Food for thought: Brexit and the Agri-food sector in Ireland

Nov 18, 2020

The agri-food sector forms the backbone of Ireland’s economy and cross-border trade. After the end of the transition period – regardless of the outcome of the talks – new regulatory and customs requirements are going to be a reality for trade with or through Great Britain. Threats of a lack of supplies in Northern Ireland supermarkets, and news of disruption and delays to supply chains in Ireland have hit the headlines. In our latest piece, we take a look at why this sector is so important in Ireland, the Brexit impact on the sector, and what can you do to prepare now.

‘Agri-food’ in this brief refers to primary agriculture, forestry, and fishing, as well as the food, beverage, fish, and wood-processing industries.

Why is this sector so important in Ireland?

The agri-food sector contributes significantly to Ireland’s economy and cross-border trade. The shared land border between Ireland and Northern Ireland has resulted in the creation of a highly integrated agri-food sector on the island of Ireland, with goods being traded and/or processed across the border on a daily basis. Additionally, the UK is Ireland’s largest market for food and drink, with 38% of Ireland’s agri-food exports (worth €5.5 billion) destined for the UK every year. This results in the Irish agri-food industry having a higher dependence on the UK market when compared with other sectors in Ireland.

A no-deal Brexit could mean high tariffs and quotas on Irish produce when it is imported into the UK, meaning the price of Irish produce to the UK consumer could increase dramatically.   

 

How will the Brexit outcome impact the agri-food sector?

Agri-food businesses are now being urged to prepare for two scenarios: a ‘no-deal Brexit’ on default WTO trading terms, or a limited ‘Free Trade Agreement’.

Both scenarios would be disruptive. A ‘no-deal Brexit’ will be significantly disruptive, as it will bring the introduction of tariffs and quotas on trade from Ireland, into and out of the UK. A limited Free Trade Agreement between the EU and UK may mean no tariffs or quotas on goods; however, certain agri-food products moving between the two countries will still have to go through thorough regulatory compliance checks and controls on imports for safety, health, and other purposes, alongside customs declarations.

For example, as there is a high volume of bilateral trade between Ireland and the UK in animal products in particular, the disruption to existing trade flow through tariff barriers, or other increases in costs, would reduce the overall value of these markets. In a no deal scenario, the potential impact for important sectors could include a hike in tariffs, where beef exports could be subject to tariffs of up to 72 percent, dairy exports could be subject to tariffs of 40 per cent, and poultry exports could be subject to tariffs of 37 per cent.

What will change for the sector from 1 January 2021?

From 1 January 2021, there will be changes for the Irish agri-food industry with new customs and regulatory requirements (including SPS checks) for importers and exporters of agri-food products, as well as export certification and other requirements in respect of movement of goods to, from, and through Great Britain. Both short-term and long-term impacts will be felt in the areas of compliance with EU food law, regulations and standards, border controls and certification, and access to markets. Under the Protocol on Ireland/Northern Ireland, Northern Ireland will continue to follow the EU’s safety standards for goods so that there will be no need for regulatory checks on goods crossing the land border into Ireland. However, SPS checks will be carried out on some agri-food products that move from GB to NI.

 

What are ‘SPS checks’?      

Sanitary and phytosanitary (SPS) checks are the main checks carried out on plant and animal products to protect humans, animals, and plants from diseases, pests or contaminants. These measures were laid down by EU legislation to reduce or eliminate the possible risks of animal, plant, and public health threats, as well as animal and plant diseases being introduced into the EU by goods coming from non-EU countries.

SPS checks involve different control systems from customs checks. In this process, customs staff will stop the goods, but their documents, inspection and clearance are carried out by the Food Safety Authority or other relevant agencies. One of the very serious challenges is that SPS goods travelling across to Great Britain (in either direction) will be regarded as having left the EU. Traders will need to register for TRACES (Trade Control and Experts System) by applying through the Department of Agriculture, Food, and the Marine and complete declarations for all consignments of animal products going to Great Britain or going to another EU Member State through Great Britain.

The requirements for plant products are less stringent, but again, registration and passporting of consignments will be needed.

EU Food Law

EU food law applies to all food sold within the EU, in order to uphold a high standard of health and food safety. Where food is sourced or manufactured outside the EU, the onus to ensure compliance with these laws falls on the importer, who must ensure that all standards are upheld.

However, following the UK’s withdrawal from the EU, EU food law will no longer apply in the UK after the transition period, and in the absence of a deal there will be new and potentially different UK rules applying to food products exported to the UK.

Adding further complexity to this situation is Northern Ireland’s position under the Protocol on Ireland/Northern Ireland, which will for the purposes of food law have to follow EU rules starting 1 January 2021, even if goods have been introduced into the market before the end of the transition period.

Some of the new requirements will be of the following:

 

SPS goods imported into Ireland from UK

SPS goods exported from Ireland to the UK

Northern Ireland

Key point

Irish distributor / reseller will be treated as the ‘importer’ into the EU with full responsibility for abiding by EU food law

Exporters from Ireland to UK are urged to check UK certification requirements that will apply to specific products

Food shipped from GB to NI will be treated as imported food and may be subject to customs and regulatory checks prior to entering NI. For Irish food businesses, there will be no change to the current practices for trade in food between Ireland and Northern Ireland.

Labels

Must display name and address of an EU-based food business operator

Must display name and address of a UK-based food business operator

Foods from NI must be shown as “United Kingdom (Northern Ireland)” or “UK(NI)”

Origin labelling

Labels need to clearly distinguish foods as being of “non-EU origin”

Labels will clearly need to specify that foods originated from an EU country

Food produced in NI would be considered as EU-originating food

Certifications

Certifications issued by UK authorities no longer valid. Certifications issued by EU authorities will required

Certifications will need to be issued by UK-based authorities

NI Food Chain Certification applies

Health identification mark

Food products of animal origin (POAO) from the UK will have to switch from the “EC” abbreviation mark to a 2-digit ISO country code, as they will be treated as third country goods

Food products of animal origin from the EU will continue to use their EU mark

NI originating foods will be treated as EU-originating foods

 

What can you do to prepare?

Business that are planning to import or export animals, plants, or products of animal or plant origin from or to Great Britain (i.e. UK excluding NI) from 1 January 2021 must be registered with their respective agriculture authorities. Importers based in Ireland and NI must also be registered on TRACES, an EU Commission system for the electronic completion of documentation required for imports of certain consignments from third countries. UK-based importers will need to be registered to use the new “IPAFFS” system.

Business can also take the following practical measures to prepare:

  1. Build awareness of the all region-specific rules coming into operation from 1 January 2021
  2. Analyse your supply chain, and identify any element of the product that originates in GB or NI
  3. Assess whether any new certificates, authorisations or registrations will be required to import that product into Ireland after 1 January 2021
  4. Identify what the customs/tariffs position may be for a product
  5. For exports to the UK, assess whether any new certificates, authorisations or registrations will be required under new UK laws
  6. Prepare for any new technical requirements, including in relation to rules of origin and labelling
  7. Review existing contracts to ascertain where the responsibility for “importing” compliance lies, and therefore the liability for maintaining import duties or tariffs
  8. Assess readiness for increased customs costs and import VAT implications
  9. Talk to a customs agent or upskill in the area of customs to manage the additional customs declarations and paperwork necessary

 

Further Guidance