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22% tariffs for Food and Drink imports should the UK leave the EU with No deal

The Department for Environment, Food and Rural Affairs (DEFRA) hosted a Select Committee on 6 December to discuss the impact of Brexit on food pricing and standards.

The committee heard from manufacturers, retailers and consumers and asked contributors to consider the priorities that government should seek to negotiate for trade deals.

Tim Martin, Chairman at JD Wetherspoon suggested that if the UK is to leave the Single Market it should become a free trading nation, which he believes would boost productivity. He cited New Zealand, Singapore and Hong Kong as countries which have prospered by implementing this model.

Andrew Opie, Director of Food and Sustainability, British Retail Consortium (BRC) said that the priority has to be securing a tariff free trade deal with EU and as close to frictionless trade with the EU. Only once this has been secured should the UK consider other trade deals.

This view was echoed by David Thomson, CEO FDF Scotland, Food and Drink Federation, who said that any tariffs applied to trade would see prices in the supply chains increasing and would create additional paperwork to manage this.

Presently the UK enjoys free trade with other nations because of bilateral EU deals and Thomson suggested that the government must prioritise deals with countries vital for trade and suggested that South Korea was particularly important for the Food and Drink sector. Opie highlighted South Africa, Iceland and Peru as priority countries for the sector.

The panel were asked to suggest the potential outcome of ‘No deal’. Opie said currently 25% of British Food and Drink is imported, with 80% coming from the EU. The BRC have calculated that the average World Trade Organisation (WTO) tariff on these imported goods would be 22%. He believes the only possibility is the price being passed onto the consumer, and that there would be a knock on effect to the domestic market which may raise prices to match imported goods.

Thomson said that growth in the sector will only come from exporting, but tariffs will make it more costly and time consuming to export and could potentially price the UK out of local markets.

The panel were asked if there was ‘No deal’ could the UK improve Food and Drink standards beyond those of the EU and could this present an opportunity for the sector. Thomson said that with standards the only priority would be that the EU accept they are equivalent to EU standards. Opie said that the government must be careful in regulation. He believes that if the value of improved standards can’t be passed on to the consumer, then the committee must question if raised standards would be of benefit to the sector.

Thomson then gave an example of what would be the impact on a meat processing business wanting to export to Europe should the UK leave the EU with no deal and adopt third country status. The current process would see the business apply to be on a list of approved meat processers, then apply for a veterinary inspection, wait for the outcome of this inspection. There would then need to be an annual veterinary inspection, however, this would only be arranged if the regulators deemed that the business was a priority exporting business.

The Select Committee are due to produce a report of their findings in the New Year. 

To view the video of the Select Committee visit the UK Parliament website.

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