This section outlines the UK position and principles in the future economic relationship with the EU on agricultural products (which includes food and drink, fish and fish products.
Some areas are not directly covered in this paper and are being considered in more detail in other section of the White Paper, for example on manufactured goods and state aid, and will be referenced when this is the case.
International trade in agricultural products
[The global market for Agriculture and Food and Drink manufacturing imports, excluding the UK, was worth around £974 billion in 2016.] As with other products, agricultural products are subject to tariffs and heavy regulation that manifests as non-tariff barriers.
The WTO Agriculture Agreement provides rules for Member States on market access, domestic support, and export subsidies. Tariffs on all agricultural products are now “bound”, meaning that they are committed and difficult to increase. The progressive replacement of import restrictions, such as quotas, to tariffs (“tariffication”) has made markets substantially more predictable. A nation’s domestic support, or subsidisation of its agricultural industry, can make the market less predictable and can have a direct effect on production and trade.
One form of non-tariff barriers are Sanitary and Phytosanitary (SPS) measures. The measures are based on a range of international standards that give common requirements for the protection of the human, animal, and plant life and health.
The WTO SPS Agreement sets out the basis rules on food safety and animal and plant health standards and allows countries to set their own standards. The TO requires its members to form regulations based on science, rather than as a means to discriminate between countries with similar standards, although this has not prevented the proliferation of SPS measures that have increased considerably in recent years, increasing the requirements for exporters.
SPS are policy actions intended to protect public, animal, and plant health in relation to trade in animals, plants, and related products. In the UK, Defra and the Food Standards Agency each lead on key elements of the UK’s SPS policy, the latter with regard to human health. Defra leads on other policy issues in the area of animal health and welfare that is not covered within SPS measures, for example pet travel.
The UK is in a unique position, since it starts from a point of full regulatory alignment on Day One after leaving the EU. It is therefore possible that a solution is achievable and within the grasp of both Parties.
The UK will approach negotiations with a flexible and imaginative nature. Whilst we are seeking a bespoke agreement, the UK has reached deep agreements with near neighbours in the past, allowing for the free flow of agri-food products across borders.
For this reason, the UK is seeking a model which both the EU and the UK can agree:
- An enhanced trading relationship based on trust
- Robust governance mechanisms to ensure that the UK can continue to meet its commitments into the future, with flexibility in how those are delivered, and
- Respecting the integrity of the Single Market, ensuring both parties continue to commit to high standards.
The position on agricultural products is underpinned by the following overarching objectives for the agri-food sector:
- Maximise trading opportunities for the agri-food sector, ensuring open markets for each other’s products and securing flexibility to ensure the UK can make the most of the opportunities Exist presents for its farmers and exporters,
- Protect public, plant and animal health, animal welfare and the environment, ensuring the upmost safety of agricultural products and maintaining animal welfare and the environment standards at least as high as the EU, and
- Champion the consumer, safeguarding consumer confidence, food supply and food prices, providing continued access to the best available products.
The UK’s position on agricultural products is to seek an agreement to achieve the same outcomes with the flexibility to achieve those outcomes in ways best tailored to both parties’ circumstances. The preferred approach of ‘outcome equivalence’ is explored further below.
Outcome equivalence is when two parties agree to achieve the same outcome with flexibility as to the method by which that outcome is achieved. It is a concept used in existing FTAs (such as the EU’s FTA with Canada – CETA) to facilitate trade where two countries have similar (“equivalent”) but not identical regulatory regimes. It would enable the UK to tailor its regulatory environment to best suit UK businesses and consumers, ensuring our farmers and exporters are able to make the most of the opportunities presented by our withdrawal from the EU, whilst facilitating trade by minimising delays and costs at the border.
For the UK, actions or positions are equivalent if evidence shows that they achieve the same outcomes. The UK has publicly committed to evidence-based policy making for many years, arguing consistently in the EU for agri-food regulatory decisions to be focussed on achieving outcomes, leaving flexibility as to how those outcomes should be achieved.
The UK Government therefore proposes:
- Whether two polities in this area are equivalent should be determined by whether they achieve these goals to the same extent, with the existing regime used as the baseline
- If a new policy does not result in significant increase in risk, it is deemed equivalent to the existing regulatory regime and can be introduced by the proposing party. If it does, then that new policy would not be deemed equivalent
- The UK and EU agree to a definition of “a significant increase in risk” and the scientific methods to be used to determine this to prevent disagreements in the regulatory cooperation mechanism discussions
- The regulatory cooperation mechanism is set within the UK’s proposed architecture for the economic partnership as a whole, which is further explained in the chapter on governance. For agri-food, the scientific review of a new proposal would be carried out by an SPS sub-committee to the Joint Committee, which would draw on relevant expertise as necessary.
- In the event that the SPS sub-committee could not reach agreement or that the parties failed to reach a mutually agreeable solution, the issue could be escalated to an overarching joint committee or ultimately a Dispute Resolution Body.
Agencies, systems, and databases
Associated with this, is the UK’s future relationship with EU agencies, systems, and databases. We will seek continued engagement and cooperation with relevant EU agencies and appropriate access and exchange of data and IT systems to ensure food safety and protect public, animal, and plant health for the mutual benefit of the EU and UK citizens.
Having appropriate access and data sharing arrangements will be important in facilitating the oversight to ensure the safety of products placed on the EU and UK markets and ensuring open markets for each other’s products. Ongoing collaboration with EU agencies, such as the European Food Safety Authority (EFSA), and access to and exchange of appropriate data will underpin the approach of regulatory equivalence.
As applies to goods in general, the UK will also seek to agree areas of mutual recognition of certificates and documents for agricultural products that do not fall within the scope of SPS, for example organics, licences, and export certification.
Although the UK is seeking an ambitious and bespoke agreement with the EU, there are helpful precedents in agreements reached with the EU and third countries that can be drawn upon. The EU has a number of bilateral and multilateral agreements that include agricultural products, such as with Switzerland, Mexico, and South Korea. These agreements have a range of provisions on market access for agricultural products. Some of these agreements reduce non-tariff barriers on the basis of regulatory equivalence, in the spirit of the WTO’s multilateral SPS Agreement, which in some cases is achieved by the partner country aligning its rules to the EU’s. The agreements the EU has established with other countries show that there is a range of possible models for co-operation, including in ways that allow parties to pursue their own regulatory goals.
On the proposed regulatory cooperation mechanism, SPS sub-committees do exist in current EU FTAs. However, the approach to ensuring cooperation differs to that proposed by the UK in that in most EU FTAs, the two parties start with different regulatory systems and are moving towards convergence. In contrast, a UK FTA with the EU would need to allow for an initially harmonised regulatory system to diverge over time.
Equally, the commitments in the Joint Report for the island of Ireland require issues to be discussed on an ongoing basis, therefore a UK-EU SPS sub-committee would need to meet more frequently and work more collaboratively than existing models.
With regards to access to agencies and systems, precedents are seen with countries such as Switzerland, which has preferential access to some market surveillance databases, to EEA countries, which have EFSA observer status and access to the EU food and feed rapid alert system, right through to third countries, where FTAs including data sharing arrangements.
A new partnership in agricultural products
Given the close historic relationship between the UK and the EU, it is in the interests of both Parties to go beyond such precedents and seek a bespoke and ambitious future partnership in agricultural products that is beneficial to both sides.
This should be driven by our mutual commitment to open and frictionless trade and providing both parties with the regulatory flexibility, whilst continuing to meet high standards.
It also means ensuring flexibility to ensure the UK can utulise its new state to establish new agreements across the glove. We are determined to ensure that our farm businesses can thrive in this new trading environment, competing successfully on the world stage.
Within our World Trade Organisation (WTO) obligations, the UK will also have the opportunity in future to establish its own tariffs, both unilaterally and in the context of new bilateral trading relationships. In formulating our tariff policy, we will ensure that tariffs are set in the best interests of UK consumers, businesses, and farmers.
Both the UK and the EU benefit from their close and longstanding trading relationship for agricultural goods, and easy access to the UK market is especially important for particular EU industries.
It is in the mutual interest of the UK and EU to continue to hold a close trading partnership. The UK remains a major market for EU agricultural products (which includes agriculture, food and drink, and fish products), with the EU exporting €36.7 billion of agricultural products to the UK in 2016. The main sources of these exports were the Netherlands (€6.3 billion), France (€5.1 billion), Ireland (€4.6 billion), and Germany (€4.5 billion). The UK is a particularly significant export market for Ireland and Cyprus, accounting for 39% of Ireland’s global agricultural exports and 24% of Cyprus’ agricultural exports.
Equally, the EU imported €15.4 billion of agricultural products from the UK in 2016. The main EU importers were Ireland (€4.2 billion), France (€2.8 billion), Germany (€1.5 billion), and the Netherlands (€1.4 billion). The UK accounts for 54% of Ireland agricultural imports, whilst Malta and Cyprus import 10% and 8% respectively of their agricultural imports from the UK.
Providing continued recognition and protection of Geographical lndications in the EU and UK
This paper outlines the United Kingdom’s (UK) position and approach to ensure a smooth and orderly withdrawal from the European Union (EU) and the freest possible future economic relationship in regard to geographical indications (Gls).