BREXIT: What does it really mean for food businesses?
Let me save you some time before the rest of this article – Business will adapt and survive whatever happens post BREXIT. Yes amazingly food business are here to serve the consumer and if there is the demand for product business will adapt.
Despite the worry attached to the BREXIT process businesses are great at adapting to new challenges. Business had big challenges with health claims, the food information (labelling) regulation but business survived. Despite this, any change can be costly and indeed BREXIT depending on the way we exit will have implications for ‘UK BASED BUSINESS’. So given a single week does not pass before a client asks, “so what going to be the effect of BREXIT’, we give some thoughts on the impact over the short to medium term on the key aspects of the deal or no deal.
One of the primary concerns in relation to the UKs exit from the single market is a loss of our reliance on the principle or free movement of goods, in this case free movement of foods. The principle has been useful in that it can be used to get access of UK products onto other member state markets even if they are not in compliance with that member states laws. The only time really this is ineffective is in relation to products rejected on food safety and consumer protection grounds, but when used correctly it can be great for business expansion.
Once we exit from the EU (in the case of a no deal) this benefit will cease. The issue then will be for businesses to implement free movement you will need to 1stplace the product on another member state before distributing across the EU. The implications are that most other markets are more restrictive than the UK so formulation dosages may have to be decreased, additional label warnings added and or course registration (establishment) of your company in another member state.
Many companies are registering in Ireland as a backstop in the chase a no deal BREXIT is implemented.
Labelling will have some instant changes for some. So for those using the term ‘EU’ on pack as part of Origin labelling, but based in the UK will need to alter this indication post BREXIT.
For food businesses wanting to sell in the UK, a EU address will not be enough and a UK address will need to be placed on pack. Similarly, UK companies will need and EU address from the other 27 Member States.
Other contentious issues such as front of pack (FOP) traffic light labelling and nutrient profiling may also seek to be addressed post BREXIT. The FOP issues that have resulted in disputes with Member States such as Italy and subsequent the involvement of the European Commission could post-BREXIT end up as traffic light labelling as mandatory rather than voluntary.
There are discussions underway of possible transition periods (perhaps 6 months) to allow for such changes in labelling and stock sell through for products carrying the old formats.
In the absence of a deal any new claims that maybe developed would need to go through a UK and EU system for assessment. For the UKs part this will now be carried out by a new ground know as the UK Nutrition and Health Claims Committee (UKNHCC). This body will consist of 8 members of which one will be a Chair.
The issue here is that according the application forms and enquiries made by Legal Foods, the post will be exempt from anyone that is involved in industry. This means we will have a set of academics with little to know industry experience. This is for the sake of not having the Committee being seen as ‘captured’ by industry.
The problem then is we will have a system of advisers that are academics with no consideration and little knowledge over consumer and industry interface. None of the positions require any understanding of UK/EU law and thus the position of the UKNHCC will be on the assessment of science alone.
Are we creating another EFSA that holds the food industry to almost pharma standards? Only time will tell.
THIRD COUNTRY CERTIFICATION
There are 2 significant issues arising from a no deal BREXIT; 1. Natural Mineral Waters (NMWs), 2. Organic Certifications.
Currently, NMWs in each Member State in the EU are recognised in respect to guidance stipulated in Directive 2009/54/EC. Although the UK will amend its own legislation to allow such rules to operate they will no longer be recognised across the EU. Therefore, in the case the UK becomes a third country (non-EU) then recertification will be required for recognition in other States.
In the case of Organic certification it really will depend on reciprocal recognition of UK products by the EU in relation to the UK accepting EU products. However, in the event of a no deal with the UK being considered as a 3rdcountry then use of the EU Organic logo would not be permitted by UK companies. The requirement will be to adopt a UK specific certification and logo as potentially would EU businesses exporting into the UK. There may also be issue for UK organisations to get recertified as a UK Organic producers as the process for organic control bodies to be recognised by the European Commission can take up to 9 months. Again such issue will be tried to be fast tracked and some sell through negotiated but it will be a critical issue for the UK / EU organic market place.
The current situation has the UK to leave the EU on March 29 2019. We at this point do not know if there will be a deal, no deal or potentially and extension to the Article 50 process. The Great Repeal Bill (Legislating for the UK’s withdrawal from the EU) aims to ensure, “the same rules and laws will apply the day after exit as the day before.” The suggestion is that all current EU legislation is in the most part folded into UK law with the aim of facilitating trade between the UK/EU. Despite this tariff’s, border checks, and more food specific issue such as Protected Geographical Indications (PGIs) remain contentious and concerning.
Whatever, happens business must adapt to what is a fluid situation, especially if we do not have a deal come March 2019 and no transition period until 31stDecember 2020 exits. As such with only a few months to go before we leave the EU business is not yet in a position to fully consider what the impact of BREXIT will be. Perhaps the most prudent and effective advice could be is to ensure that products have a non-UK hub to sell across the EU including a registered business in another member state - even if that company is a present non trading. Such a choice would allow a continuation under EU rules whatever the effects of BREXIT.