This briefing discusses how future UK trade policy after Brexit could affect the availability, price and quality of food, as well as the prospects for farmers, food producers and processors. It sets out key statistics on the UK’s international food and drink trade and considers the potential opportunities and challenges of new trading relationships after the UK leaves the EU, including under a Withdrawal Agreement or a no deal scenario.

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Future UK trade policy after Brexit is of great importance to food consumers as well as to farmers and other food producers.

For consumers, how the UK trades with the EU and the rest of the world could affect the availability, price and quality of food. Only 61% of all the food eaten, and 75% of that able to be grown in the UK, is produced in the country. The remainder –worth more than £47 billion a year– is imported. Much of the imported food we eat (some 70%) comes from the EU.

Trade also matters to farmers, food producers and processors. The UK exported £22 billion of food, feed and drink in 2018. Although smaller in absolute terms than other sectors’ exports, exports make up a significant proportion of sales for some parts of the agri-food industry, such as the lamb and pork sectors. The terms of trade with the EU will be vital since the EU is a major destination for exported agri-food products: two-thirds go to the EU and seven of the top ten destination countries are EU members.

This briefing sets out key information on the UK’s current international trade in food, feed and drink. It considers how potential changes to trading arrangements after Brexit, particularly to tariffs and regulatory arrangements, could impact on food producers and consumers. The briefing includes information on agri-food trade aspects of the May Government’s Withdrawal Agreement and the new Withdrawal Agreement announced in October 2019 as well as exploring some key issues arising under a no deal scenario such as food supplies and farm exports.

Free and frictionless trade

Farmers and the agri-food industry consider frictionless trade with the EU to be a key objective. Prime Minister Boris Johnson has said that he wants as free and frictionless trade in agri-food goods with the EU as possible and a UK international trade system that does not undermine high domestic production standards. Two key potential barriers to achieving frictionless trade outside of the EU are tariffs and regulatory standards.

Tariffs

Trade between EU Member States is tariff-free but, globally, agri-food products typically attract high tariffs and this can impede trade and affect prices. Farmers are concerned about the EU imposing third country tariffs on UK exports and the impact this will have on their ability to sell products such as sheepmeat to EU consumers at competitive prices.

World Trade Organisation (WTO) non-discrimination rules have implications for imports. If the UK wishes to allow imports from the EU to carry on without tariffs, then it will need to apply the same regime to any country’s products (with some developing country exceptions) unless a UK-EU Free Trade Agreement is concluded. Putting low or zero tariffs on UK imports from all countries would help to keep prices down for consumers but could undercut UK farmers. In contrast, putting higher tariffs on imports to help protect farmers from increased competition from non-EU countries’ products could increase prices in the shops.

The UK lodged in 2018 WTO tariff schedules to apply to imports after Brexit. However, the Government has announced temporary tariffs  that would apply for up to a year in the event of no deal. Whilst the majority of imports to the UK would be tariff free, tariffs would apply to some agri-food products, with higher levels for products such as sheepmeat and beef to protect these sectors. Zero tariffs would apply to other foodstuffs however, such as vegetables and eggs. No tariffs would be applied to imports to Northern Ireland from the Republic of Ireland.

Regulatory standards

Depending on the future UK-EU relationship, after Brexit there could be scope for divergence in the standards applied to food production in areas such as food safety and animal welfare. The Government has committed not to reduce such standards however. Stakeholders have nonetheless expressed concerns that future trade deals might allow imports of food produced under standards currently not permitted in the EU (such as washing chicken carcasses with chlorine or feeding growth hormones to cattle). Any divergence by the UK in standards could impose additional trade barriers: products placed on the EU market would still need to meet EU regulatory standards and compliance may need to be demonstrated.

No deal concerns

Farmers and the food industry have strongly urged no deal to be removed as an option for EU withdrawal because of concerns about the impact on the sector’s prospects of changes to tariffs and regulatory checks, particularly with no transition period for adjustment.

Without specific agreements otherwise, the EU will require UK exports to undergo additional animal and plant health checks which do not currently apply whilst the UK is part of the EU Single Market. Some of these checks, such as some physical inspections of consignments, must take place at or near the EU border at Border Inspection Posts. There may be consequential costs and delays for exporters from these checks and from increased general customs checks. This could have a knock-on effect on imports and the retail sector has said delays at ports could disrupt UK food supplies, leading to unpredictable shortages of some products. Supermarkets and food suppliers have increased their storage, but there are limitations on capacity, particularly for chilled products, and fresh produce imports are a particular concern. The Government said prior to the 31 October Brexit deadline that it would prefer to secure a deal, but stepped up planning to improve infrastructure and processes at ports such that people would have the food they need if there was no deal.

Variable impacts

The impacts of trade changes will not be uniform across the agri-food sector. Factors such as how much product is exported, what sort of checks are required on the product, and the extent to which tariff changes give imports a competitive advantage are among key factors which mean that different product sectors will experience different types and levels of impact.

Future opportunities

The Government aims to increase food and feed products exports to both EU and non-EU markets. Outside of a customs union with the EU, the UK could conclude its own Free Trade Agreements with other countries. However, agriculture has been a contentious aspect of the EU’s trade negotiations with third countries. Continuity agreements have been reached by the UK with some countries to roll-over EU deals so that they continue to apply to the UK after Brexit. Progress on rolling over these agreements, or renegotiating them with other terms and tariffs, will be important for the agri-food industry.

Future farm policy

This briefing does not consider future British Agricultural Policy which will replace the EU Common Agricultural Policy. For information on this please see the Library briefing on the Agriculture Bill 2017-19.  This Bill fell at Prorogation in September 2019. The Queen’s Speech in October 2019 included an Agriculture Bill with the same main aims but this was not introduced in the 2019 Session.

Commons Briefing papers CBP-7974

Authors: Sarah Coe; Matthew Ward

Topics: Agriculture, Common Agricultural Policy, Countryside, Fisheries, Food, International trade