The UK food & drink industry is a major growth sector generating a turnover of £104 billion with an estimated export market exceeding £23 billion in 2018. It represents the largest manufacturing sector accounting for 19% of total UK manufacturing. The industry is also a major employer with an estimated workforce of 450,000 workers, of which over 25% are EU workers. It has been one of the most vocal sectors in relation to the potential impact of Brexit.
Brexit is something of a moving target at the moment, with the UK originally requesting an extension of the Article 50 negotiating period to 30 June but the EU only agreeing to a delay to 22 May (if the House of Commons accepts the Withdrawal Agreement in a third “meaningful vote”) or otherwise to 12 April. However, a no-deal Brexit remains a possibility, on 12 April if not on 29 March.
The impact of a no-deal Brexit on UK businesses, and particularly the food & drink sector, is expected to be significant. Many UK companies have started making preparations for that scenario. Our Brexit checklist of key questions businesses should be asking themselves to assess how ready they are for Brexit can be accessed here. Our latest update on the status of EU citizens residing in the UK is available here.
A large part of the legislation relevant to the UK food and drink sector comes from the EU. In the event of a no-deal exit, the European Union (Withdrawal) Act 2018 (“2018 Act”) will ‘convert’ EU law into domestic law, with technical changes made to reflect the fact the UK is no longer an EU Member State. More detail on these technical changes and how they will be made is available here and here.
In August 2018, the UK Government began publishing technical notices to give guidance to stakeholders and businesses on how to prepare for a “hard” Brexit. The European Commission has published similar documents (so called preparedness notices).
This legal update summarises some of the key technical notices (and preparedness notices) specifically relevant to the UK’s food and drink industry. Our earlier briefing on Brexit and food & drink (which predates the technical notices) is available here.
Food labelling and compositional standards rules (minimum standards for certain products, e.g. honey, bottled water and fruit juices) are intended to maintain consumer confidence in the products and a level playing field for businesses. Once the UK has left the EU it will no longer be acceptable to include references to the EU in origin labelling of UK products, and reference addresses on food products will need to reflect the fact that the UK is no longer a Member State: a product sold in the UK will need to have the UK address of the responsible operator; an EU address would no longer be sufficient.
On the other side of that coin, the Food Labelling Technical Notice explains that, in a no-deal scenario, the UK address of a food business operator would no longer be valid for the EU market. To ensure continued EU market access, operators would have to provide an address within a remaining EU member state.UK food business operators that wish to either maintain or obtain EU market access could implement one of the following actions: (i) set up an EU hub; (ii) engage an existing EU distributor to act as an EU importer; or (iii) appoint a stand-alone EU importer.
UK businesses producing and processing organic food would also have to adapt to changes, for example UK operators would no longer be permitted to use the EU organic logo if the UK leaves the EU without a deal. In addition, businesses exporting to the EU would need to be certified by an organic control body recognised by the European Commission before they could continue exporting to the EU.
A raft of product and sector specific guidance has also been published by the Government in these areas. For instance, DEFRA has recently issued guidance to the fishing industry detailing the rules and processes for exporting and importing wild-caught marine fish if the UK leaves the EU with no deal.
With the UK no longer an EU Member State, health and identification marks on meat, fish and dairy products would need to be adapted too. For example, the UK would not be entitled to use any abbreviation in the health and identification marks that implied membership of the EU. At the same time, the new UK design would need to meet the EU’s requirements for a third country health and identification mark to ensure recognition by EU countries.
The EU’s preparedness notice on EU food law mirrors the content of these technical notices from the EU side, reiterating that UK labels would have to reflect the UK’s changed status and that UK products entering the EU market would have to comply with the EU’s food law requirements.
EU food and drink producers can protect the names of their products under the geographical indication (“GI”) regulations put in place by the EU. These ensure that GIs are protected from imitation throughout the EU and that EU countries comply with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights. At the moment, there are 87 EU GI-protected UK product names, making up a quarter of the value of UK food and drink exports.
In the event of a no-deal Brexit, UK products would no longer be able to register under the EU GI framework. It is expected that the UK will set up its own GI scheme which will broadly mirror the current EU scheme. All existing UK products registered under the EU GI framework would automatically be given UK GI status. UK producers would have to comply with new rules in order to be able to label their products with a new UK logo. While the UK Government anticipates that the EU GI framework will continue to protect all EU GIs for UK products, in the event of a no-deal exit UK producers may have to apply to regain EU protection and the right to use the EU GI logo.
Importing and exporting animals and food products
Exporting to and importing from the EU after Brexit would be subject to some significant changes if the UK were to leave the EU without a deal. The changes that face any importing and/or exporting UK business, in particular regarding goods classification, tariffs and customs procedures, are summarised in two general technical notices on trading. These can be found here and here. The main issues are summarised in our Brexit checklist.
If your business is exporting animals or animal products to the EU and intends to continue doing so after Brexit, a no-deal outcome would lead to increased paperwork. To be able to export animals and animal products to the EU post-Brexit, UK exporters would have to obtain an Export Health Certificate (“EHC”) for each consignment; however, the UK would have to be recognised as a third country exporter by the EU first. At the moment EHCs are only required for third-country exports, while exports inside the EU only need export certificates (the Intra Trade Animal Health Certificate, “ITAHC”) for live animals and some very specific animal products such as germplasm.
For live vertebrate animal transports into the EU, UK transporters would no longer be able to rely on UK-issued transport documentation. They would need to appoint a representative in an EU Member State and apply for a relevant Transport Authorisation, Certificate of Competence, or Vehicle Approval Certificate or Journey Log where necessary. Consignments and relevant certificates would then have to be checked at a Border Inspection Post (“BIP”) upon arrival in the EU.
The EU’s preparedness paper on the movement of live animals can be accessed here, complemented by the paper setting out the changes regarding authorisations and certificates for transporters, drivers and attendants.
A separate guidance document on how a no-deal Brexit would affect the export of GM food sets out information about the expected changes, in particular the requirement to appoint a representative in the EU/EEA in order to effectively continue trading after 29 March 2019.
In the event of a no-deal Brexit the UK would no longer be able to rely on the EU’s import notification system – the Trade Control and Expert System (“TRACES”) – for third-country imports of live animals and animal products into the UK. The UK is replacing TRACES with the Import Notification System (“INS”), and any TRACES users should start using the new system ahead of exit day to ensure that it operates effectively. For imports from the EU, no immediate changes to current import controls or notification requirements are expected, in order “to ensure a smooth transition”.
A separate technical notice sets out how importing high-risk food would be affected by a no-deal Brexit; for example, the required pre-notifications to TRACES for third-country imports of high-risk food would have to be redirected to the new UK system INS. This also applies to imports from the EU post-Brexit: importers would have to pre-notify the UK’s Food Standards Agency (“FSA”) using the INS, allowing the FSA to continue to respond effectively to food safety incidents.