As if the pandemic and its fallout on global trade were not enough, UK businesses and consumers are also dealing with their special brand of Brexit-related headaches. The reappearance of borders – absent when the UK was a member of the European Union (EU) – has led to extensive and expensive paperwork for traders, delays and long queues for goods at the borders, and promises of permanent food shortages on store shelves.
Among the complexity of factors creating this problem, we highlight here those of particular relevance to trade in food products between the UK and the EU. The EU remains Britain’s largest trading partner with the UK importing about 30% of all its food from the EU. In that context, the problem for the UK is two-fold. Firstly, goods being traded between the UK and the EU must still meet the trade rules that Brexiters found so onerous, except now, they must also undergo customs formalities from which they had been formerly exempt in order to prove their compliance. Secondly, UK goods trade with Northern Ireland continues to operate within the rules of the EU Single Market.
The Northern Ireland Protocol
An integral component of the Brexit deal is preservation of the 1998 Good Friday Agreement that had ended the violence between Northern Ireland in the UK and the Republic of Ireland of the EU. The parties agreed to keep open the formerly violent land border between the two and avoid construction of any border posts reminiscent of The Troubles. To this end, the Brexit deal incorporated the Northern Ireland Protocol under which Northern Ireland would continue to follow EU rules on product standards.
Accordingly, for England, Scotland, and Wales, goods trade with Northern Ireland today operates just as if they are trading with France or Spain, for example, rather than another part of the UK. Required checks and inspections on goods entering Northern Ireland from these other parts of the UK occur at Northern Ireland ports.
To help UK retailers transition to this new regime, the EU and UK agreed to a grace period during which the rules would not apply. This grace period was initially scheduled to end on June 30, 2021, then both sides agreed to extend it to September 30, 2021. However, on September 14 (2021) the UK unilaterally announced that it was extending the grace period indefinitely and delaying other pending deadlines.
The Sausage Wars
The “sausage wars” illustrate the practical impact of Brexit and why the UK government felt pressured to take this step. In addition to requiring inspections of many food products entering from non-member countries, the EU completely bans the importation of some products, such as chilled meats. Under the terms of the Northern Ireland Protocol then, once the grace period ends, these products will no longer be available in Northern Ireland. British sausages, a breakfast staple, will no longer be available in supermarkets throughout Northern Ireland – a blow to suppliers and consumers.
With its unilateral extension of the grace period, the UK government is essentially seeking to put in place the Brexit it had naively hoped to have – special access to the EU single market. It has said that it wants to get rid of most of the border checks and to reduce customs procedures in order to allow goods to flow more freely. It also wants to remove the role the European Commission and the European Court of Justice have in overseeing how the protocol works.
At stake for the EU is the integrity of its Single Market. If former membership creates a “special relationship” allowing the UK to bypass its rules, this both undermines the efficacy of the rules and the reasons for current members to remain in the single market. The EU has said it is willing to explore “creative solutions” but will not renegotiate the agreement, to which both sides remain bound. It had initiated legal action against the UK which has since been put on hold with the hope of having both sides reach an agreement.
The “sausage war” is only a high-profile element of the day-to-day impact of Brexit on UK farmers, manufacturers, consumers, traders. New border paperwork requirements have added reams of paper and days to the process of moving a wide range of goods from the UK into the EU market, and vice versa. UK exporters are struggling to adjust and losing money. UK importers, retailers, and consumers are facing the prospect of permanent food shortages.
Countries create customs unions and single markets in order to provide a special trade regime with benefits for its members from which other countries are excluded. Now a non-EU member, the UK will have to adjust. Grace periods provide one solution precisely because of the enormity of the changes, which always require time for that adjustment. In the case of Brexit, this need is particularly great because the deal was concluded on December 24th, 2020 and took effect January 1, 2021. So, even as the new trade regime began governments and traders would have been just learning its provisions and figuring out the practical realities of implementing them.
Scottish fish exports into the EU illustrate that despite the challenges, the adjustments are not impossible. In January 2021, Scottish salmon producers reported that dozens of truckloads of fish had failed to leave Scotland on time. Confusion over the paperwork, the required extra documentation, and IT problems had contributed to the delays. Shipments were spoilt, contracts and customers cut, and prices reduced to the value of millions of pounds, the industry complained. Five months later, Scottish salmon farmers boasted of record exports to the EU. A taskforce comprising industry experts and government ministers worked to achieve significant reductions in the time needed to complete the Export Health Certificates. The result was an increase in salmon exports of 74% over the corresponding period the previous year.
While additional challenges remain in adjusting to Brexit, the Scottish salmon industry suggests that the energy and efforts of UK exporters are best utilized in adjusting to the procedures required of all non-EU members to show that their products still meet the EU standards. The UK government has the authority to determine the requirements for imported EU products. It has little or no room, however, to re-negotiate the Northern Ireland Protocol. Perhaps one solution is to make the sausages in Ireland?
I am a seasoned international trade and customs attorney, and policy adviser for various companies and governments with a demonstrated history of successfully developing and implementing sustainable and dynamic trade programs. I am experienced in creating partnerships with various business-support organizations to drive compliance and growth in the international market.