The government’s white paper finally shows ministers recognising the food industry’s concerns – but can the proposals work? By Nick Hughes.
It’s taken over two years but food has finally made it onto the Brexit negotiating table.
On Thursday the government published its long-awaited Brexit white paper setting out proposals for the future relationship between the UK and the EU.
From a food sector perspective, the document is notable for its long overdue acknowledgement of the extent to which our food supply is inextricably linked to the outcome of the Brexit process.
It identifies food and drink as the UK’s largest manufacturing sector. It recognises the complexity of interconnected global supply chains. And it notes the importance of frictionless trade, particularly with the EU which accounts for the lion’s share of imported food.
These may seem like obvious points, but so far issues concerning food security have been conspicuously absent from the Brexit narrative.
The focus on food also represents a victory for the sector’s trade bodies, which have been forced to ramp up their rhetoric in recent weeks as policymakers failed to grasp the magnitude of the challenge facing businesses, which are running out of time to activate their own continuity plans.
The British Retail Consortium – not a body given to hyperbolic statements – warned on July 6th of the risk of food “rotting in ports” in the event of a cliff-edge scenario in which a deal has not been reached by March 29th 2019, when the UK will officially exit the EU.
And the Food and Drink Federation director general, Ian Wright, was typically forthright when he said in a recent speech that “the interests of the food and drink sector cannot be left to the eleventh hour as is typically the case in the EU’s trade negotiations”.
The government appears to have listened. But to what extent does the white paper reflect the priorities of the food sector? And are the proposals really deliverable?
Different sectors understandably have their own priorities, but where food businesses have been consistently aligned is in their desire for a Brexit outcome to deliver the most frictionless trade possible with the EU, avoiding customs controls and border delays.
In its recent response to the Department for International Trade’s call for evidence on preparing for our future UK trade policy, the Association of Licensed Multiple Retailers (ALMR) stated that the aim for the eating and drinking out sector must be “to deliver tariff-free trade in food and drink products, the minimum possible level of non-tariff barriers and support for the ongoing trade in services”.
Britain currently imports a third of the food it consumes from the EU, which accounts for 60% of all food imports. And while advocates of a clean break from the EU have highlighted the potential to bring down the price of food by striking free trade agreements with low-cost producers such as the US (an assumption that is fiercely contested, including in a recent House of Lords report), it’s clear that Europe remains the focus for the majority of businesses. The ALMR was quite clear that “the EU must be the priority” for trade agreements, even though it welcomed the opportunity that Brexit presented to strike bilateral trade deals with third countries.
Wright, meanwhile, has said that the only acceptable outcome of Brexit for his manufacturer members is one that delivers continued tariff-free UK-EU trade in all agri-food and drink products, and continued access to EU free trade agreements during and beyond any transition period.
So does the white paper deliver?
One point the government has already made clear is that the UK will leave the single market and the customs union at the end of any transition period. What it proposes in its place is a new trading relationship with the EU which would ensure continued frictionless access at the border to each other’s markets for goods. It plans to deliver this by establishing a free trade area for goods that would protect “the uniquely integrated supply chains and ‘just-in-time’ processes” that food businesses in particular have developed over the last 40 years.
If accepted, the proposal would avoid the need for customs and regulatory checks at the border, and would enable products to only undergo one set of approvals and authorisations in either market, before being sold in both.
To get around the issue of regulatory harmonisation – something the EU has repeatedly said is a red line for future free market access – the UK government proposes a “common rulebook for goods” including food products, whereby the UK would commit to comply with relevant EU rules.
Crucially, such a commitment would only apply to rules necessary to provide for frictionless trade at the border, specifically sanitary and phytosanitary (SPS) rules, which safeguard human, animal and plant health. It would not include other areas of food policy such as labelling which do not need to be checked at the border and where the government intends to tailor future rules “to better reflect business needs, improve value for money and support innovation and creativity”.
Both the Common Agricultural Policy and the Common Fisheries Policy are also excluded from the common rulebook, allowing the UK to pursue its own policies, some of which have already been set out by DEFRA.
And on standards – another issue of huge contention – the proposal is for a “non-regression requirement” to ensure the UK does not backslide on environmental standards (although no such guarantee has been made for animal welfare standards) after it has left the EU.
The paper has a number of holes in it, noticeably the thinness of detail on future immigration policy – a critical issue for food businesses. But the proposals as a whole have been given a cautious welcome by industry bodies. The Food and Drink Federation describes it as “positive” that the white paper begins to address some of the most concerning issues for manufacturers, while the British Retail Consortium says it is “encouraging” to see some progress towards a frictionless customs system.
But this is politics in 2018, when events change by the hour and what seems concrete today is likely to have disintegrated by tomorrow.
The show of unity that marked the announcement of the prime minister’s Chequers agreement lasted all of 24 hours before all-out cabinet warfare resumed. The Brexit secretary, David Davis, resigned, citing a lack of belief in a plan he told the BBC was “giving away too much and too easily”. Boris Johnson quickly followed suit. Then on Thursday, a leaked document surfaced setting out a previous set of proposals drafted by the Department for Exiting the European Union. This included a position on agricultural, food and fish products based on the concept of “outcome equivalence”, whereby two parties agree to achieve the same outcome with flexibility as to the method by which that outcome is achieved. Such an agreement would enable the UK to set its own rules and standards while facilitating trade by minimising delays and costs at the border – the so-called “Canada Plus Plus Plus” model.
With the Conservative parliamentary party fracturing by the day it now seems doubtful whether Theresa May can even get her white paper to the EU negotiating table.
And on Friday, the US president, Donald Trump, characteristically threw fuel on the fire by suggesting the Brexit blueprint would scupper any prospect of a US-UK trade deal.
Amid the carnage, one key figure has remained noticeably steadfast. Despite campaigning vigorously for Brexit, the environment secretary, Michael Gove, has publicly rejected the alternative food policy of cheap imports and deregulation championed by certain Brexit-supporting colleagues.
Instead, Gove has repeatedly insisted that UK standards of production must be maintained under future trading relationships and has backed the government’s latest proposals … so far.
Were the political split to widen, as seems inevitable, Gove will come under intense pressure to join his leave-supporting colleagues in opposing May’s plan.
The environment secretary’s progressive vision for food and farming policy, and his championing of the sector’s importance to the economy, health and the environment, have converted former sceptics into believers. But it remains to be seen how much longer he can marry his food vision with the desire to help deliver a genuine split from the EU.
If Gove rejects his role as conciliator and joins the backlash against the proposals, the prospect of no deal being reached will edge ever closer to becoming reality.
Then, even the prospect of rotting food may not save the industry from the cliff-edge scenario it fears the most.
