Wot no Impact Assessment?
At work and in councils, we are told we have to make an impact assessment of any proposed changes. So we would have thought that there would be impact assessments for the biggest changes for this country in decades. Sure enough: “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.
Cake & Eat It
The hard copy Bittersweet Brexit (p 39) was going to be called 'Cake and Eat it' because Brexiteers 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 (see ARLA below)
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)
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'.
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.
EU threatens to impose tariffs if UK drops standards (What have tariffs got to do with this? read on)
Irish Border Fudge
To move to trade talks, we agreed about a frictionless Irish border. All interested parties agreed to be ‘fully aligned’, meaning standards between Ireland and N Ireland would be similar but not necessarily the same; this means staying close to EU standards—i.e. those ‘harmonised’ for the Internal (Single) Market. This is particularly relevant to agricultural goods, where there seems to be general agreement to keep our animal and food standards much as they are. However, there is no mention on the matter of all those food taxes (2,000 tariffs). If we come out of the Customs Union, there will be tariffs on food (up to 30% for meat) both ways across the border(s). How can this be 'fully aligned' - ie no taxes either way? To do that we would have to stay in the Customs Union. Come out, and we have to negotiate 'alignments' for 2000 farm taxed farm products, then 15,000 more for processed foods. Unless the alignment for each is FULLY IDENTICAL, there will have to be a border with Customs checking what food/farm products you are moving...see UK-EU Deal for more. Border Fudge According to the Headmistress of St Theresa's Grammar School for Girls (and boys) in Private Eye, Mrs T May wrote: "Pupils may like to know that my Irish Border Fudge is now available in the tuck shop. Though unfortunately they do not have any in stock. That's because although it does exist n theory, it doesn't necessarily in practice."
"Technology cannot offer a frictionless solution to border controls. The need for formal product standard approvals, hygiene checks, advance security declarations, VAT calculations and payment, and the inevitable delays at the border, cannot be wished away according to Liam Fox's former top official.
Trade Bill introduced 7 Nov 2107 "By tabling this dog's breakfast of a trade bill, Fox is making a mockery of democracy, and giving the lie to the pledge that Brexit would restore parliamentary sovereignty. A UK-US trade deal could give Liam Fox a free hand to introduce TTIP on steroids." says Global Justice. Since then, amendments have ensured that there wont be any Henry 8th stuff (Ministers deciding ), and that the final 'deal' will come before the Houses of parliament - the 'mother' of all parliaments.
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 ost 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! Full Report from Food & Drink Federation.
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.
Assuming Britain signs a free-trade agreement with the EU27 to come into force in 2021, 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".