Summary
If the UK leaves the EU without alternative trade arrangements in place which deal comprehensively with both tariff and non-tariff issues the EU will have no choice but to treat the UK the same as any other third country. This could make it very difficult to avoid disruption of existing trade flows. If a UK/EU27 free trade area dealing with tariffs were agreed this would still require the negotiation of comprehensive arrangement related to the application of non-tariff measures to EU imports from the UK. What the absence of such an agreement would mean in practice in the area of the future application of EU Food Law has been set out in a February 2018 EC notifications to stakeholders on the implications of the UK leaving the EU. This notification highlights how products of animal origin are likely to be the worst affected agro-food sectors, given the stringent controls on 3rd country imports which the EU applies. This suggests ACP governments will need to look carefully at what trade policy tools they have available to deal with sudden surges in UK and EU27 exports of product of animal origin.
The specific nature of the 3rd country import controls which will be required once the UK leaves the EU has been laid out in a February 2018 EC notification to stakeholders on the implications of the withdrawal of the United Kingdom under EU food law. This review suggests the greatest threat of trade disruption from the application of standard 3rd country import controls will arise in trade in animal products (poultry meat, beef meat, sheep and lamb meat, dairy products or inputs to dairy products such as fat filled milk powders) (1).
This notification highlighted how in the absence of specifically agreed new interim arrangements once the UK is a 3rd country under EU food production and hygiene rules, for food of animal origin to be imported from the UK the standard requirements applicable to 3rd country suppliers will need to be met. These include:
- the UK securing a listing ‘by the Commission for public and animal health purposes’ under the applicable EU legislation;
- the listing of ‘the establishment in the United Kingdom’ from which the food is dispatched and obtained or prepared in….by the Commission for public heath purposes’ under the applicable EU legislation;
- the listing of the UK’s ‘residue control plan’ approved in accordance with the relevant EU legislation ‘for animals and animal products specified therein’;
- documentation verifying the ‘imported food satisfies all food hygiene requirements’ (1).
All the above controls will be applied through ‘mandatory border checks at the first point of entry into the Union territory’, with imports allowed to take place only through approved ‘border inspection posts’. Each imported consignment will need to undergo ‘documentary and identity checks, as well as at an appropriate frequency physical checks’. Each consignment would also b-need to be accompanied by a certificate of compliance with EU food legislation (1).
There is a parallel obligation placed on food importers in the EU27 to ensure all the above conditions have been met before ‘importing products of animal origin’ (1).
This all needs to be seen in a context where many of the exporters and importers involved in EU27/UK trade will have had no experience of meeting 3rd country compliance requirements.
Currently for the UK meat trade the absence of border inspection post infrastructure in Calais is an immediate source of concern, with this requiring a reorientation of the UK meat trade to Rotterdam where border inspection post infrastructure exists and is being expanded (2). It should be noted these EU rules apply to all meat containing products, from carcasses and fresh and chilled cuts to prepared chicken curries and pork pies.
For imports of food of non-animal origin the procedures for importing food are simpler but will still need to be based on a multi-annual national control plan drawn up by the UK government and approved by the EU, which identifies control requirements for specific products in light of the potential risk these pose to human, plant and animal health (1).
Where particular risks are seen to exist there would then be ‘increased levels of official controls at designated points of entry’. In addition specific SPS rules which apply to some products would also need to be complied with. For these products trade may be subject to ‘100% documentary controls at the point of entry’ and ‘identity and physical controls…at specific minimum frequencies depending on the risk that they present’ (1).
For irradiated food imports from the UK will be ‘prohibited unless the irradiation facilities in the United Kingdom are “listed” by the Commission’, while for organic products from ‘the withdrawal date, the certificate issues by control authorities and bodies in the United Kingdom are no longer valid’. Imports of organic food from the UK would then be subject to standard EU 3rd country import rules which would require the UK to be “listed’ in line with the requirements applied to all other 3rd country suppliers of organic products (1).
The UK for its part envisages the continued adherence to a common rule book, which forms part of its proposed Facilitated Customs Arrangement, should be sufficient ‘to reassure the UK and the EU that agri-food products in circulation in their respective markets meet the necessary regulatory requirements’. This it is held should ‘remove the need to undertake additional regulatory checks at the border’, thereby ‘avoiding the need for any physical infrastructure such as border inspection posts’. It is argued that the proposals advanced by the UK should be sufficient to ‘protect integrated supply chains, trade between the UK and the EU and consumer and biosecurity’ (3).
| Comment and Analysis
From a private sector perspective, as the moves to re-orientate the UK meat trade to Rotterdam rather than Calais suggest, many of the challenges faced arising from a ‘hard’ Brexit could be individually manageable. However in the short term the sheer sum of individual actions required could prove problematical unless the UK and EU agree special transitional arrangements. However in the longer term even if a UK/EU27 free trade area were agreed, these non-tariff measures could still prove highly disruptive unless new comprehensive arrangements compatible with the non-discrimination provisions of WTO rules on the treatment of 3rd countries are concluded. In terms of EU27 exports to the UK, in light of the UK governments July 2018 proposals for future UK/EU trade arrangements a critical issue which could well emerge is how the UK government would respond to the EU’s application of standard third country import controls during the period when the proposed Facilitated Customs Arrangement is still being phased in and the technological solutions envisaged in the UK proposal are still being developed? Once the UK has left the EU, unlike EU27 member states governments, the UK government will no longer be obliged to implement EU food law. The UK government could theoretically apply minimal import controls based on a risk assessment drawn up in the light of the recent history of food safety violations found on imports from the EU27. Such an arrangement, designed to facilitate continued frictionless trade, would be easier for the UK to adopt than the EU. The EU has established procedures and infrastructure for the implementation of food safety controls on imports from 3rd countries, which the governments of the EU’s 3rd country trading partners would expect the EU to apply in full to the UK once the UK was just another third country trade partner. The UK is in a different position, since legally it would no longer be bound by EU rules and would need to set in place its own national food import control rules and associated implementing infrastructure, in the immediate post Brexit period the UK is likely to enjoy more leeway to adopting new systems of import controls for food products than the EU, without being accused of discrimination against other third countries. These issues are important for ACP countries for unless they are effectively addressed the disruption to current UK/EU trade they would give rise to could well see a sudden surge of exports of the affected products to ACP markets, particularly in Africa. This suggests ACP governments will need to look carefully at what trade policy tools they have available to deal with sudden surges in UK and EU27 exports of products of animal origin (poultry meat, beef meat, sheep and lamb meat, dairy products or inputs to dairy products such as fat filled milk powders). A number of concerns arise around the UK’s overall approach to future economic relations with the EU in general and around the UK’s regulatory alignment and harmonisation proposals in particular. At the general level the first area of concern relates to the lack of consistency of the UK proposals with established EU redlines in regard to the indivisible nature of the Single Market and the four freedoms (free movement of goods, services, capital and people). The UK is unequivocally committed to ending the free movement of labour, while proposing a special new ‘mobility framework’ agreement. It remains to be seen to what extent the EU is willing to accept a new ‘mobility framework’ as going someway to re-instating free movement of labour between the EU and UK. Similar single market related problems would arise in regard to the UK’s proposals for the establishment of new arrangements for trade in services and investment. Finally at the general level the issue of the future role of the ECJ as the final court of arbitration in all matters related to the proposed trade in goods component of the agreement is likely to be problematical. More specifically the UK proposal to agree to a common rule book and ongoing harmonisation would place responsibility for ensuring compliance with EU rules on domestic UK bodies in order to remove the need for regulatory checks at the UK/EU27 border (including all Ireland borders). However the question arises: is the EU legally allowed to do away with border controls for compliance with regulatory standards in trade with a non-member? The EU has consistently argued in its notifications to stakeholders that standard 3rd country treatment will need to apply to the UK once it leaves the EU. These notifications have set out precisely what this means in terms of border controls for a range of agro-food products. The second problem arises from the qualified nature of the UK’s commitment to continued regulatory harmonisation, with the UK government committing only to continued harmonisation within a common rule book in those areas ‘necessary to provide for frictionless trade at the border’. This needs to be seen in the context of the UK proposal to apply different (lower tariffs) on goods which remain in the UK. It would be only a small step to suggest divergence from the common rule book should be allowed where goods remain in the UK, since these goods would not cross and EU27/UK border. The EU is likely to seek clarification on what the UK means by the phrase ‘necessary to provide for frictionless trade at the border’. There will also be EU concerns over the UK’s insistence on the right of the UK Parliament to choose whether or not to remain aligned with particular pieces of EU legislation. This level of uncertainty is likely to be unacceptable to the EU. |
Sources
(1) EC, ‘Notice to Stakeholders: Withdrawal of the United Kingdom and EU Food law’, 1 February 2018
https://ec.europa.eu/food/sites/food/files/notice_brexit_eu_food_law.pdf
(2) Gloablmeatnews.com, ‘One year countdown: is the meat industry any clearer on Brexit?’, 29 March 2018
https://www.globalmeatnews.com/Article/2018/03/29/Brexit-countdown
(3) UK White paper, ‘The future relationship between the United Kingdom and the European Union’, July 2018
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/724982/The_future_relationship_between_the_United_Kingdom_and_the_European_Union_WEB_VERSION.pdf