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What can the UK expect from Phil Hogan, the EU’s new trade negotiator?

12 September 2019

9:09 AM

12 September 2019

9:09 AM

For the second time, Ireland’s Phil Hogan will serve as an EU Commissioner in Brussels, after his appointment was announced on Tuesday by the next President of the Commission, Ursula von der Leyen.

Whereas Hogan didn’t receive a lot of attention in his previous post – even though he was responsible for the biggest spending role in the EU budget, agriculture – that is certainly about to change. Hogan is about to become responsible for the EU’s trade portfolio, which includes supervising future trade talks between the UK and the EU. What can we expect from him?

In his job as Agriculture Commissioner, Hogan didn’t upset the status quo very much at all. For example, even if he claimed to want to ‘modernise and simplify’ ‘direct payments’ he stopped short of scrapping them altogether. These are EU subsidies that amount to more than €270 billion over seven years, and are paid out to owners of agricultural land, including the Queen, without any requirement to actually produce anything. With 2 per cent of beneficiaries receiving 30 per cent of the total budget, this truly is at the heart of special interests rallying in Brussels. In the end, it wasn’t Hogan but the President of the European Parliament, Antonio Tajani, who dared to propose slashing these lavish EU payouts for farmers and spending it on dealing with immigration instead. According to one anonymous source Hogan reportedly did make an effort, however, to resist Tajani’s proposals afterwards, reportedly fighting side by side with special interests such as Coldiretti, the Italian farming lobby, and the ‘European Landowners’ Organization’ to do so. Poor Tajani halted his proposals right away.

Before that, as Irish environment minister, Hogan implemented the unpopular water charges policy, which was part of Ireland’s obligations in return for emergency loans issued by other Eurozone countries – including the United Kingdom. It triggered big protests in Ireland but Hogan proved steadfast. One Irish political commentator calls Hogan a ‘reliable fixer’.

It is good though to see Hogan and not a protectionist occupying this very important Commission portfolio. He has been a staunch defender of free trade, even when it’s been politically inconvenient. When faced this year with Irish beef farmers’ concerns about a big trade deal between the EU and Mercosur, a group of South American countries, Hogan pointed out that despite the concessions to allow more beef imports, ‘we’ve gained in the dairy sector which nobody has mentioned’, further noting that the EU has been successful in opening Mexico’s and Japan’s market for Irish – and other European – farmers.

Hogan was the only EU Commissioner, apart from the British one, to speak in the UK in the run-up to the 2016 referendum. There, he took a staunch anti-Brexit line, unsurprisingly, playing up the prospect of ‘British farming [being] at the back of the queue.’

After the referendum, he has continued to rail against Brexit, stating that when it comes to EU agriculture spending, ‘UK farmers will look at this very jealously and see what they’re missing post-2020.’ He has also dismissed the idea of ‘Global Britain’, saying: ‘Outside the EU, the UK will see its standing and importance reduced. Global Britain will feel that pain. Size matters’ and predicted that ‘The US will certainly seek market access in areas that will bring the UK in direct conflict with European standards, for example on genetically-modified crops, hormone beef, chlorine-washed chicken.’

In any case, he should be aware of the importance of an agreement between the EU and the UK for Europe’s agricultural sector, having pointed out that in 2018, the EU had a €25 billion trading surplus with the UK in agricultural products alone and that is higher than its entire surplus for trade in all products with the rest of the world. It’s a reminder that when people warn about possible food shortages in the UK in the case of no deal, they tend to forget that there’s a sizeable agricultural sector outside of the UK with interests at stake as well.

Back in March, when addressing a meeting of Irish farmers, Hogan said he thinks the UK’s no-deal tariff plans, which foresee that no import duties would be levied on goods entering Northern Ireland across the border, are ‘incompatible with WTO rules’, which was backed up by the EU Commission. It looks like the competition Irish beef farmers face with Mercosur countries will be a walk in the park compared to after no deal. Expect more of these discussions if no deal happens, with special interests arguing their case and opaque legal debates taking place over whether WTO rules are violated and if they have consequences. Presumably, little attention will be paid to the interests of consumers and the precedent of New Zealand, which opened up its agricultural sector dramatically in the second half of the 1980s, which ultimately benefited both producers and consumers.

This week, Hogan started off his Brexit brief constructively, declaring that he sees ‘movement’ happening on both sides of the Brexit negotiations and confirming that the EU side is finally open to changes to the Withdrawal Agreement, even if it would not be changed in ‘a major way’. In particular, he mentioned that ‘If we can build on [Johnson’s all-Ireland food zone proposal] we certainly might get closer to one another in terms of a possible outcome’, however stressing that the backstop ‘would have to include all goods… in terms of any agreement’.

He added that ‘I remain hopeful that the penny is finally dropping with the UK’, which wasn’t a sign he was overly concerned with addressing unionist sentiment in the UK. Fundamentally, both sides will need to move here. Given how the UK will be free to set its own rules and its own tariffs, Ireland won’t be able to resist all differences in regulation and tariffs with Northern Ireland forever.

It would be much easier for Ireland to move if its EU partners allow it to not implement proper border checks. Interestingly, the EU has actually conceded this, at least as a temporary arrangement, when one official told Irish media that ‘There will be an understanding on our side that things are not exactly how they should be… but an understanding on the [Irish] side that they need to demonstrate they are progressing and that they have a plan.’ In any case, Boris Johnson has stated that ‘under no circumstances will the Government of the United Kingdom be putting checks on the Northern Irish frontier.’

Fundamentally, Hogan should be knowledgeable enough of UK politics to understand that any compromise will need to involve the UK being able to conduct its own trade policy, which isn’t possible under the backstop arrangement. In April 2017, Hogan said he believed the then-UK Prime Minister Theresa May might be persuaded to stay in the EU Customs Union, calling this ‘very important for north and south of Ireland and border relations between the UK and the rest of the EU.’

If there is one lesson to be drawn from the failure of Theresa May, it is that it’s not politically sustainable for the UK not to be able to enjoy trade independence, even less so in the age of Trump and trade wars. Let’s hope Hogan and his Brussels friends now make this their assumption when trying to come to a compromise with the UK.

 


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