Any decision by the UK government to diverge from EU rules governing import standards for plant and animal products could make a bad situation at entry points into the EU much worse, food industry leaders have warned.
“A veterinary agreement is not just necessary for what we face now, but what we could face in the future,” William Bain from the British Retail Consortium told the UK Trade and Business Commission last Thursday.
Set up to make recommendations to government on the impact of international trade deals, membership of the Commission includes politicians and leading figures in industry. Last Thursday’s evidence session looked specifically at food and drink.
Sovereignty and divergence has a cost
As well as friction at the border between Britain and the EU, Bain pointed out that divergence in the so-called SPS rules (sanitary and phytosanitary checks) that relate to animal and plant products would also lead to more friction moving goods from Britain to NI. Under the terms of the Irish protocol, NI is effectively in the EU single market for goods.
“Sovereignty and divergence has a cost. It would be appropriate in any plan to diverge, that there is a proper impact assessment about what the opportunities would be, but also the costs for business and consumers” said Bain.
According to food industry representatives, with Britain now a third country outside of the EU, the new rules have added significant cost and complexity.
The bigger companies are sending carcases and cutting up abroad
In his evidence, Nick Allen from the British Meat Processors’ Association said that the cost of taking a lorry to the continent has doubled (an extra £1,000), and that is before taking account of the “army of office workers” businesses require to process the necessary paperwork.
“It’s also the added value that is being lost here. The bigger companies are sending carcases and cutting up abroad. It’s not as simple as just looking at tonnages” he added.
When asked if it was easier for his members to trade into NI or the EU27, Allen said that NI required less effort, “but only just”. He also suggested that some companies prefer to go to NI via Dublin, rather than direct into Belfast or Larne.
However, the new trade rules are perhaps most keenly felt by chilled food companies who produce items containing multiple ingredients, each of which must be listed out in the export health certificate (EHC) to accompany the product.
“We are about 50% down on exports across any patch of water,” Karin Goodburn, from the Chilled Food Association told the Commission.
She suggested that a lot of smaller companies have given up trying to export to NI or the EU, and warned that once a grace period for retail goods moving from Britain to NI ends on 1 October 2021, “there will be another huge hit”.
We need to simplify and digitise the whole thing
She also pointed out that in the first quarter of 2021 vets in Britain have issued 89,000 EHCs compared to 806 for the same period in 2020.
“That is 21,000 eight-hour days signing EHCs. We need to simplify and digitise the whole thing,” she said.
All three food industry representatives argued strongly for a UK-EU veterinary agreement that would do away with EHCs. “There would be a huge cut in the level of complexity,” said William Bain.
In their evidence to the Trade and Business Commission last Thursday, food industry representatives questioned the role of vets in the export process.
“Why are we asking a fully qualified vet to sign off an EHC for a cream cake, and what qualification does a vet have to be able to do that? This is about an audit trail. It costs our members £200 every time they get a vet to sign an EHC,” said Nick Allen.
“The vets don’t know anything about food necessarily, therefore query everything because they can lose their jobs if they do it wrong,” added Karin Goodburn.
While a UK-EU veterinary agreement would remove a significant chunk of the bureaucracy facing those trading from Britain into both NI and the EU27, it is unlikely to be agreed in the short-term, UK trade expert Emily Rees told the Commission last Thursday.
“When we look at the type of agreements the EU has struck with other third countries, they are rarely a single document – it is actually a trust building exercise over time.
“They don’t happen overnight,” she said.
She also pointed out that MEPs in the European Parliament only formally adopted the UK/EU trade deal last week, so thoughts are only now turning to other issues.
On potential changes that the UK and EU could agree to ease the flow of goods between Britain and NI, Rees warned that all exports to the EU must comply with the same regulations.
“If it were to not impose these checks on Britain, you would find yourself in a situation where there would be a discriminatory advantage to British products compared to other third-country products and that raises issues of compliance at the World Trade Organisation (WTO),” she suggested.
With the UK and Australia set to sign a trade deal in June 2021, there have been concerns that it will lead to a flood of cheap Australian lamb, beef and wine into the UK. However, trade expert Emily Rees believes that a free flow of agricultural trade is unlikely, with Australian imports managed by a set of UK tariff rate quotas that allow specific volumes to be imported without any taxes.
“You want to make sure it doesn’t have too much impact on domestic production, so it doesn’t create a shock, but is there to create resilience. Food security is ensured by the fact we have diversified imports,” she said.