With all scenarios still possible, the United Kingdom and the European Union are optimistically expecting a comprehensive free trade agreement between both parties, although a so-called "hard-Brexit" or "no deal" is also on the table.
No deal: All former trading agreements disappear and customs checks, tariffs and regulatory controls come into play at all UK borders.
Hard Brexit: Customs declarations and regulatory checks for goods crossing the Irish Sea are brought in from 2021, but there is a soft border in Ireland. There is a hard border at Dover, but no tariffs.
Customs union after transition: Goods flow more smoothly, but for seafood and agricultural products there would be substantial delays at the border.
Goods-only single market access: Britain agrees a customs regime that, in practice, means it shares a common external tariff with the EU. Frictionless trade.
Norway plus plus: Britain enters EEA-style agreement and remains in customs union. Frictionless trade.
Edited from The Financial Times.
According to a new report presented by Gorjan Nikolik, senior analyst at Rabobank, during the Groundfish Forum last week in London, the negotiations could end up with a beneficial outcome for UK fishermen, although it would have negative impacts for the rest of the seafood industry.
In 2016, EU vessels landed £700 million (€795 million/$795 million) worth of seafood from UK waters, but most of that catch does not have a market in the United Kingdom, while the UK fleet only caught £100 million (€113.6 million/$113.6 million) of fish in EU waters.
In addition, the UK exports over 70 percent of its seafood products to the European Union, which makes it highly dependent of this market, while it imports only 7 percent of the European catch.
“This is the most uncertain trade war there is at the moment, we do not really know what is going to happen and both the European Union and the United Kingdom are in very difficult negotiation paths regarding seafood products,” Nikolik told IntraFish.
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“If the UK fleet gets what they want, they could get a net increase in quota worth £700 million (€795 million/$795 million), but the seafood trading industry could suffer from tariffs.”
Last year, EU seafood exports into the United Kingdom amounted to $1.7 billion (€1.5 billion), including $299.1 million (€258.3 million) worth of whitefish, $201.8 million (€174.3 million) in shellfish, $152.4 million (€131.6 million) in salmon, and $126 million (€108.8 million) in pelagics.
Meanwhile, the United Kingdom exported another $1.7 billion (€1.5 billion) into the European Union. Of that, $360.8 million (€311.6 million) was shellfish, $323.9 million (€279.7 million) was whitefish, $161.3 million (€139.3 million) was salmon and $128.1 million (€110.6 million) was pelagics, according to the Rabobank’s report.
“At the moment it is impossible to predict what the outcome will be. Our expectation, for now, is relatively little change,” Nikolik said.
Who are Brexit winners and losers?
How will the benefits and losses stack up? Most likely, the EU fleet, which could potentially lose £700 million (€795 million/$795 million) in landings, and UK seafood exporters, who would need to find a new market for current volumes and for the additional catches -- which are not demanded in the United Kingdom -- would be the hardest-hit sectors.
“Russia could be an alternative market, especially for some products such as pelagics, but this is not possible due to the existing trade embargo,” Nikolik said.
In addition, Scottish salmon exporters could fill in the gap in salmon supply, but would potentially lose one of their key markets, France, which could affect price positioning.
Other clear losers would be European processors relying on UK raw material, since they could face an increased prices from other origins.
On the other hand, European exporters to the United Kingdom have a better chance to diversify in markets they currently serve, Nikolik said.
The only potential winners of this situation would be UK fishermen, who would gain a valuable TAC increase, and other exporters currently selling product to the United Kingdom, who could fill in the gap.
“With such a volatile environment, companies would have to find new markets and suppliers faster than previously,” he said.
“The current shifts in seafood trade will clearly accentuate the strengths and weaknesses of current business models.”
