Supplementary memorandum submitted by
the Food and Drink Federation
FDF ENLARGEMENT SURVEY—"WILL ENLARGEMENT
AFFECT YOUR BUSINESS"—FEBRUARY 2004
SUMMARY
In February, FDF conducted a survey of members'
views on EU Enlargement. On balance, respondents seemed generally
positive about Enlargement and most saw potential benefits for
their business from the process. Most respondents also expressed
concerns about Enlargement, but these were largely regarding the
Commission's ability to maintain food production, processing and
safety standards, and protect borders, as opposed to fundamental
objections to Enlargement itself. Very few respondents had any
concerns regarding administrative, trade facilitation or customs
issues.
It is clear that many FDF member companies have
already been involved with the accession states for a number of
years. FDF is unable to estimate the scale of this involvement
as members' investments decisions are commercially sensitive.
In addition, as FDF members represent the manufacturing industry
in the UK, it may be difficult to get the full investment picture,
not least when major investment decisions are made outside, and
with little reference to this country.
BACKGROUND
On 24 March 2004, FDF is due to give oral evidence
on "Agriculture and EU Enlargement" to the Environment,
Food and Rural Affairs Select Committee (EFRACOM). The Committee
is interested to know what opportunities and/or threats UK manufacturers
think enlargement poses for their businesses. In order to prepare
for this session this survey was sent out to all FDF members on
25 February asking the following questions:
— What opportunities do you consider
EU Enlargement offers your business?
— What threats do you consider EU Enlargement
presents to your business?
— What administrative, trade facilitation
or customs issues are you concerned about?
— What specific food safety issues
do you think require attention?
E&ITP received 21 written responses to this
survey.
Respondents cited the following key benefits of
enlargement:
Expanded export markets—Approximately
half of all respondents said that enlargement of the single market
would pose benefits for the export arm of their business. Many
believe that the market for UK processed/value-added exports will
expand significantly as disposable incomes in new member states
increase.
Cheaper and more plentiful inputs—Four
respondents said that enlargement would increase the supply of
agricultural raw materials for processing. Four others said it
would lead to cheaper input prices. Three respondents said enlargement
would have a positive effect on the agriculture and processing
workforces as they expect many Eastern Europeans to come to the
UK in search of work. (Two respondents thought that an increasingly
foreign workforce would lead to language difficulties on-site.)
Simplified trade procedures—Four
respondents said enlargement would help to simplify trade procedures
with the new member states.
Respondents expressed the following key concerns
about Enlargement:
Enforcing food production and safety standards—Approximately
half of all respondents said they were concerned about whether
the Commission has the ability to ensure that existing EU food
production and safety standards are met by the new member states.
The key concerns here being that all UK food imports must be safe
and all EU producers must be made to meet the same standards and
pay the same compliance costs. UK manufacturers will do all they
can to ensure all food imports from new member states are legal,
reliable, fully traceable and safe as they are not prepared to
jeopardise their reputation.
Increased competition—Six respondents
expressed concerns that new member state producers may be able
to undercut them due to cheaper labour, land and input costs.
Three respondents were concerned that these competitive advantages
could lead to a significant outflow of investment from the UK
and a subsequent reduction in UK-based jobs.
Maintaining border control—Four
respondents expressed concerns about whether the Commission has
the capacity to prevent illegal imports coming through the new
member states.
Increased bureaucracy—Four respondents
were concerned that enlargement could slow down decision-making
processes in Brussels even more, especially when it comes to important
decisions over the budget and further CAP reform.
Increased sugar prices—Two respondents
expressed concern about the imminent increase in sugar prices
in new member states and the negative impact this would have on
margins.
A number of other specific concerns were raised
by respondents but as these comments were not registered more
than once they have not been mentioned in the discussion above.
For more detail about specific concerns please see Annex 1: Detailed
Results of the Enlargement Survey.
The Food and Drink Federation
March 2004
Annex 1
DETAILED RESULTS OF THE ENLARGEMENT SURVEY
| Benefits of Enlargement
| No# |
| |
| Expansion in markets, especially as the income of accession countries increases
| 10 |
| Reduce complexities surrounding trade with accession countries
| 4 |
| Increase supply of agricultural raw materials, especially corn and wheat
| 4 |
| Reduce prices of raw agricultural materials
| 4 |
| Increase the labour pool of cheaper labour |
3 |
| Improve profitability generally | 1
|
| Economic benefits of standardised food law |
1 |
No# = Number of companies expressing this view.
Concerns Regarding Enlargement
| No |
| |
| Concerned that the Commission can enforce existing food production and safety standards in acceding states, especially with regards to GMOs, pesticides, heavy metals, mycotoxins and regulation alignment weights
|
9
|
| Concerned that manufacturers in accession states will be able to undercut UK producers
| 6 |
| Concerned that Enlargement will further slow down EU decision-making, especially with regards to budget and future CAP reform decisions
|
4 |
| Concerned that the Commission must prevent illegal imports and facilitate exports
| 4 |
| Concerned that manufacturers may leave the UK in search of cheaper production and labour costs in the accession countries. This would be a threat to UK jobs.
|
3 |
| Concerned about the language difficulties that will arise with an increasingly foreign workforce
| 2 |
| Concerned about the increase in sugar prices
| 2 |
| Concerned whether the EU has the resources to swiftly respond to inevitable problems
| 1 |
| Concerned that acceding countries may find it difficult to export sugar containing processed goods.
| 1 |
| Concerned that controls against stock piled sugar in acceding countries are effectively applied and prevent excess stocks flooding back into the EU15
|
1 |
| Concerned about training of laboratory staff in accession countries
| 1 |
| Concerned about the increased burden Enlargement will put on the restitution budget
| 1 |
| Concerned about the credit worthiness of business partners in the accession states
| 1 |
| Concerned about intellectual property enforcement
| 1 |
| Concerned about how the Inward Processing Relief (IPR) will operate
| 1 |
| Concerned that the Commission can enforce existing environmental standards in acceding states
| 1 |
| Concerned Enlargement will exacerbate the UK trade deficit
| 1 |
| Concerned about confusion regarding the calculation of working stocks on the date of accession
| 1 |
| Concerned about the slow establishment of mechanisms for the payment of non-Annex 1 refund in accession states
|
1 |
No# = Number of companies expressing this view.
The Food and Drink Federation
March 2004
| |
| 
