The impact of Brexit on the processed food and drink sector Contents

6Trade opportunities post-Brexit

Replicating existing EU trade deals

55.No one we took evidence from argued that the UK could avoid relying at least partially on imports as it does not have the capacity to produce domestically some of the products UK customers have grown used to all year round. 94 per cent of UK exports and 97 per cent of UK imports of food and non-alcoholic drink are to and from the EU or with countries that the EU has negotiated or is in the process of negotiating a trade agreement with.115

56.This has led many stakeholders to stress that it would be in both the EU’s and the UK’s interest to negotiate a trade deal as soon as possible and for the UK to replicate as many existing EU trade deals as possible, as they represent 10 per cent of all UK food and drink exports.116 The Food and Drink Federation identified Korea, Canada, South Africa, Mexico and Norway as key priorities for replicating existing EU trade deals as they are the top 5 five non-EU export destinations for UK exports through an EU trade deal.117

Opportunities for new trade deals

57.Many witnesses suggested that negotiating these new agreements would be an opportunity to improve existing export processes and tariffs118 but stressed that any new agreement should achieve mutual recognition at the very least.119 Witnesses also warned against lowering existing product standards as a result of negotiating new deals with non-EU countries.120

58.Although all witnesses welcomed the Government’s intention to negotiate new free trade agreements, some feared that it is already running out of time to do so before March 2019.121 UK businesses argued for certainty on future trade terms now in order to make long-term investment decisions.

59.Exiting the EU could be a unique opportunity to diversify the UK’s balance of trade towards new partnerships with non-EU countries and decrease the cost of some imports by agreeing mutually-binding reduction or removal of tariffs on certain goods.122 The Government pointed out that it is predicted that 90 per cent of global economic growth in the next two decades is going to be created outside of the EU.123 The Food and Drink Federation told us the UK was “massively” under-exporting, representing an opportunity to do much better in terms of exports to both non-EU and EU countries.124 The Government’s Food and Drink Action Plan was designed to increase UK exports and has the potential to deliver significant outcomes.125 Nevertheless, some witnesses suggested that the Government pursue these new opportunities whilst maintaining the same level of trade with the EU, rather than substituting it.126

60.We welcome the Government’s Food & Drink Action Plan and any other initiatives to boost UK food and drink exports. We believe this cannot be done without seeking a free-trade agreement with the EU as a priority given the sector’s current reliance on the EU as an export destination. The Government should also prioritise the roll-over of existing EU trade agreements to the UK and then focus on establishing new free trade agreements with third countries.

115 Food and Drink Federation, A New UK-EU relationship, Priorities for the food and drink manufacturing sector, July 2016, p4

116 Food and Drink Federation, Exports snapshot 2017, p4; Scottish Whisky Association BRF0018; Ferrero UK BRF0015, para 28; Wine and Spirit Trade Association BRF0011; Food and Drink Federation BRF0010, para 10; British Beer and Pub Association BRF0009; PAGB BRF0006, para 6.1; Confederation of Paper Industries BRF0002, para 13; International Trade Committee, First Report of Session 2017–19 - Continuing application of EU trade agreements after Brexit, HC 520, 7 March 2018