26 July 2018
This is the latest in a series of posts looking at the UK Government’s White Paper on the Future Relationship between the UK and the EU, which was published on 12 July. For a general overview of the proposals see our previous blog post.
This post looks specifically at the elements of the White Paper that are most relevant to the agri-food sector and summarises reaction from the sector, the Welsh Government and, crucially, the EU.
The Economic Partnership
A major feature of the White Paper is the proposed future economic partnership between the UK and the EU. Key to the economic partnership is the creation of a new free trade area for goods including agri-food goods.
The proposals include a common rulebook for agri-food goods focusing predominantly on rules that must be checked at the border. The paper says this would require the UK to make an upfront commitment to harmonise rules with the EU. The UK would seek to participate in relevant EU technical committees that have a role in designing and implementing rules that form part of the common rule book, albeit without voting rights.
The paper places the rules that apply to agri-food products into three categories:
- Those that must be checked at the border, including sanitary and phytosanitary rules, which aim to protect human, animal and plant health;
- Those that relate to wider food policy and do not need to be checked at the border, including labelling rules; and
- Those that relate to domestic production, including the Common Agricultural Policy (CAP).
The paper includes Geographical Indications (GIs), otherwise known as protected food names, in the second category (rules that do not need to be checked at the border). It says the UK will establish its own GI scheme after Brexit that will be open to applications from within and outside the UK. Wales currently has 15 GI-protected products and the paper acknowledges the particular significance of Welsh lamb and beef.
The paper also reiterates that the UK will leave the CAP. On 10 July the Welsh Government published its proposals for a new land management policy to replace the CAP.
Other elements of the new free trade area for goods include:
- Zero tariffs on agri-food goods and no quota or rules of origin requirements for goods traded between the UK and the EU.
- A new Facilitated Customs Arrangement (FCA) where the UK would charge UK tariffs for goods entering the UK destined for the UK market and EU tariffs for goods entering the UK but destined for the EU market.
- Cooperation arrangements with the EU to enable market surveillance to ensure rules are upheld in both markets. This would require UK access to existing EU communications systems, such as the Rapid Alert System for Food and Feed (RASFF).
Other proposals in the paper include:
- Mutual recognition of professional qualifications, enabling professionals to provide services in the UK and EU. This could be particularly significant for the veterinary sector as around a quarter of vets in Wales are non-UK EU nationals including the majority of those responsible for monitoring meat hygiene in slaughterhouses.
- UK participation in key EU agencies who play a significant role in placing goods on the market (however the European Food Safety Authority (EFSA) is not mentioned in the paper).
- Agreeing to adopt the same system and rules on state-aid and close cooperation on competition regulation.
- A commitment to maintaining minimum environment, climate change and social protection standards and in particular a non-regression clause on environmental standards and domestic labour standards.
- The UK being able to pursue an independent trade policy outside of the EU where it could set its own tariffs but would be limited by the common rulebook on where it could allow different product standards to the EU.
Many of the proposals in the paper are broadly consistent with conclusions and recommendations made in two Assembly Committee reports – the External Affairs and Additional Legislation (EAAL) Committee’s report on Wales’ future relationship with the EU (March 2018) and the Climate Change, Environment and Rural Affairs (CCERA) Committee ‘s report on future of land management (March 2017).
Both reports discuss the importance of EU migrant workers to the agri-food sector. The paper does not discuss the labour needs of the agri-food sector, rather it emphasises that free movement of people will be replaced by a new framework for mobility that does not seem to provide a means for temporary or permanent migrant agri-food workers from the EU to enter the UK as they do now. The paper states that the UK’s future immigration arrangements will set out how those from the EU and elsewhere can apply to work in the UK.
Agri-food sector reaction
Food and Drink Federation Chief Executive, Ian Wright, said it was “extremely encouraging” that the White Paper seeks to “make no-friction trade with our most important trading partner its number one Brexit priority.” In doing so he emphasised that food and drink manufacturers rely on integrated supply chains, with ingredients and finished products crossing UK and EU borders frequently.
He said it was positive that the paper begins to address some of the most concerning issues for manufacturers, such as rules of origin, but there “is a lot further to go” emphasising the impact rules of origin can pose for globalised supply chains.
He also said that more needs to be understood about how the common rulebook would work in practice, and while he welcomed that the UK would continue to seek to influence EU technical committees and have access to RASFF, many questions remain around “our valued relationship” with the EFSA.
A joint statement from the presidents of four UK farming unions, including NFU Cymru, also welcomed the proposals for frictionless trade stating that the principle of a free trade area for goods is vital for the agri-food sector.
They said they were pleased the UK Government intended to maintain high production and welfare standards and stressed that “it is imperative that the UK’s independent trade policy does not seek to undermine those standards”. They called for more clarity on the future trading relationship between the UK and the EU and hope that “we maintain the high levels of trade … [with] our largest market for agri-food products”.
They also emphasised the importance of seasonal and permanent workers from outside the UK and called for a new immigration policy based on “business need, reflecting the importance of these workers to our food and farming sector.”
Welsh Government reaction
On 17 July the Cabinet Secretary for Finance, Mark Drakeford, responded to the White Paper in a statement in the Assembly. He gave the proposals a lukewarm reception saying the UK Government “has taken some faltering steps towards the [right] direction” (i.e. the Welsh Government position of full participation in the Single Market and membership of a Customs Union]” but also that it was a “potentially significant step”. He also said that “for every answer the White Paper attempts, a further set of questions arises.”
The Cabinet Secretary agreed with the proposals for a free trade area for goods including agri-food goods, and for the need for alignment with certain EU rules through a common rulebook. He said the proposals for a common customs territory could be a step in the right direction but asked how the “convoluted customs proposals” would work in practice. He also asked how the UK would provide sufficient guarantees to the EU on environmental and labour standards, to ensure that there is a genuine level playing field.
The Cabinet Secretary also said the paper was a missed opportunity to provide clarity on migration issues and reiterated the Welsh Government position of a system “compatible with the principle of free movement of people, but where migration is clearly linked to employment”.
Finally, he called on the Prime Minister “to state straightforwardly that the UK aims to stay in the single market for goods and agricultural products, and remain in a customs union.”
On 20 July the EU’s Chief Negotiator, Michel Barnier, issued a press statement outlining his response to the White Paper. Politico reported that his comments “all but killed” the proposals for a free trade area for goods and a new customs arrangement.
Michel Barnier restated the EU’s commitment to the Single Market and the indivisibility of its four freedoms, which includes the freedom of movement for workers.
He questioned the proposals for a common rulebook for goods but only for rules that must be checked at the border. He asked how EU consumers could be protected if other agri-food standards, which are not controlled at the border, such as for Genetically Modified Organisms (GMOs) and pesticides, are not included.
He also questioned the proposals for applying two tariffs in the new customs area asking whether this was workable without additional complexity or bureaucracy and whether there would be a greater risk of fraud.
However this was by no means a total rejection of the proposals. Michel Barnier said “there are several elements that open the way for a constructive discussion” on the future relationship. These include a free-trade agreement that “should be at the heart of our economic relations” and UK commitments regarding a level playing field, notably in state aid and environmental and labour standards.
The next post in this series will look at what the White Paper says on environmental protection.
Article by Elfyn Henderson, National Assembly for Wales Research Service