Trade Bill

Written evidence submitted by British Sugar (TB21)

Introduction

British Sugar is the only company that produces sugar grown in the UK. This briefing provides information on the British beet sugar industry and outlines what Brexit means for the industry and what we would like to see from post-Brexit trade policy.

The British beet sugar industry is over 100 years old and is a British success story:

1. A significant employer in the East of England, with approximately half of the UK’s sugar demand from sugar beet grown here in the UK.

2. Employing 1,400 people across four factories in the East of England with a total of 9,500 jobs supported across the beet sugar value chain.

3. A supply chain concentrated in rural areas with 3,500 growers based across over 75 constituencies.

4. In 2014/15 British Sugar paid farmers received £317 million in receipts and the annual revenue generated by British Sugar’s workforce amounts to £720m per year.

5. An independent report by LMC found the UK has one of the most competitive sugar industries in the world. [1]

6. We have invested around £250 million in our advanced manufacturing plants over the past five years, making them ever more efficient, while continuously improving our use of raw materials.

7. Together with our growers we have driven sugar beet yield increases of 25% in the last 10 years and 50% in the last 3 decades.

The British beet sugar industry and Brexit

8. This is a particularly important time for the British beet sugar industry. The current EU sugar policy was dismantled in October, meaning the UK is no longer restricted in the amount of sugar we can produce. This creates several opportunities for the industry, with potential new customers in the UK, EU and worldwide.

9. The British beet sugar industry can prosper after Brexit – so long as UK trade policy involves appropriate measures to allow it to compete with the rest of the world on a level playing field.

10. Outside the EU, we would like to see:

a. Reciprocal trading with the rest of Europe – so that if the EU imposes tariffs on British grown sugar after Brexit, the UK would look to impose an equivalent tariff on European sugar

b. External tariffs purely to the extent necessary to make up for any subsidy given to cane sugar producers by foreign governments

What this means in practice – Trade arrangements after Brexit

11. We believe that the British beet sugar industry adds substantial value to the UK economy – for example in 2014/15 the total revenue generated by British Sugar’s workforce amounted to £720m. The industry adheres to high standards which are valued by both the Government and consumers. We want to ensure that these standards are upheld, and that the import arrangements agreed by the UK post-Brexit strike a fair balance between domestic and third country supplies.

12. We would expect any import concessions granted as part of trade deals to be matched by reciprocal export opportunities for UK sugar into those markets.

13. There are also a number of countries where we believe the Government could help open up export markets for us by reducing white sugar import barriers. These could include Canada, the US, Algeria, Russia and Central Asian region, Egypt, China and Saudi Arabia.

Key points of note to British Sugar in the Bill

Clause 2

14. We recognise that this Bill relates only to trade agreements that the UK has signed before exiting the EU, does not cover future trade deals, and will be used to implement non-tariff provisions. We support the Government’s overriding intention to maintain continuity by replicating existing trade as closely as possible and believe that this is the best means by which to provide certainty to business.

15. However, there is scope for trade partners to seek changes to current terms while evaluating the net trade benefit of replicating the existing EU framework. Before making any changes or concessions to the existing trade arrangements, we would therefore ask the Government to consider their effects on the existing UK sugar market structure, and to make sure that inadvertent damage is not caused to the homegrown industry.

16. We believe that scrutiny of any substantive changes to existing trade deals should include consultation with representatives of sectors or industries likely to be impacted, and for the process to be transparent to limit the potential for uncertainty.

Clauses 5 & 6

17. We support the Government’s commitment to "protect our businesses against unfair anti-competitive practices" (HMG, Future Customs Arrangements, 15 August 2017, p 5) and recognise the requirement of the creation of an independent vehicle to enforce trade remedy measures.

18. Subsection (2) of Clause 6 states that the advice, support and assistance requested under subsection (1) may include, among other things, analysis of trade remedies imposed in other countries and how these affect producers and exporters in the UK. We believe that it is important that the Government is able and willing to use trade remedies as necessary. With respect to the sugar market, in this year alone there have been pertinent examples of trade remedies being used:

a. The US Government used its domestic trade remedies legislation (both anti-dumping and countervailing duties) to control ‘dumping’ of Mexican sugar

b. The Chinese Government used its domestic trade remedies legislation to apply safeguards against all imported out-of-quota sugar, having introduced an import licensing regime only three years ago

c. Brazil used the threat of a WTO Dispute Panel to force Thailand to change its domestic sugar support policy to eliminate export cross-subsidisation 

19. We also agree with the Government’s intention to consult widely on the Trade Remedy Authority, and believe that this is a necessary component in successfully developing a cohesive framework for the TRA.

20. We also see benefit in ensuring that there is a presence on the TRA from the agricultural sector.

January 2018


[1] LMC International, global sugar industry rankings, 2016.

 

Prepared 30th January 2018