Trade talks between Britain and the European Union hit a stumbling block after a clash over €70 billion in subsidies handed to European farmers.
The Government is concerned that there is no way to protect British farmers from cut-price imports from the bloc after the transition period expires at the end of the year. The EU is demanding a commitment from the UK to not launch retaliatory tariff strikes on European goods even when it is deemed that British farmers are being unfairly undercut by their continental rivals.
UK officials fear that heavily subsidised European farmers will be able to exploit the biggest shake-up in the agriculture industry in over 40 years.
One clause in the EU’s proposed trade deal with the UK would suggest subsidy funds are not price distorting and cannot be reacted to with “anti-subsidy proceedings nor be subjected to price or cost adjustments in anti-dumping investigations”.
David Frost, the Prime Minister’s chief trade negotiator with the bloc, has argued this could hamstring the Government’s ability to defend Britain’s farm industry.
Under the EU’s Common Agriculture Policy, the bloc has increased subsidies handed out to farmers across the continent.
The unprecedented spending accounts for around 34.5 percent of the EU’s entire €168.7 billion budget for this year.
For the duration of the current parliament, the Government has pledged to fund farmers at the same rate as the EU – around £3 billion a year.
Under World Trade Organisation rules, there is no cap on payments to farmers that “do not distort trade, or at most cause minimal distortion”.