Brexit deal favorable for produce trade between EU and United Kingdom

For United Kingdom and European produce traders, the apple cart has not been upset after all.

More than three years after voters in the U.K. voted to leave the European Union, the terms of the separation are finally set.

The U.K. was originally scheduled to leave the E.U. by Jan. 31, 2020, but both sides agreed to extend negotiations until the end of 2020.

With the deadline fast approaching, the Brexit deal was agreed to on Dec. 24.
The deal will preserve duty-free and quota-free access to fresh produce and other goods between the U.K. and the E.U., but will introduce more paperwork for movement of people and cargo.

“I think in the last couple of weeks (in December), people had got to the stage where we thought that probably the chances of reaching no deal, which would see the U.K. and Europe sort of reverting to trading on WTO terms, were getting stronger and stronger,” said John Giles, a divisional director with Promar International, the consulting arm of Genus PLC. 

The sense of “brinkmanship” during negotiations was predictable but there was a sense of relief when the deal was struck, he said.

Giles said the 2,000-page document still needs to be ratified.

The deal came into effect on midnight Dec. 31, and Giles said Jan. 11 that there have been minor problems but no major disruptions in trade.

“The nub of the deal was that there was that there would be no tariffs and no quotas on trade between the U.K. and Europe,” Giles said. At the same time, more paperwork and customs declaration forms are now required.

“I think there have been some delays, while people get to grips with the new paperwork, but I think so far so good,” he said.

The main concern about a “no deal” had been higher tariffs and food inflation, because the U.K. is a net importer of fresh produce from Europe, he said. With the Brexit deal, those concerns have been averted, he said.

Labor effect

The effect of the Brexit deal on the movement of farm labor is less certain, Giles said.

“One of the reasons that the U.K voted to leave the E.U. was, not so much the issue of labor coming in from Eastern Europe, but uncontrolled labor coming in from Eastern Europe,” Giles said.

However, Eastern European labor is needed for U.K. farms, factories, health care and more.

“There have been big concerns about the restriction or potential restrictions on labor for the U.K.,” he said.

The Brexit agreement will allow a certain number of migrant laborers into the U.K. on a yearly basis. 

Ultimately, Giles said the U.K. would like to encourage migration of skilled workers to the country.

“In terms of labor, there’s still a number of issues,” he said. “Labor has been an issue in the U.K. for the last 20 years, and labor, so it’s not going to go away just overnight.”

There have been some efforts to encourage U.K. workers to find employment at farms, especially during the COVID-19 pandemic. Giles said those efforts didn’t get far.

“They found that people, even in quite difficult and challenging economic circumstances, didn’t always want to do that type of work,” he said.
Robotics and mechanization are growing areas of focus for U.K. farmers, he said.

Trade

With a Brexit deal on the books, Giles said the possibility of a U.K and U.S. free trade deal may grow.

“It seems to me that the path is clear and positive to carry on the U.K.-U.S free trade talks,” he said.

However, the trade priorities of President-elect Joe Biden may put those talks on the back-burner if he wants to first address simmering trade friction with China and Mexico, Giles said.