Argus EU fertilizer duties guide: UK on verge of exit

Another year of political manoeuvring, turmoil, negotiation and parliamentary voting has passed, and the UK remains in the EU. But Brexit is far closer than it has been at any point in the three and a half years since the UK voted to leave.

This article is a segment of the 2020 Argus Guide to EU Duties, which was published on 17 January and can be found here.

On 12 December 2019, a general election was held in the UK, resulting in a comprehensive victory for the Conservative party and prime minister Boris Johnson, who won the party's leadership on 23 July. Two months previously, his predecessor Theresa May said she would resign on 7 June, after she and her government failed to get their amended Brexit deal through parliament.

Mr Johnson and the new government, with a majority of 80 — and a working majority of 87 — at their disposal in the House of Commons, were able to push through their plan to leave the EU on 31 January. The vote was won by 358 votes to 234.

Come 23:00 GMT on 31 January, Article 50 of the Lisbon Treaty can no longer be legally extended, and the UK will officially depart the union, beginning a "transition period" that will last until 31 December 2020. During this time, the UK will continue to be subject to EU rules and remain part of the single market and customs union.

What will be crucial thereafter is the nature of the deal — assuming there is one — that the UK and the EU agree. In theory, fertilizers in the UK that are imported from the EU could become more expensive as third-country duties are factored into final sales prices. And UK producer CF would be expected to raise its own offer prices to offset increased prices for imported raw materials and finished products.

On the other hand, the UK would no longer necessarily be subject to EU anti-dumping duties, including with regard to UAN and AN. This could lead to more competitively priced product arriving from countries in which production costs are far lower than they are in the EU. But the UK will impose — effectively retain — at least some anti-dumping tariffs that currently apply to it by virtue of being part of the EU, and fertilizer measures are likely to be among them.

Even at this stage, much uncertainty continues to surround Brexit and its likely impacts.

What can tentatively be forecast is that crop trade is more likely to be directly disrupted than fertilizer business, even if default standard duties are adopted. Ordinary fertilizer tariffs are not a great impediment to trade, but the EU is a major outlet for much UK farm output, and tariff-rate quotas could limit UK exports to the EU and, as a result, farmer income.

Read the full 2020 EU Duties Guide here.

By David Maher