Border friction and disruption
“The British Government has said that, in the event of a no-deal, they will waive all restrictions on imports. So, in order to ensure the free movement of goods, particularly through the channel crossings, they won’t impose any paperwork or any checks at the border for a temporary period.
“The assumption is that the EU would impose checks at their border, so goods coming in to Britain through Dover in theory get waived through, [and the] things going from Dover to Calais, particularly food products, products of animal and plant origin get stopped and are subject to sanitary and phytosanitary checks.
“The difficulty is that the same lorries and containers that go out are the ones that come in … If the lorry going out gets stuck at Calais and is in a queue waiting to be checked, that’s probably the lorry that at some point, once it has offloaded one container, is expected to take a different container back the other way. So, what we and the Department for Environment Food and Rural Affairs (Defra) are saying is there will be some disruption both ways, because the logistics traffic is subject to new checks and friction once it reaches the EU border. That potentially has a knock-on effect right down the supply chain.”
Food shortages and ingredients that might be affected
“In terms of shortages, it’s difficult to be very precise. It depends on which lorries get stuck and for how long.
“We know that we’re heavily reliant on imports, so things like milk powder, high-protein wheat, and fresh fruit and vegetables, particularly as we head into November, are the sorts of products you might expect to see problems with. Of course, milk powder goes into not only infant formula, but also confectionery. In any scenario where the flow of lorries is slowed substantially, which is what Defra thinks will happen, there will be effects on the supply chain, particularly of goods that are perishable.
“Stockpiling can mitigate the effect of that a bit, so you wouldn’t see it on day one, but you might well see it on day 14 and onwards, because most of our members say they can’t practicably stockpile for much more than two weeks.”
Tariff rate quotas (TRQs)
“The Government has announced a set of no-deal tariffs and, in doing that, they’re trying to balance consumer prices against the impact on industry. In most cases, they’ve also announced, alongside it, a TRQ, which says a certain amount of stuff can come in tariff-free before we move to impose the tariff. It’s like a flexibility mechanism. What they haven’t told us is how manufacturers will know when the TRQ is full or when the quota is used up. So once the quota is in place, people will want to export to the UK under that quota.
“[For instance if the quota is] 100,000t, manufacturers need to know when we’ve got to 90,000t and when it’s about to get triggered. They haven’t told us how we will find that out and they haven’t also told us how you get to access the quota. Is it first come, first served? Is there some sort of allocation between countries? It’s the details of how the flexibility mechanism around the tariffs mechanism will work [that are needed].”
“This includes issues such as whether or not products of animal origin will need to be exported on heat-treated pallets or whether or not the health mark that products of animal origin have to carry will be acceptable if it states ‘UK’ or ‘GB’.
“On both of those issues, it felt like we were making progress toward a resolution, but the resolution never got announced and it is now all on hold. These are technical questions, but it’s important if you’re an exporter of animal products to know what label you’re going to use and if you need to source additional heat-treated pallets.
“At the moment, the EU is just saying, ‘We’re not going to engage in that conversation because we’re waiting to see what happens with the UK Government’, but on things like labelling there’s quite a long lead time and October isn’t that far away.”
Food export barriers
“The best example is organics – where an EU organic certification mark is currently used. Exporters won’t be able to use that any more. We’ll have to create a new UK mark and then seek the EU’s approval to have it registered and we know that may take between three and six months.
“For any of those kinds of products, you’re likely to see them being sold back in trying to find domestic sales, so there could be quite big market distortions.
“Similarly, milk producers in Northern Ireland, who will suddenly find they face tariffs if they want to export that milk to the Republic of Ireland, will probably try and sell it back to Great Britain.”
Seamus Nevin, chief economist at trade body Make UK, told the Select Committee at the same hearing that “a no-deal Brexit would be nothing short of commercial suicide” and had already led to the loss of tens of thousands of jobs.