What’s in a name? ‘Sanitary and Phytosanitary’ hardly trips off the tongue and, until recently, probably wasn’t part of most manufacturers’ everyday vocabulary. Yet the government’s Sanitary and Phytosanitary, or SPS, deal with the EU has rapidly become one of the most talked about policy issues in our sector.
Ironically, it’s also one of the most misunderstood.
The SPS deal isn’t really a trade deal at all. At least not in the traditional sense. It’s not about the usual levers pulled to boost exports, such as changes to tariffs, customs or other border costs. Instead, it’s about realigning the UK’s food laws with the EU’s, among other things, to remove the checks and certifications that have burdened businesses since our exit from the EU in 2021.
Redressing the balance
FDF’s Trade Snapshots have consistently shown that food and drink exports have taken a hit from this extra complexity when transacting with our most significant trade partner. UK exports remain around a third below the peaks they saw in pre-Brexit times. Many smaller manufacturers have been unable to absorb the costs or handle the uncertainty and complexity that sending products across the Channel post-Brexit entails, choosing to focus on domestic sales instead. That’s a loss for those businesses and for the UK’s competitiveness on the global stage.
Realigning our food laws with the EU will address this. It will ease the logistical load for businesses, streamline trade, and open up new opportunities. In the longer term, it should help stabilise food inflation.
But what it won’t do, as government has suggested it might, is bring food prices down. Businesses are still grappling with an out-and-out pile-up of cost pressures, from EPR and DRS to raised taxes and business rates.
Manufacturers are being asked to get to grips with all of this at the same time as the government is also proposing significant changes to the nutrient profiling model, which underpins the HFSS rules.
And this is the crux of the issue. The SPS agreement is going to introduce another wave of regulatory change for businesses to confront.
Domestic law
Many are only just starting to realise what the SPS agreement really means. It’s a huge change to food law, safety and standards regulations, greater than the changes we faced when leaving the EU. By our calculations, well over 100 pieces of regulation will need to be checked to see where divergence has occurred (mostly where UK law has not kept pace with changes in EU law since we left).
At FDF, we’re keeping track of those areas of divergence, and we’re in close touch with government and our members, providing guidance where we can. But getting a sector of 12,000 businesses ready for such big changes in domestic law is a mammoth task.
Defra still has work to do in properly communicating the scale of this change to all the UK’s food and drink businesses, as well as how it will impact them. Whether or not a company trades with the EU, and whether or not they produce ‘SPS products’, such as meat or dairy, they will be affected.
We were pleased to see the first set of guidance recently released to businesses, and the government’s consideration of appropriate transitional and sell-through periods for manufacturers to adjust and help maintain supply chain consistency. But this is just the start of what must be substantive engagement with business on government’s part.
Ultimately, the SPS agreement will unlock benefits for the UK’s food and drink industry. But unless businesses are given the time, clarity and support they need to prepare, then we risk something that’s meant to help industry becoming another source of cost and complexity instead.
Karen Betts is chief executive at the Food & Drink Federation
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