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Latest Brexit developments add 'whole new level of uncertainty'

Latest extension may see processors unwind and potentially rebuild stocks and face more uncertainty.

The European Union’s decision to grant the United Kingdom a second extension to the withdrawal period from the trade bloc until Oct. 31 could turn out to be costly for the UK seafood sector.

That is the view of Andrew Kuyk from the UK Seafood Industry Alliance trade group.

For processors, importers and exporters it is more complicated than for the fishing sector, as future terms of trade could remain unknown throughout this period, making it difficult to plan ahead, Kuyk said.

“Many will also have precautionary stocks, which they will need to unwind - and potentially rebuild - as the situation develops,” Kuyk said.

“This will distort normal patterns of supply and demand - and potentially add to costs and margin pressures. In other words a whole new level of uncertainty.”

The EU granted the so-called "flextension" after the UK government and lawmakers were unable to find a way forward on the terms of the UK’s departure.

Under the terms of this latest extension, the United Kingdom’s EU membership would terminate as soon as lawmakers ratify a deal.

Fishing quotas for 2019 have already been determined, meaning an extension until Oct. 31 is unlikely to have any significant impact either way.

At the same time, should UK lawmakers approve a deal to begin the transition period already provided for in the draft Withdrawal Agreement ( until end December 2020) there will be no obvious change there either, Kuyk pointed out.

“The situation changes if we leave without a deal, either at the of May, or at any other point before the end of October. And that would also depend on the political climate at that point,” Kuyk said.

Against this background Norwegian, Icelandic, and UK authorities have negotiated an agreement between the three countries that will be implemented in case of a no-deal Brexit scenario.

Under that agreement, all established tariff preferences, including zero tariffs for industrial goods, would continue. Duty-free quotas for trade in seafood and agricultural products would be continued so that current trade would not be disturbed.

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