Amy Cowdell, Partner of Langleys LLP, discusses the impact of the UK-EU trade deal on farming businesses.
As we came to the end of 2020, the Government and the European Commission finally forged a deal paving the way for how the UK and the EU will trade with one another from January 1st following the UK’s departure from the European Union. Essentially it is a zero tariff deal with no quotas and this no doubt will be a relief to many farmers. It consists of three separate agreements, namely, the UK-EU Trade and Co-operation Agreement, the UK-EU Security of Information Agreement and UK-Euratom Nuclear Co-operation Agreement.
So, how will the UK-EU agreement affect our agricultural community and the food supply chain? It is too soon to assess the full impact and certainly beyond the scope of my column, but below is a summary of some issues to be aware of.
In order to qualify for free trade of goods between the UK and EU, products must have originated from the exporting country, whether that is in the UK or anywhere in the EU. The UK-EU trade and co-operation agreement details the rules of origin, setting out specifics where required.
It is agreed that the UK and EU will operate their own separate regimes in relation to product regulations and food safety standards. These so-called technical barriers to trade and sanitary and phytosanitary measures (measures to protect humans, animals, and plants from diseases, pests, or contaminants) have the potential to block trade and cause serious issues when the two regimes do not align. We are already seeing the impact of having separate food safety standard rules, with products such as chilled uncooked sausages and chilled minced red and poultry meat not being allowed to cross the border into the EU. The trade agreement sets out provisions to ensure that this is reviewed regularly, together with obligating the UK and EU to set their respective market regulations by international standards. Time will tell how effective this will be.
It is now a requirement to apply for an Export Health Certificate when exporting live animals or animal products into the EU, which requires certification from a vet.
Interestingly for organic certification it is intended that products certified as organic in one market shall be recognised as organic in the other. However, both parties agreed to collaborate to uphold the integrity of the premium food standard and avoid fraudulent claims.
Climate change and protection of the environment has taken centre stage in the deal. Whilst the deal allows the UK and EU to set their own environmental laws, the objective is aligned: to be net carbon markets by 2050 and honour the 2015 Paris Agreement. In fact the objective is given the highest form of priority in the trade agreement. If either party breaches it then the other can terminate the agreement. This will allow not only a level playing field in the production of agri-food products, but will also assist in keeping both parties on target to reach the ambitious goal of being carbon neutral by 2050.
Although welcomed by many, there is still concern, in particular by the NFU, that there could be disruption at the borders, which may create food supply chain issues and have an adverse impact on farming and food producing businesses. With additional certifications, customs checks and formalities that exporters must comply with it is perhaps inevitable that there will be difficulties to overcome. The UK government still has a huge task in preserving our relationship with the EU and working towards a smooth transition away from the EU common market. It is hoped that the new UK-EU trade partnership council will work effectively to bridge some of the gaps that currently exist in the deal.