas of the Alps at an altitude of 1,600 metres and is not hitting zero beneath 4,000 metres. It hasn't even been freezing at night – the temperature has not dropped below 10 degrees, and this is very unusual." A member of the State Meteorological Agency AEMET Rubén del Campo said: "These are temperatures that you would normally see in the month of April." Spain's climatic conditions are said to be influenced by the climate crisis and global heating. Campo further talked about the abnormal climatic conditions as Spain had experienced extreme temperatures that ranged from minus 25 degrees Celsius to 30 degrees Celsius in 2021. (Angela Giuffrida and Ashifa Kassam, "24C in Spain, 15C in the Alps: oddly warm end to 2021 in parts of Europe," The Guardian, 31 December 2021)
ENERGY
Nord Stream 2: Putin comments on pipelines’ progress
On 29 December, Russian President Vladimir Putin commented on the progress of the Nord Stream 2, saying: “Today the procedure of filling the second pipe of Nord Stream 2 with gas should be completed. The first string was filled in October… This new route will certainly serve to stabilize prices on the European market.” Meanwhile, Gazprom CEO Alexei Miller stated: “The Nord Stream 2 gas pipeline is ready for operation.” The pipeline, completed in September 2021, is yet to receive approval from Berlin and Brussels. (“Russia says Nord Stream 2 loaded with gas, no alternatives needed,” Deutsche Welle, 29 December 2021)
INTERNATIONAL
Biden and Putin hold a telephonic conversation
On 30 December, Russian President Vladimir Putin and his US counterpart Joe Biden held a telephonic conversation that lasted for nearly 50 minutes. The two leaders agreed to continue talks till the bilateral meeting scheduled for 10 January 2022 in Geneva. Their second call in a month saw deliberations over the Ukrainian crisis. After the call, Russian spokesperson Yury Ushakov stated: “We are in principle satisfied with the contact that took place… It's important that the American side was willing to understand the logic and the essence of the Russian concerns that were outlined in the two documents that we sent to Washington and to NATO headquarters.” Commenting on the sanctions’ threat, Ushakov said: “(sanctions would) lead to a complete breakdown in ties between our countries and cause the most serious damage to relations between Russia and the west. Our president also mentioned that it would be a mistake that our descendants would see as a huge error.” The White House spokesperson Jen Psaki also made a statement, saying: “President Biden reiterated that substantive progress in these dialogues can occur only in an environment of de-escalation rather than escalation… He made clear that the United States and its allies and partners will respond decisively if Russia further invades Ukraine.” (“Joe Biden and Vladimir Putin hold ′constructive′ phone call,” Deutsche Welle, 30 December 2021; David Smith, “Biden and Putin exchange warnings during phone call amid rising Ukraine tensions,” The Guardian, 30 December 2021; Bryan Bender, “Biden-Putin call ushers in new phase of diplomacy,” POLITICO, 30 December 2021)