Is any new EU legislation expected to come into force and effect before the end of the transition period?
Yes, in particular the controversial requirement to specify when the primary ingredient of a food differs from the stated (or implied) country of origin of the product. This comes into effect on 1 April 2020.
Is a new regulator needed, or do additional powers to be given to an existing regulator?
Food regulation is governed by the Food Standards Agency (and equivalents in the devolved nations) and DEFRA; and enforced in the main by local authorities. Therefore no new regulator is needed post-Brexit. However, there will be an increase in workload for these regulators, so there will be a need to provide additional funding and recruit skilled staff.
If regulatory equivalence is not achieved, there will also be a need to increase the current resourcing at Border Inspection Posts. Currently, only non-EU food is checked to ensure that it meets hygiene, safety and labelling standards.
The UK regulators are, however, dependent on activities carried out by the European Food Safety Authority (EFSA) in terms of scientifically assessing the safety of food ingredients. None of the existing UK regulators carry out the functions of EFSA. Post-Brexit, the UK can pay to have access to the EFSA services, which is the most likely outcome.
Is there an existing "equivalence" or "recognition" regime for recognising Third Country regulatory regimes?
Yes, in certain areas of food law (such as approved establishments that produce food of animal origin) there is recognition under the EU regime that certain Third Countries meet the standards required in respect of certain foods.
When the UK becomes a Third Country, we would hope its food regulatory regime is recognised as part of any agreement. If there is no agreement, there would be a period of time when UK businesses would need to go through more laborious processes in order to export into the EU. This would be significant given that 72% of UK food and drink exports (excluding alcoholic drinks) go to the EU.
Post-Brexit, the UK will also need to be satisfied that it can similarly recognise the regulatory regime of Third Countries. Currently, the EU makes this assessment on the UK's behalf. This is likely to be challenging, not least because there are not enough skilled personnel to carry out this task.
A further concern in the food sector is the so called "hidden hard Brexit" around rules of origin. This has been explained in an excellent report by the FDF. In essence, assuming the UK and EU can agree a free trade agreement (which will hopefully avoid the imposition of tariffs on food and drink), for both sides to benefit from that arrangement, the goods will need to meet the rules of origin requirements. There is a risk that a food product that is made from raw materials that are imported from Third Countries may not be considered to have "originated" from the UK and therefore would not benefit from the free trade arrangements when exported to the EU.
Does current UK government policy mean that (subject to the terms of a future trade agreement between the UK and the EU) material changes to regulation or enforcement are likely post-Brexit?
The relationship between the UK and the rest of Europe in relation to food exports and imports should mean that no significant regulatory changes are made. 40% of the food consumed in the UK is from the EU, and the EU is the UK's biggest export market. Having that degree of dependency provides a strong incentive to maintain regulatory alignment and trust in each other's systems and procedures. Food manufacturers are also going to be unwilling to engage in a situation where they are required to produce two varieties of the same product – one for the UK market and one for the EU. Therefore any attempts by the government to introduce material changes to regulation, and attempts to then enforce that legislation, would likely be strongly resisted.
However, in the longer term, it may well be possible for government policy to promote food innovation through changes in regulation but still ensure mutual recognition with the EU. There is also the prospect that free trade arrangements with other countries may require regulatory changes.
What should businesses be doing now to prepare for Brexit?
Whatever the future Brexit deal, so many of the issues for food and drink businesses center around the supply chain. Focus your Brexit planning by conducting a full review of your supply chain and, in particular the following:
- Sourcing: where are you sourcing your raw materials or products from? Are there options to source from the UK? Are any of your products likely to be affected by rules of origin? Have you worked out the cost to your business in a worst case scenario (a 'hard Brexit' and WTO tariffs)?
- Borders: do you import or export raw materials or finished product across borders? If there are delays what are your contingency plans, particularly for fresh and chilled items?
- Workers: have you taken steps to reassure and assist your own workforce? If Brexit results in a skills shortage, are you able to get involved to support the development of more homegrown talent? Could automating part of your processes assist in addressing any skills shortages?