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Some Red Lines for the Brexit negotiators

By: Chris Solt Date: 23 May 2017
Category: Article,Food and drink,Agriculture

Chris Solt, food and drink partner at Lovewell Blake, sets out five priorities on behalf of Norfolk’s food and drink industry for the UK’s Brexit negotiators.

With Article 50 being triggered, the real negotiations about the UK’s relationship with the EU after Brexit are about to begin. For Norfolk’s food and drink sector, what happens over the coming months will have a major impact; for many, it is uncertainty more than anything which is denting confidence and inhibiting long-term decision-making.

So as our negotiators embark on what will be the trickiest and most prolonged discussions of their kind for many decades, here are five things that they should be bearing in mind if they are to recognise the vital contribution that our food and drink sector makes to the UK’s prosperity.

Think about the workers
More than any other sector, food and drink production is reliant on low-cost labour from overseas. Around 29% of workers in the sector are non-UK EU nationals; if the current immigration rules which apply to non-EU nationals were applied to these workers, just one in eight of them would be entitled to stay after Brexit.

The post-referendum devaluation of the pound is already making it increasingly difficult to recruit workers from overseas. So it is vital that the status of these workers is clarified as soon as possible, otherwise we may face a serious shortage in the people we need to make the sector work.

No Deal is a Bad Deal
There has been much talk about ‘no deal’ being better than a ‘bad deal’. This might hold water in some sectors, but for food and drink, no deal may prove very challenging. It is now generally accepted that if the UK and EU cannot reach agreement on some form of free trade, then World Trade Organisation rules would apply from the moment we left the EU.

Tariffs on food products are intentionally kept high by the WTO, in order to protect domestic producers. But the result for countries – and regions – which are net food exporters is draconian: 53% tariffs on wheat exports, 63% on butter, 74% on skimmed milk, and a staggering 160% on frozen beef carcasses.

Norfolk’s food and drink industry simply can’t afford to fall into this tariff regime by default – a deal is imperative.

No cliff edges
Already there is talk of a transition period to implement what is agreed in the Brexit negotiations. Unfortunately, there is no appetite on the side of the EU negotiators for this period to be prolonged.

It is absolutely vital that sufficient time is granted to allow whatever is finally agreed to bed in. A ‘cliff edge’ could cause the kind of shock which would take many years to recover from.

Keep costs under control
The sector is already facing burgeoning costs from the introduction of the National Living Wage, auto-enrolment, and a whole host of other regulatory changes. In addition, it is generally agreed that Brexit itself could add cost to all sectors of the economy as input prices and inflationary pressures take hold - and indeed we are seeing the early signs of this.

Food and drink is one of the most regulated industries of all. It is vital that the government does not see the repatriating of regulatory responsibility as an opportunity for wholesale change.

Certainty on subsidy
Farmers are resigned to living with less subsidy when the relatively short ‘guarantee period’ under the current CAP regime expires. But it is important that they know sooner rather than later what kind of regime will replace the CAP and in what form and the level of support available.

One could argue that the sector is currently in something of a state of paralysis, unable to make any kind of long-term investment decisions because of this uncertainty. We cannot afford this state of limbo to continue for another three years – an early guide to what will come next is vital.

Disclaimer: Please note this article is provided for your information only. Whilst every effort has been made to ensure its accuracy, information contained herein may not be comprehensive and you should not act upon it without seeking professional advice.
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