Finding a Brexit pathway: “Exporters need clarity on trading position,” warns FDEA director as deadline looms

30 Jan 2019 --- UK exporters desperately need clarity on the trading position they are facing as Britain accelerates towards leaving the EU. And while the UK Government is still trying to trash out a Brexit deal that will be accepted by MPs and European leaders, the Director of the Food & Drink Exporters Association (FDEA) is growing increasingly concerned over the lack of progress. At the same time, exporters are finding themselves “planning for something that may not happen,” with expensive no-deal contingency plans. This is very frustrating for UK businesses trying to navigate their way through and second guess what the Brexit outcome may be.

Speaking with FoodIngredientsFirst during the ISM trade show in Cologne, Germany, yesterday, Sandra Sullivan MBE, Director of the UK FDEA, explains the urgency for UK trading exporters who are hugely susceptible to the trading challenges of a “no-deal” scenario. She says that clarity has to be “right at the top of the list” as exporters need to understand what the trading position is going to be as Europe is, by far, the biggest market for British food and drink. 

This comes as UK Prime Minister Theresa May is preparing for further talks with European leaders following yesterday’s House of Commons (HoC) vote where UK MPs backed “seeking alternative arrangements” to renegotiate her Brexit deal which includes replacing the backstop. 

Sandra Sullivan MBE, Director of the UK FDEA at ISM 2019“Particularly at the moment when the clock is ticking, trading exporters need to understand what the trading position is going to be. Europe is by far the biggest market for food and drink: about 70 percent of our exports to the EU. It is vital we are able to continue to trade as we do now,” Sullivan says. The food and drink sector has certain issues that other sectors don’t face. Some obvious ones include shelf-life; a lot of products cannot be exported beyond Europe.

“In terms of what a ‘no-deal’ Brexit will bring, unfortunately the only thing that people can plan on, if we crash out with no deal, is that the Government has issued papers on what that would mean and what the implications would be for companies. Issues like needing to make sure you are registered as an exporter to the EU and having a European importer on your packaging. These are all things that will become a huge deal overnight if we have a ‘no-deal’ situation.”

If the EU doesn’t have flexibility built into that, legally products shouldn’t be going [to the EU] beyond March 30, she says.

The meat and dairy sectors are particularly concerned about high tariffs, according to Sullivan, who says that for them losing the European market would be “disastrous.” 

“Also, logistics remains an issue,” she continues. There are not enough trucks, not enough drivers, as well as ports not being able to cope with new systems –  these are all risks. “For food and drink, all we can do is keep lobbying government and keep passing on concerns. We sit with the Department for Environment, Food and Rural Affairs (DEFRA) and the department of trade, but all they can plan is for a no-deal since there is no clarity.”

“We do find them very receptive to what we are saying. The government has got a lot of civil servants in many departments and pulled people from other sections to help support. But at the moment, it is all planning for something that may not happen, and that causes a lot of frustration and the costs that brings to companies,” Sullivan notes. 

British food and drink innovation – making the most of opportunities 
On a more positive note, Sullivan points out that another important aspect for UK exporters is to emphasize the innovation going on within the UK food and drink sector. Innovative products that tap into some of the key industry and consumer trends are plentiful and the UK has big potential to export on-trend and typically British products that appeal to consumers all over the world. 

“As markets become more middle class and affluent, supermarkets that become more prime supermarkets, start catering towards imported foods, including typically British products. These include cheeses, shortbread and beers,” explains Sullivan. However, the UK is particularly innovative. “We innovate more food and drink products than any other country each year and it’s that message we need to get out to the world.” 

“We create new products and have good ideas. We are also very on-trend, with more and more companies that have vegan, free-from or offer functional foods. Those kinds of companies need a market and would always start in Europe. We would never recommend that they start their exporting journey at the moment by heading off to the US. Although we speak the same language, it is a very complex market and building your confidence in exports first is a good way of doing things,” she adds.

“We are trying to beat the drum to alert companies they need to be aware of issues such as registering as an exporter, but everyone is hoping there will be a deal and that common sense will prevail,” Sullivan concludes. 

Earlier this month, MPs massively rejected the proposed Withdrawal Agreement and Political Declaration with just 202 members voting in favor. Now a majority of MPs have said that they would support a deal with changes to the backstop, combined with measures to address concerns over Parliament’s role in negotiations in the future relationship with the EU. 

“It is now clear that there is a route that can clear a substantial and sustainable majority for leaving the EU with a deal. We will take this mandate forward and seek to obtain legally-binding changes to the Withdrawal Agreement that deal with concerns on the backstop while guaranteeing no return to a hard border between Northern Ireland Ireland,” May said in the HoC yesterday. 

MPs voted 317 to 301 in favor of replacing the backstop – which has been a major issue of contention. The backstop is designed to avoid a hard border in Ireland in the event of “no-deal” scenario.

Precisely what happens next in terms of more negotiations remains to be seen as the EU has previously said that it will not change the legal text agreed with May. 

Any revised deal would then need to be brought back to the HoC for another vote. 

By Gaynor Selby and Robin Wyers