Official Report: Minutes of Evidence

The Chairperson (Ms Archibald): I welcome Declan Billington, who is the chairperson of NIFDA.

I ask you to give us a presentation and to try to keep it to about 10 minutes. We will then bring in Committee members for questions.

Mr Declan Billington (Northern Ireland Food and Drink Association): Thank you very much for the invite to address the Committee. The industry, like everyone else in the early days after the referendum, found itself thinking about what it means for us. It became clear in the early weeks that, although you read a lot, analysis was coming through in a vacuum and not being applied in the context of our industry. In the absence of those sorts of approaches, we thought it better that we go away, do some work ourselves and table what we think should be the way forward through all of this. The report that we have produced is titled 'Brexit: Challenges and Opportunities for Northern Ireland Food and Drink'. It is a document that we hope will influence policy and negotiation in subsequent trade negotiations.

I will go through the key messages in the report. There are two general scenarios discussed in it. The first is continued access to the single market and the customs union, in which case it would be a very short report, because that would mean business as usual. The more challenging outcome is that we end up either facing tariffs through a trade agreement or with no trade agreement and relying on the default position of the World Trade Organization (WTO). We have to consider what the things are that we can do to mitigate the impacts if that happens. Those are things that we have identified in the report that we hope find their way to policymakers and policy writers to influence policy negotiation going forward.

The backdrop is that our industry is a £4·6 billion industry for Northern Ireland. Almost 30% of that could be subject to trade deals with the rest of Europe and the rest of the world once we leave Europe. Our exposure is disproportionate to the exposure of the rest of the UK, because we have been more outward-looking and more European in our trade. When we look at the opportunities and threats, the first thing that we observe is that our biggest opportunity, whether we are inside Europe or outside Europe, is the UK market. However, there has probably been some complacency in the policy and framework that encourages agriculture that would allow us to succeed in that market. The UK market imports 42% of what it consumes. We are not great wine growers or orange growers, so we have to concentrate on the things that we do produce. Of the things that we produce — milk, meat, poultry meat and pork — the UK still imports 1 kilogram for every 4 kilograms that it consumes. When you dig into the analysis a bit further, you find that the UK imports almost £1 billion of pig meat a year. Where is that coming from? It is coming from Denmark, Germany and Holland. Those western European countries are able to outperform us in our own market. Why? We import probably £600 million of poultry meat from the Netherlands. Again, that is in western Europe, where there are environmental regulations, high production costs and high welfare standards. Why is it able to succeed in the UK market? Two thirds of the beef imported to the UK comes from the Republic of Ireland. Some 85% of the beef imported comes from Europe, which is almost £900 million. For dairy products, the figure is £1·2 billion.

The first question that we ask is this: how is it that countries such as Germany, Denmark and Holland are able to outperform us in our own market? It is down to the business model that has been developed in UK agriculture. It is a model that has been driven, or not driven, by policy coming out of DEFRA. The UK model has traditionally been one in which we produce livestock and products up to the point where the UK market consumes the whole animal. Take pig meat, for example. We eat more bacon than comes off the animals that we produce, so there is a shortage. We call that carcass imbalance. In chicken, the breast meat is preferred to the leg meat. Unfortunately, you cannot grow chickens with breasts only, so you have to do something with the legs. Then look at the Dutch and German models. It is no surprise that they are the fastest-growing exporters to China of any part of Europe. The reason is simple: they found a market for the bits that are left over, so they can sell parts of the animal to the UK and sell the balance to Asia, where they prefer different cuts from us. They prefer the things that we would not eat. The fact that they are able to sell the whole animal means that they even get more value for some of the animal than we can achieve. We are not very successful with pigs' trotters here, but, in China, they are regarded as quite nice. They can price more competitively into the market with the pieces that go to that market.

The bottom line is that we are baseline plus import our shortages; those countries are self-supply and export the surpluses. If we flip that model, we become a nation that reduces its imports and increases its exports. We increase our output and the value, because we can sell the parts at value elsewhere in the world. The failure has been to access export markets for the bits that are left over. That is a failure of policy in DEFRA, which never sourced its departments well enough to get us the access to China that the Dutch and the Germans have.

I will move on to trade deals with Europe. The default starting point is that there is none, in which case you are looking at the WTO. If you are looking at chicken, you are looking at maybe 15% tariffs that our products will face selling into Europe. If you are looking at dairy products and beef products, it is between 50% and 60%. There is a big challenge there. If we end up with a default trade position, 30% of our market could face tariff walls so high that you could not trade through them.

If the UK agrees a trade deal, what are the prerequisites of a successful one? To offer access to the European market at tariffs lower than the Brazilians, the New Zealanders and the Australians get, you have to have a comprehensive trade deal. The WTO would say that that is probably about 94 or 95 of the 99 tariff headings that define products and services that you trade; in other words, it has to be pretty comprehensive. Therefore, the UK has to agree 94 or 95 headings for 95 different industries with their own vested interests in order to have a deal that would be acceptable to the world. That is a big challenge. If we do not get a trade deal, given that we import 42% of what we consume and given that 27% or 28% of what we consume comes from Europe, are we going to sit with a default tariff of 50% for Brazilian beef, which is what it is today, and 50% for Irish beef? Are we going to say the same thing about pork and chicken, the result of which is that you have food inflation? Is the UK going to say, "We know that you've got punitive tariffs on the European side of the fence, but we're not prepared to replicate those"? The more dangerous thing is that, if the UK decides to put a 10% tariff on European imports, it will have to drop the tariffs on Brazilian, New Zealand and Australian imports to 10%. In the absence of a trade deal, it is one rate for everybody. If we want to avoid food inflation, one rate for everybody could open the floodgates to lower-cost imports.

If we talk about world trade, the statistics say that Northern Ireland has about £140 million of export trade. We believe that that is highly understated. The offal products from our industry are often consolidated elsewhere in Europe and then sold on to Asia. The final consumer is outside Europe, but the statistics say that the consumer is inside Europe. Therefore, the trade deals that we have with the rest of the world — 53 of them — are vital for selling bits of the animal, particularly the offal. The offal and the hide are worth probably £100 or £120 per animal. If we lose access to the markets that we put them through, you lose the ability to pay that £120 back to the farmer. The value might be small, but the impact could be large.

There are opportunities for imports from world trade. Wheat imported into Europe has some quite high tariffs. If we are not in Europe, we can access lower-cost wheat and maize. There will be opportunities to do the same with fertiliser, as there are tariffs on fertiliser into Europe. We are not an indigenous producer of fertiliser, so why do we not just buy from the cheapest source in the world? There are opportunities on farm inputs, but the biggest threat is from lower-cost countries, such as New Zealand or those in Asia, like Thailand, and South America, exporting through lower tariffs into the UK.

Labour has been much talked about. The fact is that we exhausted the ability to recruit from our local markets many years ago. Northern Ireland has a problem with economic inactivity: it is the highest in the UK. We are not the only industry that struggles to access a big enough labour pool. We could not have grown during the recession but for access to that labour. Some 50% of our workforce is non-UK, albeit that many of them have been settled here for the past 10 or 15 years and have children. We have a challenge to maintain the existing business. How do we grow if we do not have access to the labour that lets us grow?

Everyone is talking about the need to find a special solution because of the land border with the Republic of Ireland. I will put some markers down on that. It is more difficult to resolve the all-island issues that we have if we do not have a trade agreement. With a trade agreement, you can put mechanisms in place to deal with border issues; without a trade agreement, that will be much harder. We sell a quarter of our milk to the South. We sell 36% of our pigs to the South. We sell sheep to the South. Similar numbers of pigs come North. Some 50% of the flour that we produce in Northern Ireland goes to the South. If we do not get access to the single market and hit these tariff walls, we cannot compete. We will have assets on one side of the border that are subscale because they do not have the product from the other side of the border. It cuts both ways. It is truly an all-island market.

If we do not get access to the single market or do not get a customs union — these things are all up in the air at the moment — there are other suggestions that we will make. If you were to analyse the statistics of trade with the South, you will find, for example, at a UK level that live imports of pig are probably pretty equal to live imports of pig into Northern Ireland. Therefore, why do you not write in a quota relationship with the South equal to the value of live pig flows? The only people who could make use of it are those in the Republic of Ireland exporting to the North. You could do the same with milk, given that 98% of the milk and cream exported from the UK is to the Republic of Ireland. That is our milk in the North going South, so, again, you could write a quota for milk, but you would not write it for other things that the rest of Europe could access. Being very targeted on setting quotas equal to the existing trade that is specific and unique to our cross-border trade is maybe one way under a plan B to resolve some of the issues. If the quota is large enough, why do you need customs control to check that something is being paid when it is not being paid because the quota means that there is nothing to be paid? Those are some suggestions.

Agriculture is important for the rural economy. If you damage the farming base, you damage the whole infrastructure of the rural economy. Agriculture also delivers a lot of other things. It delivers social policy and environmental policy. The confusion there is that we confuse production costs with policy costs. Europe built tariff walls up to 50% and then started to add animal welfare requirements. That was the right thing to do, but it came at a cost. Environmental requirements were added, and that was the right thing to do, but it was at a cost. It did not matter, because the countries that did not meet those requirements could not get into the market. We are stepping outside the market, but we hold on to those things of value. The question is this: will we give access to other countries that do not believe in, for example, the living wage? We decided that it was right to add the living wage across our whole supply chain. We are competing outside Europe as much on the costs of policy as on the costs of production. If policymakers believe that these are the right things to do, they have to apply an equivalent policy cost on imports. The way in which you do that is by a thing called tariffs. Europe has put on tariffs as a way of blocking imports, and I am not saying that we do that; I am saying that there is an obligation on policymakers to create a level playing field that is equal to the policy costs that they have added to the industry, at the very least.

Then there is the issue of timing. Any transition takes time. The trade agreement with Canada has a six-year implementation plan. If you look at the life cycles of the dairy sector or the beef sector, you will see that you cannot take a decision on implementation in three years' time. You have to allow things to work their way through. In any trade deal, we have to look at phasing and timing.

The Chairperson (Ms Archibald): Thank you very much. Again, I could ask many, many questions on the topic. I will try to get as many members in as possible. You are involved in the Brexit consultative committee and feed into various other bodies. How is that working? Do you feel the information is being taken on board?

Mr Billington: I will present shortly to the Brexit consultative committee on this. It was planned that I would present to it, and then, when the Minister of State came across, we took the opportunity to do the sales pitch to her. I have had a lot of engagement on this, and I believe fundamentally that it is DEFRA that controls all the levers. It will negotiate tariff access, and it will set policy post Brexit. I am trying to find every route that I can into it through trade bodies. We are working with the Food and Drink Federation through the Executive — through the Brexit committees — and directly through engagement with DEFRA to try to influence policy while it is looking at blank pages.

The Chairperson (Ms Archibald): Has direct engagement with DEFRA increased?

Mr Billington: I met George Eustice when he was over here recently. I also met Andrea Leadsom as part of a group, and I have met the Secretary of State. I gave evidence at the House of Lords, but all those events, bar the meeting with Andrea Leadsom, were before this report. Now that I have the report, I have asked for formal meetings with them to sit across the table from their policy writers and debate the policies in this document.

The Chairperson (Ms Archibald): I want to pick up on labour matters, because it is an important aspect. There are concerns that some processing plants or whatever might relocate to the South. Are you hearing that? It is not that sort of labour only; we have the associated food scientists, technologists and all the graduate jobs that might go along with it. That would be a big concern.

Mr Billington: It is not a plan, because we do not know what is happening. It may be the natural outworking of a failed policy, by which I mean that, in the report, we are asking for devolution. If we go for labour quotas and skill sets, we are asking for devolution so that the local Executive determine local needs and how they will be met. I strongly believe that we are in a better position to manage our business than somebody in London who does not understand it.

Let us take a business that is employing a thousand people. A supermarket comes to you and says, "I can give you 5% more business for a price cut", but you cannot get the people. How do you grow? You cannot grow because you have no access to labour. In the UK, they are boxed in. Here, you could build an operation in the South, have access to labour and start to grow it there. You may not want or plan to do it, but economics would say that, if you have a business opportunity and cannot source the labour locally, you have two choices: walk away from the policy, or go to where the labour is, and, in Northern Ireland, that is 20 or 30 miles across the border. In England, it is across the water, so the effect of the border on how you support growing demand is a factor that people in London will not consider. No, there are no plans for it. It could be a natural outworking of a failed policy, subject to market access, until we get back into the UK. Would it not be nice if we controlled our own policies to deliver a growing economy locally without the need to offshore some of what we do?

The Chairperson (Ms Archibald): I agree. It is also about the need for casual labour for some of those food processing operations. Access to that is very important.

Mr Billington: Yes, and, even with the system we have here, when people come and work for you and are on, say, universal credit or income support, they are unable to be flexible at peak times because it affects their benefits. If you earn, say, £10, you might have to pay £6·30 back, so why on earth would you do overtime at a weekend for less money? The design of the system has been wrong to be able to support businesses that grow or are seasonal.

Mr McGlone: Thanks very much, Declan, for your report. I read through it, and it contains a number of issues. Caoimhe talked about the labour pool. Obviously, it is not just this sector that has requirements, because we have heard about pressures in the health service and all those things. That was the whole idea of the free movement of people.

I listened to what you said about tariffs, and there is a conundrum, because a consequence of this — we have heard it in here — is that we need to grow the export markets. If there is protectionism at the heart of protecting UK markets and not allowing others to come into them, you have put your finger right on it. How do you grow your markets and, at the same time, have a protectionist approach to your economy when you know what the reciprocal return will be from other countries?

I will be very interested to hear you expand on the food issue, because I have this thing at the back of my mind whereby, if you have a Government and, at their very heart, the issue is not about the growth or protection of agriculture or the agri-food sector but the provision of low food costs, how do you square that circle when the inevitability of what they are doing may lead to the very thing you referred to, such as Brazilian beef coming into the country? If that is their intention, do you see that there is, if not a conundrum, at least a contradiction in its outworking?

Mr Billington: There is a risk of superficial thinking from London. It is quite a large question, so I will maybe pick out some aspects.

The word "protectionism" is used. I am frustrated by that. Thailand and South America decided on a wage rate and welfare standards that we have decided are unacceptable for our society. We then decided to impose higher standards and higher policy costs on the farming base. Is it protectionist to charge other people a price to access our market equivalent to the costs that we have imposed on our market? Is that not just creating a level playing field? In Europe, the tariffs are to keep everybody out. In my view, the bare minimum that we should look for is tariffs that reflect the cost of policy, and we then have to define what policy is.
I will take a step back. I commented that about 94 or 95 of the 99 tariff codes are agreed. The ones that are not agreed relate to agriculture. Most nations in the world — New Zealand etc are the exceptions — took the decision a long time ago that the least-cost solution to supporting a vibrant rural economy was to ensure that the productive base of agriculture remained. The idea was that, if you allow the destruction of that rural economy and move from 30,000 farmers to 3,000 or 4,000 farmers, you reduce spending power in the rural economy. Villages and shops would be damaged significantly. Who has to pick up the tab for that failure, that restructuring and that migration from the rural economy into the urban economies? It is the Government. They realise that having a vibrant rural economy is a policy cost and that, if you believe that the best thing to do is to drive efficiency through family farm units, there is a policy cost. If, like the New Zealanders, you say, "Forget all that; it is least-cost production", you do not have the policy cost.

The challenge in all this is identifying the policies that you believe are important and what they add to the cost of production. That should be the tariff set. Take energy: we have renewable obligations that are £10 or £12 per megawatt of electricity consumed. The Brazilians are not paying it. The Asians are not paying it. We did that to promote renewables. We then find that we cannot compete because of those decisions. What we have to do is put tariffs in place equal to the cost of the policies that we believe are valuable to deliver a level playing field. Where efficient businesses will survive and grow, inefficient ones, even within that structure, will not. Around the world, there is the belief that the least cost to the Government is a thriving rural economy.

In answer to your question about protectionism, right now the Brazilians face a 50% tariff to get in here. If they faced a 20% or 30% tariff, there might still be opportunities for them here. It would still provide a shelter for us, but, in return for that, what will they give us to get access to their market? The danger is that, on day one, when we do not have a trade deal and do not want food inflation, we drop access to everybody. You then have nothing to give away in a trade deal. Common sense says short-term cheap food could be very expensive to a Government in the long term; it would be very expensive to your import-export and your balance of payments. A more holistic approach could deliver a balance, where the farming base delivers goods to the public by promoting the environment and high animal welfare while delivering efficient production into the market. They pay the policy costs, but anyone entering the market has to pay a gate fee equivalent to those policy costs.

Mr McGlone: I hear what you are saying, but it comes back to government policy. If government policy is to keep food costs low, the question is: how is that done without ultimately some subsidy or support to the agriculture and rural base?

Mr Billington: The Government have two choices. They can charge businesses for access to the market to cover the competitive disadvantage that they have stranded businesses on. That delivers an income stream to the Government and, if a subvention is still needed to pay for the public goods that the farming community is delivering — environmental and all that sort of stuff — they have an income stream to pay it with. They could decide on cheap food, so they give access free, in which case the size of the subvention that they would have to write to support the farming base would be very large. However, if they did not write it, the size of the cheque that they would have to write for structural change in the rural economy would also be very large. What you are trying to do is to get them to think through the domino effects, and ask: is it a surprise that most countries in the world put a tariff structure in place to protect their agriculture, or is there a sensible reason for it? How do we strike that balance between lower-cost food but also food of a high standard, and finding that we do not have a huge balance of payments deficit and a major issue with the rural economy? That is where policy is important, and the job of this report is to get them to think through all that and come up with policies that deliver a balanced outcome.

Mr Irwin: Thank you for your presentation. Are tariffs not a double-edged sword? I know that a lot of negotiations are due to take place. The Irish Republic, for instance, exports a lot of its produce to mainland UK. I cannot see that the Republic will want tariffs. If there are tariffs, does that not give Northern Ireland farmers an opportunity to fill that gap in the English or GB market?

Mr Billington: There is a lot of complexity. The first thing that I would say is that Europe exports to us 27% of what we consume, but that is only 6% of the European market. From that point of view, is it a big loss to them if they lose 6% of their total market?

The second issue is that we were writing a cheque to Europe as part of the fee for being in Europe. If you calculate the CAP component of that, we were writing a £5 billion cheque to Europe. Is Europe going to allow agriculture to trade into Europe, if we are not going to write large cheques to them? I would have a question mark over that.

My next question is: will the UK reciprocate with matching tariffs and create food inflation, or will it go for the cheap food option? The Republic of Ireland is greatly exposed; it might be 6% for Europe, but it is very high for the Republic. It is also quite high for the Dutch and the Danes. You are right that, if the UK imposes tariffs, it could be punitive on the Republic and, as a result, Northern Ireland capacity expands. However, if it was done overnight, what would you do with the 25% of your milk going South when you do not have enough processing capacity? What do you do with your pork abattoirs that do not have enough volume coming through them to trade into the UK?

That is where you need policy that is phasing for growth. The answer is that, for some businesses that own businesses in the South, the barriers into the UK could be quite difficult. For other businesses, it is a business opportunity. We have to see what the lie of the land is before we decide how to play it. One thing I would say is that the milk going South, in theory, if the trade deal is written correctly, could be processed and sold as butter or cheese into the UK without tariffs because it originated in the UK. There are ways around this. Do we get access to the single market, or do we get a customs union? No, we do not, so what do we do? That is where you look at tariffs and rules of origin and try to work the system that allows our indigenous industry to survive and grow. There could be a six- or seven-year phasing, which could certainly grow the pig and poultry sectors. If you decide that you want to grow the beef and dairy sectors, you can see how tariffs could frustrate the Republic selling into England. We have to see what way this whole thing is panning out, before we —

Mr Irwin: What I am saying is that tariffs are not beneficial to either country.

Mr Billington: The answer is yes. Then again, I would propose a quota North/South; you could as easily do an east-west quota to solve the issue. Ireland will be disproportionately punished under a trade deal with tariffs. If you do the examination, most of the beef coming into the UK comes from Ireland, so doing a quota for beef carcass could solve the east-west issue on beef. The question is this: what do you want? If you cannot get it through a trade deal, you can get it through quota by being analytical of the trade flows that are almost exclusively North/South or east-west, and then you set quotas to reflect that. You have the tariffs, but you have a quota to make the tariffs irrelevant to the British Isles for agri-food.

Mr Irwin: There seems to be concern about eastern European labour coming into Northern Ireland, but I have not heard anything from any political side that suggests that there is any will not to let those workers into the country.

Mr Billington: If you look at the statistics — it is mentioned in the report — you see that the number of people in Northern Ireland holding non-UK and non-Irish passports is very small. There may be clusters of labour pools in Dungannon, where I come from, but, generally, we do not seem to have the issues with non-UK labour that exist in England. Therefore, it does not seem to be the issue that it is there, where it is emotive. More importantly, we need those workers to do a lot of the work in our businesses, and the rest of us then do other jobs. Any company has a pyramid of employment, and, if the bottom of the pyramid is not filled, you will have no jobs for the middle and top of the pyramid.

Mr McKee: Your report, in the chapter entitled "Country of Origin", states:

What is that about?

Mr Billington: Right now, milk going South can be processed into cheese, which is exported around the world through trade agreements. Post Brexit, the milk could not go South to be made into cheese for export around the world because that milk would not be of European origin. Therefore, it would not be allowed into a product that sought to use a European trade deal.

There is a rule that if, for example, you grow an animal in Northern Ireland and it is outside the European Union and there are tariffs, you cannot send it across to be processed and exported to another country because it is not of European origin and is, therefore, subject to tariffs.

Perhaps the best example I can give is from a different industry. I worked in manufacturing for a number of years. We made compressors, and we had to have enough European parts in those compressors to claim that they were European. If they were European, they went into units made in Italy and went into eastern Europe with no tariffs. If the parts were not European and went into those units, those units would not be European, so they could not have sold them to eastern Europe.

All the stuff that we are trading to the South is inside Europe, so it can be sold via Ireland to China. When we leave the European Union, we do not have a trade deal with China, so Ireland cannot buy the product from the North and make a product for sale to China because it is using a product that is not subject to a trade deal.

The other way to call it is "badging". You cannot badge something as European if it is not and take advantage of low tariffs. Origin says that you cannot badge, and, if we are outside the European Union, we cannot send stuff across to be sold on around the world because it is being badged as European. It is not, and it cannot get access to tariff-free markets around the world.

I do not know whether that makes sense to you but, hopefully, it explains it.

Mr McKee: At the end of your presentation, you mentioned that a trade deal with Canada may take six years. We know that trade deals with China have taken eight years, from 2008 to the present, with "fifth quarter" pig products. What would the situation be if we were exporting to, or even importing from, Canada and then article 50 is triggered? Does that mean that you would have to stop selling that product until trade deals are sorted out, or could you continue trading?

Mr Billington: The triggering of article 50 starts the negotiations, but we would still be in Europe. If article 50 is not extended within two years, we will leave Europe and no longer be party to the trade deal. Therefore, we will be paying the same tariffs as any other country in the world that is trying to get into that market without a preferential deal. That is our big fear. At the moment, products such as powdered milk are going from here to west Africa under a trade deal with beneficial tariffs, and it is a premium product in that market. If we do not replace that trade deal when we leave Europe, we will automatically hit tariffs into those countries, which will mean that we cannot trade with them any longer.

The challenge to the UK Government is to roll the 53 international trade agreements with Europe and have them replicated for the UK. If we do not do that, overnight when we leave Europe, we will be barred from those countries that we have no tariff access to. We have been so focused on Europe that we have forgotten about all these other countries that are important to us and that, in parallel, we need to have trade deals with. We have them, and they liked the idea that the UK was part of them, so can we not agree to roll them?

Mr Ford: Thanks for your presentation, Declan. There is little to disagree with in your report, except my concerns about the practicality of much of it. I suspect that we might agree on issues such as tariff-free trade if we were debating them between Belfast and Dublin, but we are not. We are going to be debating them between London and Brussels.

Mr Billington: Agreed.

Mr Ford: There are real challenges, particularly from the perspective of a past post in which I was somewhat cynical about the ability of Whitehall to understand the differences of Northern Ireland. I do not see any signs that DEFRA understands the integrated food business on this island.

That creates difficulties, but, after that harangue, I want to ask you specifically about EU employment. The issue predates 2004, largely with Portuguese people in the meat trade. It has now grown, certainly in the processed chicken industry, with many people from the 2004 accession countries of central Europe. How difficult do you think it will be to replace that labour with indigenous labour if we lose access, given that much of the motivation around the "Leave" vote came from the UKIP tendency in the Tory party in England?

Mr Billington: I share your anxiety about London trying to understand, effectively, what 3% of its population is up to, never mind understanding a land border. What we have to do is to write a document that, on the face of it, can work for the whole of the UK but has a border dimension, which gives them a back-door way of resolving the problem without having to think too hard about it.

The Republic, of course, on the other side of the fence, would be keen to find a solution that means that the free flow of goods and services is not stopped. It is not a plan A that we have tabled on some of these things, but it is a fallback that could work. We need to get the Republic on board with the idea and get DEFRA to accept it on the basis that it does not have to think too much about it and it looks like it will work. However, I am quite concerned that DEFRA, left to its own devices, will not resolve issues for us.

Non-UK labour was never our first choice. The fact of the matter is that there was a failure in the labour market in Northern Ireland. Once we have exhausted the supply of local labour, we have to go elsewhere. If we are outside Europe, the whole of the world is our labour pool. Many years ago, when labour was being brought in from outside Europe, we had control over the documentation necessary for approvals. That went to England, and something that should have taken three weeks took three or four months, and businesses struggled greatly to access the labour pool because the administration was elsewhere and priorities were decided elsewhere.

My anxiety is that, if we lose the continuing flow of labour from Europe, we will need to access it from the rest of the world. What are the rules that will determine that? What are the acceptable criteria? Agricultural skills requirements are different from pharmaceutical skills requirements. That is why we need local control to meet our local needs.

Mr Ford: I appreciate your point about the benefits and Whitehall's willingness to concede that will be a major difficulty.

Mr Billington: Those are points in principle. The report states that we should start the dialogue, tell the industry where we think that it is flawed, and let us see if we can address that. There has to be a dialogue as opposed to not looking at the issue and ignoring it. We want the conversation, and we want to challenge them as to why it would not work.

Mr Ford: Agreed.

Mr McGlone: Declan, will you explain about rolling the trade deals?

Mr Billington: It was once explained to me as taking the 53 trade agreements, Tippexing out the words "European Union" and putting in the words "United Kingdom" — and away you go. In other words, regions like west Africa were happy to do a trade deal with Europe, and, in Europe, the fifth or sixth largest economy was part of that trade deal. We should not have a long, drawn-out renegotiation but should simply say that the document was acceptable to you at a European level, so let us replicate it at a UK level and get on with it. We will come back and revisit it in due course, but those trade deals were mutual, and countries thought that they were trading with Europe, including the UK. Now they could be trading with Europe but not including the UK. For the sake of the status quo, why can we not replicate the trade agreements as is and renegotiate the finer points in years to come.

Mr McGlone: That is exactly the point, and it is contingent on such countries saying that there is a huge market that has shrunk and maybe circumstances change. Britain is not in the driving seat in the negotiations with the rest of Europe. Likewise, the cut-and-paste approach may or may not work depending on economies in those countries at that time and whether their Governments see something for them in a shrunken market.

Mr Billington: You are quite right: it is not simple for two reasons. In those trade agreements, there were European quotas, and then the market shrunk. One complication is: what piece of the quota will the UK use, and what piece will Europe use? In the early days post referendum, the American, Chinese and Japanese Governments all said that they needed certainty. We can take uncertainty out of international trade deals by saying, "Yesterday, you were happy with them. Today, you are happy with them. Tomorrow, let us just continue them". We can deliver certainty on one aspect of the exit: everybody but Europe. If we take that uncertainty off the table — you are content because you are trading with us on that basis — we will then concentrate on Europe. Later, we can come back and specifically address how to make the mutual trade deal even better for the partners.

A fear I have is that we are so focused on Europe that we are not paying attention to figuring out how we roll the status quo. The danger is that countries will jockey for something better in each of the 53 trade deals, but they signed up to get access to our market, and they could lose out. If the world wants certainty, let us take the international trade deals off the table just by rolling them over and continuing with them, and then we have taken one piece of uncertainty off the table and can concentrate on Europe. In due course, you can tidy them all up and make them even better.

The Chairperson (Ms Archibald): Thank you very much for your presentation. It is important to the Committee, and I am sure that we will engage with you in the next few months.

Mr Billington: Thank you very much. I would appreciate any support to get this into the halls of power in London.

The Committee Clerk: I suggest that we write to the British-Irish Parliamentary Assembly, with which the Committee is familiar, and to our sister Committees in the other jurisdictions, including the EFRA Committee and the Oireachtas Committees.

The Chairperson (Ms Archibald): We will share the report with them.

The Committee Clerk: We could maybe also share it with our MEPs.

The Chairperson (Ms Archibald): Yes.

Mr Billington: Thank you for your advice.