UK food and drink manufacturers could be heading for a ‘hidden hard Brexit’ according to a report commissioned by the Food and Drink Federation.
If the government secures a free trade agreement with the EU after Britain leaves, many UK producers could still be hit with new tariffs thanks to ingredients sourced from other countries, the FDF said.
EU rules of origin could result in the products effectively being deemed not ‘sufficiently British’ enough to qualify for any preferential trade agreement, the federation said.
The FDF cited UK chocolate producers as an example, exporting £530m-worth annually. They could face tariffs of 27% or more depending on the value of UK-refined cane sugar originating from the world’s poorest countries and the volume of Irish milk in their products, according to the federation.
“In essence, rules of origin dictate if a product is deemed sufficiently ‘British’ - its economic nationality - and whether it qualifies for a preferential tariff that has been agreed in a trade deal,” the FDF said.
“Our manufacturers are committed customers of UK farming but this is dependent on having continued access to imports that complement our use of UK raw materials,” the statement added. “The ingredients in many food and drink products are a mix of domestic and international goods, many of which are not produced in the UK or not in sufficient quantity throughout the year to meet consumer demand.
“We know that under existing models applied by the EU, many UK-manufactured products would not qualify for preferential tariffs.”
The report, called Rules of Origin In An EU-UK FTA: A ‘hidden hard Brexit’ for food and drink exporters?, sets out practical recommendations for the UK and EU to minimise disruption to UK food and drink exports to Europe, worth £13.3bn a year.
“Rules of origin are a big piece of the Brexit puzzle for the food and drink industry,” said FDF director general Ian Wright. “If we fail to secure sufficiently generous rules as part of a preferential trade agreement with the EU, food and drink manufacturers will be the ones who suffer this hidden hard Brexit. They could be facing an increase in exporting costs, or a complete ban of entry to the market. This report is essential reading for those who want to avoid both.”
“Flour millers in the UK source 80% of their wheat from the UK, but also use grain from Canada, the US and other European countries to make a range of flours with different baking qualities,” said Alex Waugh, director general of the National Association of British and Irish Flour Millers.
“If the rules of origin adopted in many of the EU’s trade agreements were to apply in a trade deal between the EU 27 and the UK, flour milled with even a small proportion of these grains, and many foodstuffs made from it, would no longer be considered ‘of UK origin’ and would therefore be subject to very significant duties.”
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