The United Kingdom is hurtling towards the Brexit deadline of March 29 with severed brakes, and yesterday Parliament tossed the steering wheel out the window, strengthening the European Union’s hand, which could hurt U.S. rice interests.
The crushing defeat of UK Prime Minister Theresa May’s Brexit plan (432-202) has confused the already chaotic situation with Labour Party leader Jeremy Corbyn calling for a vote of no-confidence on May’s government with general elections to follow.
The no-confidence vote has failed, but that leaves May with still having to navigate the UK exit from the European Union, currently scheduled to take place on March 29.
May could call for another referendum on Brexit, but that couldn’t happen before the March 29 deadline, so the UK would have to ask the EU for an extension on that deadline. With or without a new referendum, an extension may be needed anyway to enable the UK government to come up with a more workable solution to the exit.
Just last month an extension seemed unlikely – the EU had little to gain from helping the UK leave – but following yesterday’s vote in Parliament, some EU politicians have signaled that they would be open to granting the UK a conditional extension to July.
The impact on all of this for U.S. rice is more uncertainty when it comes to the EU.
Currently the UK is a valued customer for U.S. rice, importing between 20,000 and 32,000 metric tons of rice for each of the past six years, and that is not expected to be negatively impacted by any Brexit outcome.
However, the EU was once a 300,000 metric ton market for U.S. rice, but has shrunk significantly in the last decade as U.S. rice continues to struggle with access thanks to a maze of tariffs and country-based concessions, and new 25 percent retaliatory tariffs imposed last year in response to U.S. tariff on steel and aluminum.
Additionally, the EU believes that tariff rate quotas for U.S. rice should go with the UK if and when the country leaves, a notion the U.S. rice industry rejects out of hand.
“The TRQs for U.S. rice established with the EU had nothing to do with the UK, so whether the UK is part of the EU or not should have no bearing on them,” said Betsy Ward, president & CEO of USA Rice. “Our long term goal is free and open trade with both the EU and the UK. The TRQs were established to protect the rice producing countries of Europe but since the UK has no domestic rice industry we see no reason to keep tariffs on our rice high in whatever new trade relationship results from Brexit.”
A request for comment to the U.S. Embassy in London was answered with an automatic response explaining that because of the current U.S. government shutdown only emergencies involving the safety of human life and protection of property could be dealt with for the time being.
“The only certainty here is complete uncertainty,” said one UK-based analyst.