Brexit debate

Brexit could have ‘severe’ trade impact on food firms

By Michelle Perrett

- Last updated on GMT

Food manufacturers could face ‘severe’ consequences if Britons vote to leave the EU, warns a logistics provider
Food manufacturers could face ‘severe’ consequences if Britons vote to leave the EU, warns a logistics provider

Related tags: Eu, International trade

Brexit could have “severe” consequences for food manufacturers that trade with EU countries, as they could face delivery delays and customs barriers, a logistics supplier has warned. 

Tudor International Freight said that importing and exporting in the EU was currently a cheap and easy process.

However, there would be a more complicated customs procedure, with increased paperwork, if the UK were outside the EU, which could cause problems especially for food manufacturers with perishable foods. These would also be subject to VAT and duties.

“If you import from anywhere outside the EU there is a customs entry that is required,”​ said Adam Johnson, deputy md, Tudor International Freight. 

“There is a potential for delay and when sending food produce that has a sell-by date there is an opportunity for this to go wrong. Just two hours in the back of a truck can have an large impact on the quality of the product especially on perishable items.” 

Three possible outcomes 

Md at the freight company David Johnson said the UK could face three possible outcomes if the UK chooses Brexit on 23 June. 

He has  dubbed these the Norway, Switzerland and China scenarios.  

Johnson said the “most straightforward and favourable trading model”​ would be to follow the same one adopted by Norway, which, as a member of the European Economic Area has a free trade agreement with the EU.  

A Norway-style arrangement wouldn’t involve manufacturing companies paying duties or taxes when moving goods across borders,” ​he said.   “However, they would need to produce documents proving where the goods originated, to confirm that they weren’t eligible for duties. This is an increasingly costly task, given the ever-greater complexity of modern supply chains​.”  

Johnson said the second regime would result from the UK making a series of bilateral trade agreements with the EU, similar to the 120 treaties the  EU had with Switzerland. However, these still require customs clearance and are usually subject to VAT and import duties.  

China scenario​ 

Lastly, he said the China scenario would take effect if the UK left the EU after the official two-year withdrawal period without agreeing alternative trading arrangements.  

The system would involve us and our former EU partners granting each other access to their markets and charging the same import duties they levy on other World Trade Organization members with which they don’t have free trade agreements,” ​he said.    

“The 53 such agreements we currently have with other countries as a member of the EU would lapse if we left.The consequences of withdrawal for UK manufacturing companies trading with EU countries could be severe.”     ​ 

 

What might happen if Britons choose Brexit

  • The Norway scenario
  • The Switzerland scenario
  • The China scenario

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