Rules of origin in an EU-UK FTA
A 'hidden hard Brexit' for food and drink exporters?
Food and drink is at the heart of our national security – the first duty
of the
Government is to ensure the country is fed and watered. There is no sector with
more at stake in the Brexit negotiations than the UK's £112 billion 'farm
to
fork' food and drink industry which employs four million people.
Leaving the EU will inevitably change the terms on which food and drink are
traded between the UK and the EU. As with all other products and services,
these
goods will go from being traded seamlessly in the EU Single Market to being
exports
and imports between the EU and the UK. With over 70% of our food and
non-alcoholic drink exports going to the EU, policymakers and businesses in the
EU and the
UK will need to undertake a wide range of mitigating actions to manage the
disruption this change will bring and help businesses get to grips with the new
trading environment.
Assuming the UK doesn't agree to a comprehensive customs union with the EU, one
of the greatest challenges facing businesses, large and small, would come in
the
form of 'rules of origin'. The UK Government has set out its intention to
negotiate an ambitious free trade agreement with the EU. We hope this will
avoid the
introduction of tariffs on food and drink traded between the UK and EU.
However,
to benefit from that preferential access, business on both sides will need to
comply with origin requirements.
Rules of origin are the complex requirements that determine whether or not a
product is produced 'locally' in the UK or the EU – its economic
nationality.
If it
is not deemed to be sufficiently British, it may not qualify for these
preferential tariff rates.
This is a hugely important issue for food and drink manufacturers, in both the
EU and the UK. The UK, like the EU, is a major producer and exporter of high
quality food, selling over £22 billion in overseas markets. But like most
modern
economies, the ingredients in those UK products are a rich mix of goods from
the UK
and around the world, many of which are not produced in the UK or not in
sufficient quantity throughout the year.
The levels at which global content will be allowed in such food and drink
products will be set during negotiations to determine our future trading
relationship
with the EU. When this happens, producers may find themselves shut out of
preferential trade between the EU and the UK. In effect, as this report sets
out, they
face a 'hidden hard Brexit'.
This is why we asked Global Counsel to offer constructive solutions as to how we
might minimise the impact of these stringent rules on the UK's manufacturers of
food and drink. As many of the issues it raises also apply for EU exporters to
the UK, we hope it will be read as widely in Brussels as in Whitehall. At the
heart of the dilemma is how the EU and the UK design a new agreement that
avoids
disruption to supply chains that are central to the economy and to food
security.
In short, how do the EU and UK provide shoppers and consumers with the
fantastic
array of safe, affordable and nutritious food and drink that they currently
expect to enjoy every day.
Ian Wright CBE
Director General
Food and Drink Federation (FDF)
|
Alex Waugh
Director General
National Association of British and
Irish Flour Millers (nabim) |
Download full report:
Rules of origin in an EU-UK FTA - A 'hidden hard Brexit'
for food and drink exporters?