Currently 73% of all UK agricultural imports come from the EU. That heavy dependence sparked a report by the British parliament expressing concern about the UK’s food security in the immediate aftermath of Brexit.
Meanwhile, Latin America’s agricultural powerhouses Brazil and Argentina only accounted for a total of 1.6% of the UK’s agricultural market across eight sectors in 2018. A growing relationship would seem to be an obvious fit post-Brexit – but a number of structural issues stand in the way.
There is certainly scope for increasing Latin American agricultural exports to the UK given current trade patterns. But any improvement in agricultural trade links will depend on two factors: 1) how the UK leaves the EU: whether it crashes out, negotiates an easy exit or leaves at all; and 2) whether Latin American agricultural producers can improve their environmental practices and can meet the production standards established by the EU and likely maintained by a post-Brexit Britain.
On the UK side, there is pressure by domestic agricultural producers to raise UK tariffs to allow them to expand their local market share. Yet, despite the pressures from local farmers, the UK has laid out two scenarios. Tariffs on EU imports could go up. Even if the UK establishes 0% tariffs on EU products, it’s possible that the EU will not reciprocate, instead choosing to revert to the World Trade Organization’s most-favoured-nation tariffs.
Free trade agreements between the EU and Latin American countries
The EU has free trade agreements with the Central American bloc of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama; Mexico; Chile; and the Andean countries of Colombia, Ecuador, and Peru. In all those cases, the UK has expressed its desire to maintain its liberal trade framework with those countries.
Since that agreement is not yet in force, the UK and Mercosur would need to negotiate a separate agreement. Such an agreement may be easier to ratify than the EU agreement since there is only one partner (the UK) for such a deal, but the likely change in government in Argentina after the 27 October elections may make it difficult to secure a deal on the Mercosur side.