BREXIT ANALYSIS – PRESENTED BY EDELMAN
EU REFERENDUM
23 JUNE 2016
MMO O N NT HTH S S
DAYS DAYS
FOOD – UK ANALYSIS The UK’s decision to leave the EU will have profound effects on the policy programme that was laid out in the Queen’s Speech. From a regulatory perspective, the food industry might have some cause for optimism. The long-anticipated Child Obesity Strategy in addition to the Sugar Tax was widely expected to place strict restrictions around the sale and marketing of HFSS goods. These policies were central to the Prime Minister’s agenda but were not supported by many on the right of the Conservative Party. With the latter’s victory over Europe likely to determine the tone of the Party’s policies going forward, it is now possible that these plans will be kicked yet again into the long-grass. Even if the Prime Minister does make flagship announcements between now and the October deadline he has set on his premiership, how and if they are taken forward would need to be ratified by the new Cabinet. Of course the impact on the industry will be wider than just the consequences for planned legislations. The UK
is heavily dependent on other EU member states for food – it has a food trade gap of £21bn. Depending on what will be agreed regarding its future relationship with the EU, the UK agri-food sector could be facing significant challenges, from the loss of agricultural subsidies under the Common Agricultural Policy to major trade obstacles in the form of higher tariffs and/ or other market access restrictions. As in other sectors, post-Brexit will bring volatility, disruption and uncertainty. Food import costs might rise since the sterling plunged and inflation is expected. The UK would have to renegotiate any trade agreement signed under the umbrella of the EU, in which food and agriculture are involved. From a regulatory perspective, it is unclear at this stage how the UK Government will decide to handle those regulations, which are now part of the UK legal system, but it is very likely they will remain in place in the foreseeable future. Depending on the country’s future relationship with the EU, the UK authorities may then decide to gradually review some of the current standards.
FOOD – BRUSSELS ANALYSIS The extent to which the UK withdrawal from the European Union will impact the food industry in the UK will ultimately depend on the agreement that will be reached regarding the future of the UK’s relationship with the EU. The different scenarios available, from a European Economic Area membership to a simple World Trade Organization-type trade agreement, will have very different implications from a policy, regulatory and trade perspective. Since the UK joined the European Economic Community in 1973, its food system has been closely linked to other member states, and its food policy and regulatory framework has, to a considerable extent, been structured around principles, rules and standards that are harmonised at the European level. This goes beyond food-specific standards, directives and regulations, but also includes policies and regulations related to, for example, agriculture, fisheries, trade, as well as consumer and heath protection. The UK depends to a considerable extent on the EU for food. According to DEFRA, 27% of the food consumed in the UK in 2014 was imported from the EU. Most of the fresh vegetables: 88%, beef and veal: 73%, pigmeat: 99%, poultry meat: 94% and cereals 66% imported by the UK in 2014 came from the EU. Also, a majority of UK agricultural exports went to the EU in 2014, including 99% of total exports of mutton and lamb, 98% of fresh fruit, 93% of beef and veal and 83% of fresh vegetables. More broadly, in 2015, UK food and (non-alcoholic) beverage manufacturers exported £8.9 billion in products to other EU member states, representing over 72% of their total exports.
From a regulatory perspective, it is difficult to estimate the exact number of food standards applicable in the UK that originated in Brussels – although one can guess it is probably substantial. As stated above, the country’s future relationship with the EU will determine how the UK deals with the current standards. However, the outcome of the EU Referendum already raises a number of more practical questions, such as whether the UK Government (and UK Members of the European Parliament) can continue negotiating EU texts currently going through the legislative pipeline (e.g. organic production, food from animal clones), or have a say on texts undergoing a ‘Fitness Check’ under the Regulatory Fitness and Performance Programme (REFIT), such as the General Food Law, the Nutrition and Health Claims Regulation or the regulation on Pesticides. Interestingly, a Brexit will also give the UK authorities more freedom to implement policies and regulations without having to take into account the views of 27 other countries. For example, the UK could potentially implement a regulatory framework that would be more favourable to the research, cultivation and marketing of genetically modified products. The UK public health authorities would also be in a better position to implement a number of policies to address diet-related diseases, such as obesity, diabetes or cardiovascular disease, without having to take into account any EU rules. For example, the UK would then be able to explore more restrictive food labelling rules – by making traffic light labelling mandatory, for example – or imposing mandatory restrictions on product composition.
FURTHER INFORMATION
Emily Poole Account Director, Public Affairs Edelman UK emily.poole@edelman.com +44 20 3047 2292
Miguel da Silva Director of Food & Consumer Policy Edelman Brussels Miguel.Silva@edelman.com +32 25480278
Gurpreet Brar Managing Director, Public Affairs Edelman UK gurpreet.brar@edelman.com +44 203 047 2466
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