Did you know that because food and drink manufacturing is an international business with ingredients often coming from many different counties, a ‘hard’ Brexit might mean that many companies’ supply chains might not comply with the EU’s future ‘origin’ requirements – with dire financial conseuqnces.
Even if the UK Government manages to negotiate a generous free trade agreement with the EU, exporters would still need to comply with complex ‘origin’ requirements. These dictate whether or not a product is deemed sufficiently ‘British’ and therefore qualifies for a preferential tariff that has been agreed in a trade deal.
UK manufactures do, in the main, ‘buy British’ but UK farmers cannot supply all the ingredients that they need. Nor can they supply even the ingredients that they do grow all year round. As a result, many food and drink products are a mixture of domestically and internationally supplied goods.
Under existing EU models, once outside the EU, many UK manufactured products would not qualify for preferential tariffs. For example, UK chocolate producers who export £530million’s worth of products each year to the EU could face tariffs of 27% or more depending on how much of UK’s refined cane sugar came from the world’s poorest countries and how much Irish milk was in their products.
So manufacturers could face the prospect of either having to ‘restructure’ their supply chains (a seriously costly business) – or being barred from future EU-UK trade as a result of the EU’s Most Favoured Nation tariffs which are prohibitively high for food and drink, rising to more than 100% on many of products.
Neither is an appealing prospect for the UK food industry. Current export trade with the EU, by the way, is worth more than £13.3 billion each year.
Thanks to a Food and Drink Federation for press release for this information.