Non-Tariff Issues Facing ACP Horticultural Exporters To Be Addressed Within the Brexit Process
Developments around the Brexit process will carry a range of implications for ACP horticultural exporters under either a ‘Hard Brexit or ‘No-Deal Brexit’ scenario.
Developments under a ‘No-Deal Brexit’ will pose the most serious challenges for ACP horticultural exporters. This would be likely to leave unaddressed a range of administrative issues where policy cooperation could potentially reduce the cost increases and revenue loss effects of the UK’s departure from the EU customs union.
The most immediate areas of concern under these scenarios are:
The changes to customs administration arrangements for the movement of ACP horticultural products into the UK and EU27 markets resulting from the UK becoming a separate customs jurisdiction (Hard & No-Deal).
The administrative changes to the territorial coverage of existing certificates and authorisations (excluding phytosanitary certificate and private certification requirements) for placing products on the EU market which will need to remain valid for the territory being served (the EU27 or UK) given UK issued authorisations and certificates will no longer be valid for the EU27 market, while EU27 issued authorisations and certificates will no longer be valid for the UK market (Hard & No-Deal).
Failure to address this issue in areas where certificates and authorisations are currently required could lead to the denial of entry to the market (UK or EU, depending on the market for which the existing certificate or authorisation is valid).
The potential changes to the territorial coverage of existing SPS import inspection and approval processes (with this issue being particularly important for ACP horticultural exporters serving the UK market along triangular supply chains) and the systemic strains phytosanitary inspection service in the UK will be placed under given the scale of new demands for inspections which a ‘No-Deal’ or ‘Hard’ Brexit’ will give rise to.
This could adversely impact on the efficiency of the conduct of UK phytosanitary controls on ACP horticultural exports to the UK market, both those which take place directly to the UK and those which take place indirectly via EU27 member states (Hard & No-Deal), increasing the costs and reducing the value of cargoes delivered to final customers in the UK.
The potential disruptions to the flow of ACP horticultural products into the UK market resulting from the human resource, physical infrastructure and IT constraints on the operation of the UK’s border control services arising from the huge expansion of the number of inspections which will be required as a result of the UK’s departure from the EU customs union and single market.
This will increase costs and lead to income losses on short shelf life ACP horticultural exports, particularly those of exporters using triangular supply chains in serving the UK market) (Hard & No-Deal);
The acute shortages of heavy goods vehicles (HGV), licenced HGV drivers and even fuel which are likely to result from disruptions to trade flows under a ‘No-Deal Brexit’ scenario.
This could serve to increase costs and generate losses for short shelf life ACP horticultural exporters unless effective mitigation strategies are set in place (Hard);
The growing shortage and escalating costs of securing warehousing and cold storage space in the UK resulting from stockpiling in preparation for a ‘No-Deal’ outcome to the Brexit process and the rethinking of existing ‘just-in-time’ supply chains in both the horticulture sector and beyond (e.g. the dairy sector) (Hard & No-Deal)
This could lead to increased costs of accessing cold stores in the UK or even a complete absence of cold storage space and resulting wastage of products unless effective mitigation strategies are set in place.
The potential adverse effects of UK trade policy changes under a ‘No-Deal’ or ‘Hard’ Brexit scenario, arising from the UK’s abandonment of existing MFN tariffs on horticultural products.
This would be most severe for those horticultural products where current EU MFN tariffs are high and an entry price system is applied to imports from non-preferred 3rd country suppliers.
The UK’s currently proposed post-Brexit MFN tariff schedule would remove existing EU MFN duties on almost all fruit and vegetable imports with the notable exception of bananas and beans.
Individual ACP horticultural exporters will need to determine what impact this will have on their competitive position on the UK market in light of the current tariff treatment accorded imports from the main non-ACP competing suppliers.
It should be noted that while many of these issues are particularly urgent in the context of a possible ‘No-Deal Brexit’ on 31st January 2020 or 1st January 2021, many of these issues would still need to be addressed under a ‘Hard Brexit’ scenario in which the UK left the EU customs union and single market.
If the cost increases and revenue loss effects of the UK’s departure from the EU customs union are to be minimised ACP horticultural exporters will need to get to grips with those issues which will have the greatest effect on the functioning of the particular supply chains which they utilise in serving the UK and EU27 markets.