The first year of Brexit has been challenging for the food sector, causing market disruptions which it seems will continue in 2022, with the first quarter bringing important regulatory and trade changes. In the beginning of the year, after several delays, the British Government enforced the full customs control for goods moved from the European Union to the United Kingdom. This came as part of the EU-UK Trade and Cooperation Agreement (TCA), that took effect in January 2021, following Great Britain’s departure from the EU.
The impact of UK full customs control for the industry
With the official announcement on 1st December 2021 and deadline of enforcement the 1st of January 2022, the Government essentially gave the industry only one month to prepare for the new border control checks. As a result, many businesses were unaware or not fully prepared. This particularly impacted small businesses, with Federation of Small Businesses researchsuggesting one in four small businesses were not aware of the changes.
The new border checks mean that, whereas in 2021 full customs declarations could be postponed to the point of arrival, now the related paperwork must be handled up front and notice on the import of food products needs to be given in advance, all of which cost extra time and money. As the Public Accounts Committee stresses in a report published last month, “it is clear that the EU exit has had an impact on UK trade volumes and the new border arrangements have added costs to business”.
Safety and security checks to follow
As for the Government’s announcement that the safety and security declarations will not be required until 1st July 2022, Downing Street is currently considering to push back for the fourth time the introduction of full checks and the repeated delays so far create uncertainty and concerns for the industry that the situation could change again at short notice.
Moreover, as the Environment, Food and Rural Affairs Committee (EFRA) has stressed in its letter to the Secretary of State for Defra, Rt Hon George Eustice MP, there is an urgent need for further information for the food and drink sector to prepare for 1st July and beyond. More specifically EFRA has asked for clarifications with regards to:
- the operating times of Border Control Posts for sanitary and phytosanitary (SPS) checks
- when live animal checks will take place at the border, rather than at destination as currently occurs
- the introduction of e-certification in both directions
EFRA has also asked the Government to set out how it will use the introduction of border controls in the UK to negotiate fewer checks for British food and drink exports to the EU. At the beginning of the month, the Secretary of State announced that the Government is creating a risk-based SPS check regime. This means that GB would not be conducting the same intensity of checks on EU goods as the EU conducts on GB goods. As EFRA stressed, this will remove any incentive for the EU to take a more proportionate approach to the checks that GB traders are subjected to.
EFRA’s letter to Defra was followed by a one-off evidence session in which the Committee heard the views of the food sector about the state of border control post readiness in GB, and put questions to the Government about whether they are on track to meet the timetable for introducing the checks. According to the Chair of the Committee, Neil Parish MP “it’s essential for businesses, ports and consumers that Defra clarify key details in good time”.
Update on EU import controls: £60 loss for the industry
On the EU side, the SPS Certification Working Group, a cross-industry, veterinary and environmental health group, reported last month that the Export Health Certificate (EHC) requirements that were introduced in the beginning of 2021 have cost the British industry at least £60 million in paperwork, with 288,000 EHC applications requiring the equivalent of 580,000 certifier hours.
In its recent report “Minimizing SPS Friction in the EU Trade”, the Working Group has called on the UK to negotiate a mutual veterinary agreement with the EU, to ease the current problems in the food and feed trading between the two sides. Commenting on the report, Roger Gale MP, from the cross-party UK Trade and Business Commission, said that it “highlights the need for urgent solutions and it will help inform the cross-party recommendations on how current barriers to trade with the EU can be addressed”.
Our experience tells us that the industry has a decisive role to play in Europe’s effort to tackle the exports and food standards issues that emerged post-Brexit. Whitehouse has run successful campaigns on major legislative and regulatory dossiers discussed within the European institutions, its member states and the UK and ensured our clients continually contribute to high-profile debates at the EU and national levels.
Brexit has brought a series of challenges for food companies on both sides of the Channel, as it has increased uncertainty and supply chain disruptions but, on the other hand, it has also created new policy engagement opportunities for the sector. Now is the best time for the industry to put forward its interests, staying up to date on the policy and regulatory developments and engaging with both the EU and the UK to ensure as little disruption as possible in their economic relationship.
by Aris Myriskos