Brexit and the EU food and drink industry Lorenzo Ferrucci, FoodDrinkEurope SD WG meeting, 30 January 2018 @FoodDrinkEU

Snapshot of key data EU27-UK food and drink trade (2016, % of total exports/imports) Source: Eurostat The UK deeply relies on the EU27 both as an export destination and sourcing market. 23/11/2017

Snapshot of key data Source: Eurostat Top EU27-UK food and drink exports and imports (2016, € million) Exports Imports Trade Balance Wine 2,415 276 2,140 Bread, pastry and biscuits 2,028 740 1,289 Chocolate 1,804 558 1,246 Cheese 1,620 413 1,207 Offal, poultry meat 1,410 328 1,081 Animal feed, petfoods 1,325 773 552 Bovine meat fresh, chilled and frozen 1,252 392 860 Prepared and preserved meat 1,223 281 941 Food preparations 1,148 612 536 Pork meat fresh, chilled and frozen 1,038 184 854 Mineral waters and soft drinks 986 373 614 Fat, meat smoked 734 68 666 Prepared and preserved vegetables 716 60 657 Fruit juices 691 146 544 Spirits 602 1,967 -1,365 Wine is the EU27 most prominent product exported to the UK, while spirits dominate the EU27 imports from the UK. 23/11/2017

Brexit is a reality, so what now? Article 50 process triggered on 29 March 2017 Three negotiation stages: ‘Divorce’ settlement Transitional arrangement Deal on the long-term EU27-UK relationship 23/11/2017

Treat food and drink as a priority sector Our ‘asks’ Treat food and drink as a priority sector Collaborate closely with industry Involve industry in shaping transition Agree clear roadmap and realistic transition arrangements rapidly Minimal regulatory divergence 23/11/2017

Worst case scenario: WTO’s Most Favoured Nation Small study on the direct effects of ‘hard’ Brexit WTO duties, 10 sample products Calculated the impact of duties on sales prices of products Applied European Commission ‘trade price elasticities’ to estimate impact on volumes Source: FTI, Eurostat 23/11/2017

WTO MFN TARIFFS COULD INCREASE EU FOOD AND DRINK EXPORT PRICES SIGNIFICANTLY, RESULTING INTO ↓ EXPORT REVENUES, NEGATIVELY IMPACTING EMPLOYMENT Source: FTI calculations. Notes: (1) calculations are based on approximations of the WTO MFN tariffs, (2) these approximations understate the tariffs on bread and chocolate , and so the price increase for these products may be greater than shown above, (3) all calculations assume the tariff is passed on in full.

Brexit and EU Regulation Common Agricultural Policy (CAP) EU quality certification schemes (PDO, PGI, organic, etc.) General Food Law, incl. secondary legislation Official food and feed controls RASFF EFSA Applications (e.g. novel foods, health claims, food improvement agents) Consumer information Customs issues (tariff and NTBs) 23/11/2017

Brexit and EU Regulation ‘Soft’ policy (/mixed competence) Nutrition and public health policy Audio-visual Media Services Directive (AVMSD) Unfair Commercial Practices (UCP) Directive ‘Emerging’ EU policy/regulatory fields Sustainability (food waste, packaging, animal welfare) 23/11/2017

Customs issues Modernised Customs Code Tariff and Tariff Quotas Rules of Origin Customs procedures (e.g. additional documentation, controls) Fighting fraud and counterfeit goods Dialogue needed! (e.g. regulatory convergence dialogue, mutual recognition agreements, dispute settlement mechanisms, co-operation and information exchange between customs, etc.) 23/11/2017

What next? Virtually all UK food law comes from the EU (and virtually all EU food law has EEA relevance) For the UK, EU legislation stands until revoked, following completion of the separation process initiated by Article 50 What about EU laws currently being developed (post Art. 50 triggering)? 23/11/2017

Fact Regardless of the UK standards post-Brexit, any UK food exporter wishing to trade with the EU under a free trade agreement has to comply with any EU food law relating to product standards 23/11/2017

In summary A strong and stable EU is in the interest of all Any future EU27-UK trade agreement must ensure minimal trade disruption by: Maximum collaboration on SPS measures and technical standards Minimal divergence in application of such standards Importance of strengthening and deepening EU Single Market and ambitious international trade agenda 23/11/2017

FoodDrinkEurope activities Set up working group Met with TF50 Done study Work with food chain operators (Copa-Cogeca & Eurocommerce) Work with EFFAT Following developments in Brussels very closely Study on customs to be commissioned (deadline end of March) 23/11/2017

You can’t have your cake and eat it Major progress on the TRQs It takes two to tango Brexit is Brexit Brussels bubble Buying time Turn a blind eye We need another word for Brexit 23/11/2017

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A suivre …. www.fooddrinkeurope.eu @FoodDrinkEU