The UK left the EU on 31 January 2020, entering a transition period during which the UK and EU continue to act for most purposes as if the UK were still a Member State. That period is due to end at 11pm (UK time) on 31 December 2020. However, uncertainty remains about what, if any, agreement will be in place at the end of the transition period.
Maintaining market access post-transition is a major challenge for the food and drink sector. One of the biggest issues facing producers in Great Britain is food labelling and standards. This briefing summarises the changes producers will need to make, to ensure regulatory compliance for products moving from Great Britain to the EU (and Northern Ireland). Most of these issues will arise regardless of what is agreed in any trade deal.
The current framework
EU food labelling rules apply to all food placed on the EU market, regardless of the place of production. The law on consumer information on food products is primarily contained in Regulation 1169/2011/EC on the provision of Food Information to Consumers (FIC).
The FIC provides that the food business operator (FBO) responsible for the food information is the operator under whose name or business name the food is marketed or, if that operator is not "established in the EU", the importer into the EU market. An FBO must adhere to detailed requirements, including ensuring the product packaging or label includes the FBO's name or business name and address. At present, a UK business selling pre-packaged foods in the EU can be the FBO and can put its own name and address on the product. Products shipped to the EU (or at least in the distribution chain) before the end of transition can still lawfully be sold afterwards, even if they only show the UK address.
Under the Withdrawal Agreement, Northern Irish businesses will still be able to use their own name and address in the EU post-transition, as Northern Ireland will continue to follow EU labelling rules.
Labelling changes from 1 January 2021
Food and drink products exported from Great Britain to the EU will need to display the name and address of the FBO responsible for complying with the food information rules. This must be either an EU (or Northern Irish) address at which the British producer is established, or the name and address of the importer of the products into the EU / NI. The GB address of the producer will no longer be valid, and would mean the product could no longer lawfully be sold in the EU (whether it could no longer be sold in Northern Ireland is less clear).
If a British-based producer does not already have operations established in the EU (or NI), it will have to implement one of the following options to maintain market access:
- set up an EU / NI 'hub';
- engage an existing EU / NI distributor to act as an importer; or
- appoint a stand-alone EU / NI importer.
It is important to note that the concept of "established in the EU" is not defined in the regulations, and it has never been determined with certainty what is required. However, it is very unlikely that setting up a 'brass plate' subsidiary company in the EU or Northern Ireland, with no 'on the ground' personnel or commercial activities, would be sufficient.
British-based producers may therefore need to implement strategic changes to their corporate structures or supply chains in order to provide a valid FBO name and address. They should also review their product labels and implement any necessary changes to the FBO information.
British-based producers should also keep in mind that their products will no longer be able to be labelled as EU origin after the end of transition if they are going to be sold in the EU, as Great Britain will be treated as a ‘third country’ (i.e. a country that is not a member of the EU). Notably though, British-produced food will still be able to be labelled for sale in Britain as ‘origin EU’ until 30 September 2022.
In relation to organic products, it may not be possible for British-produced food to use the EU organics logo or label exports to the EU as organic, unless there is a deal on the EU and UK recognising each other's standards.
Other trade issues for the sector
In addition to these labelling requirements, further regulatory changes will impact British-based producers exporting to the EU, including:
- British-based producers that trade with EU member states will have to comply with the more onerous customs, excise and VAT procedures and rules that already apply to goods traded with non-EU countries. Full import and export declarations, and separate safety and security declarations, will therefore be required.
- Strict new border controls will apply specifically to exported animal and fish products, including the need to produce an export health certificate and (for fish) a catch certificate.
- Products will have to be shipped via an EU border control post, which must be given notice of their expected arrival.
- British-based producers exporting certain foods of animal origin into the EU (e.g. red or white meat, fish and fish products, or dairy and egg products) will need to ensure their business is 'listed' as an approved establishment with the EU.
- EU import controls on certain plants and plant products (such as root and tuber vegetables, leafy vegetables, most fruits and some seeds), including the need for phytosanitary certificates and potentially EU border checks, will also apply from 1 January 2021.
- Tariffs will be imposed on GB-EU trade unless a free trade deal is agreed.
We cover these border control issues for the food & drink sector in a separate post.
The road ahead
The food and drink industry is hugely important to the UK economy. It also represents Scotland's largest manufacturing sector, employing around 45,000 people. Recent figures quoted by Scotland Food & Drink suggest that approximately two thirds of Scottish food produce is exported to the EU. Combined with whisky and other drink exports, the annual value of Scottish food and drink exports to the EU (for 2019) was estimated at approximately £2.5 billion.
Protecting and growing that trade will require food & drink businesses to understand what changes they will need to navigate at the end of transition, including in vitally important areas where change is coming regardless of whether there is a trade deal.
We have produced a detailed checklist for businesses to assess how ready they are for the end of the Brexit transition period. More information on Brexit and how it will affect the status of EU law in the UK is also available via our Brexit hub.
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