BITTERSWEET BREXIT - Coming Out

Coming Out (Chap 2)

There is 1. divorce from the EU Institutions 2. Leaving of the Internal (Single) market and 3. Leaving Customs Union
Common Agriculutral Policy
Single Market Subsidies, Standards and Sanitary Measures
Customs Union Brexiteers v Free Traders, Tariffs,

The EU Institutions and policies

Coming out of the EU will mean coming out of many EU Institutions, and the main policies that govern the EU, whether or not we also come out of the Single Market and Customs Union (see below). The two main policies are the Common Agricultural Policy(CAP) accounting for around half of the EU budget, and the even more controversial Common Fisheries Policy (CFP).We will be leaving over 40 Institutions, that we will need to replace in some way, including the European Food Safety Authority, who advise the EU on food safety and pesticides. These institutions will all go whatever sort of Brexit, and the UK (or is that English, Welsh, Scottish and Northern Irish?) will have to create new ones to replace them.

The EU Institutions and policies

Agriculture Policy

Fisheries Policy

Directives & Regulations

Cake & Eat It

Cliff Edge

Wot no Impact Assessment?

Table Analogy

Rules of Origin

Agriculture Policy

The Common Agricultural Policy (CAP) is one of the founding policies of the original Common Market, and brings together national intervention programmes into one scheme "to allow farmers to compete on a level playing field". Translated that means: 'EU farmers will have a level playing field with each other, while the rest of the world is ploughing a field in the valley". And that is where we could end. Most CAP money goes to landowners (see Chapter 'Land'). This is now up for debate - here in the UK but also in EU, where there is now talk about 'nationlising' the policy - i.e let countries do their own thing. For much more see CAP

Fisheries Policy

Most fisherfolk voted for Brexit wanting to 'take back control of our waters (See Chapter Favourite Foods:Fish). But there's a catch! Britain’s fish will still belong to Europe after Brexit — because Spain, Holland and Iceland have bought up nearly 90% of the entire fishing quota of Wales (88% Spanish) and more than half the quota assigned to England is now in Dutch, Icelandic and Spanish hands. Just a bigger share going to bigger fisheries? More. Devolved governments are likely to make a case for greater decision making in regards to fishing policy.
Government published Sustainable Fisheries for Future Generations' July 2018. Introducing it, the PM said "when we leave the EU we will take back control of our waters, while ensuring we don’t see our fishermen unfairly denied access to other waters." Unlikely to be any gains. We shall see..

Gove on right

In May's deal (Nov 18) negotiators agreed "to park the contested issue of fishing quotas, with the aim of reaching a deal before July 2020. EU member states want any deal on tariff-free access for British goods to be traded in exchange for maintaining existing fishing rights over the 100 common species that swim between the UK and rest of the EU." Out of the EU, our shellfish could face an annual bill of over £40m in taxes when we export into the EU. If we want to sell our shellfish to the EU without their tariffs, then we are going to have to give way on quotas. V tricky issue, so the Commission persuaded EU members to 'park' this on, although France & Netherlands don't like it nor do many fisherfolk -esp more northerly ones who tend to catch white fish rather than shellfish
Macron says we "must agree to give up fishing rights and follow European Union regulations or face being indefinitely trapped in a customs union,"

Labour " wants to reform the quota share for new and existing fishing allocating quota based on progressive social, environmental criteria. Such criteria would stand to benefit small boats, the backbone of British fishing that make up 49% of employment in the catching sector but only have around 6% of fishing quota. They’re the SMEs of fishing and they’ve been ignored for far too long. "

Directives & Regulations

Directives 'direct' - point member states in a clear direction. Regulations have to be followed - ie copied/translated/pasted to each member.
“Farmers have long been frustrated by the way farms are regulated. As we leave the EU and as government sets out new expectations for farming, we have a unique opportunity to transform the way we do things." Chair of Farm Inspection Regulation Review "The interim report sets out the problems with the current system of regulation, largely borne out of the requirements of membership of the Common Agricultural Policy (CAP). It finds that farmers and regulators alike are exasperated by the demands of regulation, which are unduly precise and inflexible. "
Others say that DEFRA gold plated EU Directives. We certainly did some of them proud. (e.g Sustainable use of Pesticides). Many complained that DEFRA took ages to pay out - so much so that the EU fined DEFRA! I also call on MORE inspections from the likes of the Health & Safety Executive. Farm fatalities are still the worst of any workplace by far.Nothing else has worked to reduce fatalities More surprise inspections are needed to send out a message. I used to be on the HSE Committee that dealt with this.

Cake & Eat It

The hard copy Bittersweet Brexit (p 39) was going to be called 'Cake and Eat it' because people kept saying we could come out of the Single Market (ditch dull harmonisation stuff), yet continue to have the benefits of its membership - ie frictionless movement of food. This was dubbed “cake-and-eat-it” position. It has now been comprehensively ruled out by every European leader. A leaked policy paper made clear that unless Britain remained inside the single market, the only access to it would come via a much more limited goods trade agreement such as that the EU has with Canada (see UK-EU Trade Deal page)

Cliff Edge

There will be food issues in event of cliff edge Brexit warns the British Retail Consortium. In a letter to key characters they highlight "how the UK’s highly complex food supply chain – and the excellent value and choice it offers UK consumers – depends upon frictionless trade with the EU. The livelihoods of tens of thousands of farmers and food producers in the EU also depend on it. ..The cliff edge scenario – will mean new border controls and multiple ‘non-tariff barriers’ through regulatory checks, creating delays, waste and failed deliveries. "

Wot no Impact Assessment?

At work and in councils, we are told by David Davis - then Brexit Secretary, that we would have impact assessments of any proposed changes 'in excruciating detail'. So we would have thought that there would be impact assessments for the biggest changes for food and farming in this country in decades. “We are conducting a broad range of analysis at the macroeconomic and sectoral level to understand the impact of leaving the EU on all aspects of the UK, including the agriculture sector.” said David Davis in a statement attached to a letter to Lady Verma, chair of the House of Lords EU external affairs sub-committee – 30 October 2017. Less than 6 weeks later, he told a committee of MPs on Dec 6 that the UK government had produced no economic forecasts on the likely impact of Brexit on various sectors of the economy.
An Impact scenario appeared in April 18 found May's bespoke deal would cost over £600m a week. Global Future found the amount of money available for spending on public services would fall. Under the so-called Norway option, there would be £262m less a week, under the Canada model it would be £877m, while under a no deal ('WTO rules') it would be £1.25bn.

Table Analogy

Imagine Europe Union like a table, where the top is the Single Market and the legs the Customs Union. The Single Market is like the table top, where we can move food and farm-stuffs around freely, along with utensils, condiments, napkins, and waitresses. Any of these can move freely, as the standards and laws governing food composition and cleanliness are standardised; we know they are safe wherever they come from within the EU because these standards have been 'harmonised'. Thus there are no checks to movement because these 'non-tariff' barriers are the same throughout the EU. This is what is meant by 'frictionless'. EU threatens to impose tariffs if UK drops standards

If we jump off the table, we jump out of the Customs Union. The legs are the taxes (tariffs) put on food and farm goods coming in. The legs can be shorter, as in a coffee table - as the tax on roasted coffee is small. But most of our meals are served on a high table, with high taxes for most foods coming in. Meat attracts taxes - often 30% - unless there is a quota (see below). out of the Customs union if the EU wants to export to us, they will face the same tax cliffs - unless we change them.
Checks at borders for safety are bigger than customs checks say food freight bosses. "The phytosanitary checks legally required on both sides of the border were a bigger challenge than the high-profile issue of customs checks that is currently dividing the cabinet." It is not just food imports, "there will have to be checks in Calais and other continental ports for British exports, meaning French diners may have to do without Scottish salmon or langoustines. Supplies of such foods from Scotland rotted on the roadside in 2015, the last time there were major delays in the ports. "

This is a representation of what barriers there will be to the free movement of food ingredients around Europe post Brexit

Barrier no 8 is health and veterinary. This is the check to make sure that the food/farm product conforms to the many EU standards of food and pesticide residues, as well as health checks.

No 1 is 'Rules of Origin'....this is what that means....

Rules of Origin

When customs want to tax a commodity they have to know the country of origin, as different taxes apply - depending on the country of origin. That is easy when the commodity consist of one substance. When it consists of many - as with many processed foods, the determination of country of origin gets complex. Is the sugar used in the chocolate, being exported to EU from Britain, from here or abroad? How much of the flour in that loaf comes from Canada - if it is more than a particular percentage, then the country of origin may change..and so it goes on etc etc.

If we do not agree a comprehensive trade deal with the EU, 'rules of origin' could play havoc with movement of food in and out of the EU. "Rules of origin are the complex requirements that determine whether or not a product is produced 'locally' in the UK or the EU – its economic nationality. If it is not deemed to be sufficiently British, it may not qualify for preferential tariff rates."

The ingredients of many UK food products are a rich mix of goods from the UK and around the world, many of which are not produced in the UK or not in sufficient quantity throughout the year. The levels of global content that will be allowed in 'local' food and drink products will be set during future UK-EU trading negotiations. There are 15,000 Process Agricultural products with various tariffs.
But nobody really knows what/how this will get sorted. Mind you David Davis' previous experience of working at Tate & Lyle may come in handy with this one...UK chocolate producers (who export £530m of products each year to the EU) could face tariffs of 27+% depending on the value of UK refined cane sugar originating from the world’s poorest countries, plus all the Irish milk in their products. Most milling flour could well be hit, as most have a mixture of British flour with N American flour. Food Manufacturers could face the prospect of either a costly restructuring of their supply chains or de factor barring from future EU-UK trade as a result of the EU’s Most Favoured Nation (MFN) tariffs which are prohibitively high for food and drink. Or we could produce a lot more food ourselves!

For Customs clearance of foods it is necessary to determine the "nationality" of the food. After the classification of a commodity into the Harmonized System and the determination of its value, the determination of the country of origin is the third key element in customs clearance procedures - and this is governed by the 'rules' of origin.

Full Report from Food & Drink Federation.

How 'Rules of Origin' work

Assuming Britain signs a free-trade agreement with the EU27 to come by the of 2020, as PM promises, similar deals such as the EU agreement with Canada would not exempt UK processed food from EU tariffs because the ingredients would contain too much non-UK material to qualify. Food-processing industries contribute 50 per cent more to the UK economy than the automotive sector and 70 per cent of its exports go to the EU, the industry said, warning of a threat to Britain’s food and national security. Without much looser rules of origin than in existing EU free-trade agreements, Alex Waugh, director-general of the National Association of British and Irish Flour Millers, warned that food manufacturers still faced a “hidden hard Brexit” because not enough UK ingredients are produced domestically. “Producers may find themselves shut out of preferential trade between the EU and the UK if Britain did not stay inside the EU customs union".
Government advice in event of 'No Deal', regarding 'Rules of Origin.

Government Consultation !!!!!!!
Health and Harmony The Future of Food Farming and the Environment is consultation set up by Secretary Gove. Sustain's ready-made response for you My response
RSA announce Commission into Food, Farming and Countryside because "We need to create a new space to have a new conversation, using a systems level view, acting as an honest broker to explore best practice and new thinking". Quite - can we have this based in the North? You can contribute to RSA Food Farming & Countryside Commission.

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