British agrifood exports to the European Union have dropped by nearly £3bn a year since Brexit, according to a trade think tank.
Regulatory divergence and high trade costs were behind a fall of more than 16% in exports of agricultural and food goods to the EU on average in the three years since the UK left the bloc compared with the three years before then, a report by the Centre for Inclusive Trade Policy (CITP) found.
This amounted to £2.8bn fewer exports each year heading from Britain to the EU’s single market.
New documentation requirements and physical checks at the border have caused friction between the two markets since Britain officially left the bloc in 2021. The CITP research found trade flows had showed no signs of returning to previous levels since then.
Businesses currently moving certain plant and animal goods considered medium and high-risk need costly export health certification, signed by vets.
These requirements were introduced by the EU on British exports at the start of 2021. And after a three-year delay, Britain imposed the same controls on European goods in April this year.
The food industry has urged the Labour government to go ahead with its pre-election promise to secure a veterinary deal, known as an SPS agreement, with the EU to ease trade and lower costs.
However, little progress has been made, with both sides recently keeping quiet on the possibility of such a deal.
Traders also now face higher customs requirements, as well as physical checks of their goods at the border, all of which contribute to increasing costs.
The CITP report said many businesses found the new red tape for both imports and exports to be a “major obstacle” for their operations, hindering growth.
Sean Ramsden, CEO of exporter Ramsden International, said the company’s business with the EU since Brexit was “down by a third – and that’s being generous”.
Ramsden also extended the lead time to ship exports to the bloc from around three days to three weeks to accommodate for the additional red tape.
Read more: As exports decline, what’s going wrong in the UK food trade?
“The reality is there has been significant drop-off, particularly for micro, small and medium enterprises (MSMEs) trading with the EU product of animal origin, food, drink and plants, because of the new requirements”, added Marco Forgione, director general at the Chartered Institute for International Trade & Exports.
“We’ve had conversations with counterparts in the EU, food producers, who themselves are deciding whether it’s worth continuing to trade with the UK because of the new requirements at the border.”
The CITP report also found there had been “significant divergence” between the UK and the EU’s regulatory landscape, with the UK tightening rules on animal welfare, while Brussels introduced stricter standards across packaging rules and pesticides use.
“Before Brexit, deep regulatory harmonisation facilitated the development of highly integrated supply chains within and between agri-food businesses,” the report said. “In EU trade terms, the UK is now classified as a ‘third country’, imposing a new set of regulatory barriers on UK traders.
“To lessen these barriers, the UK government has stated it will pursue a new Sanitary & Phytosanitary (SPS) agreement with the EU. As UK and EU agri-food regulation was previously harmonised to create frictionless trade, a first step in this negotiation is to take stock of the divergence that has taken place.”
The post-Brexit trade deal, also known as the UK-EU trade and co-operation agreement (TCA), is set to be reviewed next year.
Forgione said: “What I’m hoping to come from that will be a clear ambition from both sides to address where there have been problems. And one of the key problems is a reduction of trade and trade flow of UK product into the EU.
“We don’t want to see the EU producers either finding that they don’t want to trade with the UK. So it’s on both sides’ interest to try and seek resolution.”
He added: “There are significant issues that need to be addressed, but even under the terms of the TCA as it exists, there is more that could be done to build trust and assurance in the supply chain to enable access to markets of the UK’s brilliant food and drink manufacturers.”
Meanwhile, it is estimated that Donald Trump’s threatened tariffs on all US imports could hit the UK’s transatlantic-trade as badly as Brexit affected trade with the EU, a leading think tank has warned today.
Trump is threatening tariffs as high as 10%-20% – with even steeper rates for goods from China, Mexico and Canada – rivalling the scale of non-tariff barriers that Brexit imposed on goods sales to the EU, according to a new study by the Resolution Foundation.
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