- Written by Faisal Islam
- Economics Editor
Image source, Getty Images
This time, the government will really do it. There is no room for retreat. They would push the button for a new kind of trade frontier coming to Great Britain from the continent.
In the industry, this is called Brexit 2.0. At least, that is the more polite version of the name given to the imposition of a series of new post-Brexit requirements on food importers in Britain.
It is the final piece of the puzzle of necessary changes following the UK’s exit from the EU customs union and single market.
The most significant changes to imports of food and plant products from the European Union begin to take effect in phases on Wednesday, after a series of delays.
This means significantly more red tape. In particular, an expensive veterinary certificate will be legally required with shipments of fresh food and plants imported from the EU. These are requirements as of 0001 on Wednesday, but will not be subject to physical checks at the border for another three months.
The government acknowledges that additional red tape and controls will lead to higher food prices, causing the overall price level to rise by 0.2 percentage points over three years. This means a noticeable impact on food inflation, but not a new food price shock of the kind we saw after the Russian invasion of Ukraine. However, this increase was enough for Cabinet to further delay imposing the checks last year, at a time when food inflation was rising at double-digit rates.
As Tom Southall, director of the Cold Chain Federation, said: “There was never a good time to do it, which is why it was postponed five times.”
The delay led to two problems. There has been a lack of reciprocity. UK food and agricultural exports to the EU required additional red tape, checks and three-year delays, but their competitors on the continent enjoyed unfettered access to the UK. The agricultural industry has expressed concern about biosecurity in the UK, i.e. defending against the spread of plant and animal diseases, which could be very costly.
But tomorrow, four years to the day after Brexit, the changes will begin.
If all goes according to the government’s plan, the smooth and phased introduction of these new controls will protect UK biosecurity, have a minimal impact on the availability and cost of food, and even provide an incentive for both the UK and EU to work together to lower these barriers. .
Different parts of the industry point to a range of interconnected concerns that paint a somewhat different picture: rising costs, delays, and limited availability – especially specialty food imports.
The specific question is whether a lack of knowledge of UK changes in individual EU countries and regions will combine with a shortage of vets, and lead to many small EU businesses abandoning UK supply.
The impact is more likely to appear on prepared food counters rather than supermarket shelves. “The big unknown is whether there will be enough official vets across Europe to sign off on all the export health certificates,” says John Keefe, director of Getlink, the Channel Tunnel operators. “If there are not enough vets, there will be a problem.” “Big as there is no certificate.” This means no import.
Most critics fear the changes will be costly and problematic, and will serve as an inconvenience for some niche suppliers rather than a wider problem.
The introduction of these checks since December 2020 in the other direction (to the EU from Great Britain) has resulted in the need for 852,165 export health certificates issued by British vets, or 1.7 million hours of veterinary time, at a cost of £100 per hour. That’s according to the Chilled Foods Association, which has to extract the figures from the government through a monthly freedom of information request. The industry has already had to generate an additional £8.5bn in sales to cover the £170m cost of UK to EU veterinary certificates, the government told the government.
The UK imports more food than it exports, so we expect these numbers to be exceeded with these new requirements.
Karen Godburn of the Refrigerated Foods Association also chairs the SPS Certification Working Group. Her biggest fear is that 24/7/365 food supply chains simply don’t work, when you have to wait for vets to sign off on certificates and then give 24-hour notice of imports. “This could bring those supply chains to a halt, or at least hit the pause button,” she says.
last week I wrote to Agriculture Minister Steve Barclay has raised widespread concerns about the readiness of a site in Kent intended to host inspections of cross-Channel imports. Surprisingly, the government has not yet specified the fees charged on each shipment to pay for these checks. The Government says clarity on whether the charges will be closer to £10 or £43 per shipment will come in the next few weeks.
Above all, official EU vets are unlikely to be available during the day, night and weekend to sign off on perishable exports to the UK. All of this is made more complicated by the requirement to provide a day’s advance notice of imports. That’s a large percentage of the best dates on these types of merchandise.
“We lost one day,” says Goodburn. “That’s 20% of the shelf life and the products are really unsellable.”
Add all this together and you have an extreme stress test for a transcontinental food supply chain designed to deliver safe, highly perishable food items, in a timely manner. Moreover, many of the more exotic imports – such as cocoa or bananas – come via freight to EU hubs such as Rotterdam.
The export safety inspection system is actually designed for the long-distance transportation of shelf-stable food products in container ships. There is a danger that the system will not work when applied to what was a free-flowing, frictionless trade of perishable goods. These complex and elaborate supply chains in the UK have never been tested in this way before.
While the gradual introduction of controls would limit obvious disruption, shipping organizations have told MPs of their concerns over important issues in the autumn, when the EU is also expected to change its border arrangements for individuals. Kent County Council is preparing a plausible worst-case scenario of a 14-hour wait when EU entry and exit checks and visa exemption requirements begin.
“The combination of these two schemes, which will come into force in 2024, could cause significant delay and disruption to UK and EU supply chains… UK logistics members are also concerned about the EES [Entry/ Exit System] And in Tom [Border Target Operating Model, the government’s plans for importing goods into Great Britain] “It is very likely that this will lead to a shortage of drivers to cover European work, which in turn will lead to higher costs with a potential inflationary impact,” the UK freight logistics trade body told the House of Commons European Scrutiny Committee last week.
Although these concerns have been expressed before, there is now a crucial difference. This is one area of post-Brexit politics where the opposition has been prepared to openly challenge the government.
Labor is proposing a veterinary agreement with the EU that would reduce border inspection requirements on health certificates, or even eliminate the need for them entirely. The challenge is that reducing friction and disruption will also require closer alignment with EU food safety rules on gene editing and fertilisers. It is unclear where exactly Labor wants to go on the trade-off between frictionless food trade and regulatory freedom.
So, tomorrow, the experiment begins. Can pan-European food supply chains in the UK operate effectively within a cumbersome certification and inspection system? And what if the industry is right that maximum disruption will occur this fall, around the time of the general election? The final piece of the Brexit puzzle is perhaps the most important.