The government is preparing for a no-deal Brexit, is the food industry?

August 24, 2018

It seems the only thing we can be sure of is more uncertainty. However, as the 29th of March 2019 draws closer the possibility of a “No-Deal” Brexit appears increasingly likely, so much so that the UK government has released a series of 24 documents providing guidance in the event they cannot negotiate a deal in time. While the government assures us that the guidance is only a formality it raises the question, what impact will a “No-Deal” Brexit have on the food industry and what safe guards can be put in place now?

The 24 documents released so far are only the first of many, but already we have some concerning details related to the food industry” says Stuart Hancock, Founder and Co-Owner of Rick Bestwick which regularly imports and exports food products on behalf of its customers. “Import and export difficulties will be unavoidable, if the government reaches a deal then customs arrangements will change, and the sector will have to adjust, which immediately means a level of disruption and delay as new systems and processes are implemented”. “However, the real problem is if they don’t reach a deal. Without a deal the process becomes bureaucratic and costly as we would be forced to operate on Non-preferential WTO rules.”

Under these rules products will be subject to;

  • Customs duty on goods exported or imported to or from the EU, which will require classification beforehand.
  • An Import Declaration when goods enter the UK and an Export Declaration when they leave.
  • A Safety Declaration on both exports and imports (Usually made by the haulier, airline or shipping line)
  • A Security Declaration on both exports and imports (Usually made by the haulier, airline or shipping line)
  • Excise goods will no longer be managed by the Excise Movement Control System (EMCS) when moving between the UK and the EU. This means that immediately upon importation, excise goods will have to be placed into UK duty suspension.

“The organic food sector could be particularly affected according to the released information from the government” comments Colin Taylor, CEO of Rick Bestwick. “Some things are likely to remain the same, standards and labelling for example. Additionally, the documents state that the UK will likely continue to recognise the countries that are equivalent to the EU as well as continue to accept ‘organic’ goods from the EU itself.

“The crucial issue is that UK companies will not be permitted to export to the EU until they are certified by an organic control body which is recognised and approved by the EU.” Given that UK control bodies cannot apply for recognition until the UK becomes a “third country” (a process that can take up to 9 months) it could potentially be almost a year before organic food companies can export to the EU again.”

The good news amongst all this is that the leaving date is in March which is at the end of the traditionally quieter trading period. Warehousing is almost always available during this time and stockpiles of imported ingredients or completed stock can be built up in UK cold stores. Additionally, stock can be exported now before any changes take place. With a good enough contingency stock on the continent it may be possible to circumvent customs delays.

 

 

Key Points:

  • Imports and exports from British ports and terminals will have hurdles and delays. This will be particularly severe in the event of a “No-Deal” Brexit when imports and exports to or from the EU will be treated similarly to how goods from outside the EU currently are.
  • Organic food trade will be significantly disrupted and businesses in this field should be contingency planning now.
  • Labour should not be overly affected as the law in this area will only be changed in-so-far as to reflect that it is now UK, rather than EU law
  • Plan now, and import ingredients or completed stock to guarantee supplies
  • Export your stock to the EU now to create a contingency in case customs delays affect your ability to transfer stock to the continent.

 

References:

https://www.gov.uk/government/publications/producing-and-processing-organic-food-if-theres-no-brexit-deal/producing-and-processing-organic-food-if-theres-no-brexit-deal

https://www.gov.uk/government/publications/workplace-rights-if-theres-no-brexit-deal/workplace-rights-if-theres-no-brexit-deal

https://www.bbc.co.uk/news/uk-politics-45274972

https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal#farming

https://www.gov.uk/government/publications/trade-remedies-if-theres-no-brexit-deal/trade-remedies-if-theres-no-brexit-deal