Economist says 'Brexit' unlikely to affect global food balance
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WASHINGTON, July 13, 2016 - The United Kingdom's decision to pull out of the European Union may have major impacts for both the U.K. and the remaining EU members but isn't likely to have significant effects on the United States or other countries, three experts said here today.
Speaking at a forum convened at the National Press Club by the Farm Foundation, they agreed that farmers in the U.K. (England, Scotland, Wales and Northern Ireland) may lose support payments under the EU's Common Agricultural Policy, but that the impacts will not be wider.
“Scary as it is for the British and the Europeans, it poses no real risk for the global food system,” said Michael Dwyer, chief economist of the U.S. Grains Council. “This will be a ripple. It will barely make a dent in the global food system when you diffuse that across a huge system.”
Although the so-called “Brexit” roiled currency and equity markets for a few days after the U.K. unexpectedly voted to leave the EU, “I do not expect this level of chaos to continue much longer,” Dwyer said. His biggest concern is that the political climate in Britain could be contagious, encouraging anti-EU forces in other European countries to abandon the union.
Benno van der Laan, a former European Commission executive now at Greenhouse Communications in Washington, said the key question now is what kind of deal the U.K. and EU will negotiate and how the U.K. will strike trade arrangements with non-EU countries.
U.S. relations with the EU may be affected by the loss of the U.K. “voice” in EU deliberations, he said, because London has generally been in favor of “free markets, new technologies and science-based decision-making.” He suggested that, without the U.K., it would become more difficult for “market access issues such as new biotech approvals for imports, authorization of crop protection products and import tolerances.”
John Dardis, senior vice president for U.S. corporate affairs for the Irish-based dairy and food giant Glanbia, said, “The bottom line is nobody knows what's going to happen” hereafter.
“The effect is a quite scary,” he said. “A fundamental tenet of the EU internal market is free movement of people and Brexit has said we don't want that.”
Dardis suggested that global companies will ask whether the “tea leaves of a protest vote” could be an omen for the U.S. November election. Investors in new facilities and jobs seek a degree of certainty and may be reluctant to move forward if the outcome is in doubt, he said. “I'm not sure people get that.” The Brexit vote created “shock and uncertainty for us in doing business.”
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