What does the EU’s groundbreaking new regulation of the food sector mean for a post-Brexit UK?
Tom Wills, Policy Advisor, looks at the implications of the forthcoming EU law on Unfair Trading Practices for UK businesses and recommends some next steps for the UK government to take.
European Union leaders have agreed the final text of a new law aimed at tackling unfair trading practices in food supply chains. This will go a long way to ensuring that the farmers and workers that produce our food are able to get a fair deal and has been welcomed by groups across the political spectrum.
The UK’s news cycle is dominated by questions of Brexit process. However, for an agenda that has been championed by the European Union, unfair trading practices are as close to Brexit-neutral as it gets. Regardless of what the UK/EU relationship will look like over the next few years, the UK government should legislate to support fair and efficient supply chains – and this Directive provides an impressive model on which to base such legislation.
In a previous blog I introduced the EU Directive on Unfair Trading Practices and explained what it is, who it aims to support and how it works. To gain a better understanding of the Directive itself, I recommend that you read that blog first, then come back to this one.
This blog will tackle one specific question: what implications could the new law could have on UK businesses, given the unique situation of Brexit?
In the event that the UK leaves the EU before July 2021 (whether without a deal or after a transition period), it will be treated in exactly the same way as any other non-EU country under the terms of the Directive.
Specifically, any UK farmer exporting food to the EU who is being subjected to illegal practices by their buyer will enjoy the same protections as an EU farmer and would be well-advised to make a complaint to the enforcement authority in the country in which the buyer is based. Given that the UK exports $18bn of agricultural exports to the EU, this is significant.
Additionally, any UK food importer that is buying agri-food from an EU supplier will fall within the remit of this law and therefore will have to ensure that its buying operations comply with the terms of the Directive.
Many UK food businesses have international supply chains, so the EU’s demonstrated support for fairer forms of trade should be welcomed. Businesses and business associations should consider how they can educate themselves about the detail and implications of the law so that they can use its protections (if they are suppliers) and ensure that their operations are compliant (if they are buyers). Of course, many businesses operating in the middle of a supply chain, such as a processor or food brands, will be both buyer and supplier.
The other scenario is that the UK’s Brexit process is in some way delayed, meaning that the UK remains obliged to comply with EU law (including, of course, this Directive). The Directive – which UK MEPs and UK government representatives have supported and helped shape – carries a transposition period of two years, which means that the provisions have to be inserted into national law within that time frame. There is then a six-month window in which the law needs to be brought into force.
If that doesn’t happen for any reason (such as an extension to the transition period contained within the Withdrawal Agreement) then the UK will have to follow the terms of the Directive: bringing through laws establishing a UK enforcement authority to tackle unfair trading practices along the whole supply chain.
What the UK government should do
Regardless of the twists and turns of Brexit, complementary domestic legislation on Unfair Trading Practices is the appropriate move. This would minimise regulatory divergence with the EU27 (therefore preventing the risk of trade displacement) as well as avoiding the politically embarrassing situation where UK farmers would enjoy greater protections from the EU than the UK government offers. Since the UK Groceries Code Adjudicator already performs a similar (albeit more limited) function to the mooted national enforcement authorities, this would not be a huge departure from the status quo and would re-establish the UK as a world leader in supply chain fairness.
Christine Tacon, the UK’s Groceries Code Adjudicator
A quick and simple way of doing this would be for the government to amend the Agriculture Bill that is currently making its way through the House of Commons.
The Bill proposes to give the government the power to tackle unfair trading practices between farmers and the ‘first purchasers’ of agricultural products. This is piecemeal regulation, picking at the edges of the problem when a more comprehensive approach (in the EU model) is needed.
Green MP Caroline Lucas has proposed that the Agriculture Bill could be amended to better support fair supply chains
Michael Gove, as Environment Secretary, should accept amendments 45, 46 and 47 proposed by Caroline Lucas MP (see page 27 of this document) to the Agriculture Bill that is currently passing through the Houses of Parliament. These would have the effect of giving the government the power to bring in comprehensive regulation that would cover the whole of the agricultural supply chain. This is demonstrated in the below diagram:
The UK should ensure that it supports fair and sustainable supply chains, giving customers confidence that their food doesn’t have the hidden ingredient of exploitation. The Groceries Code Adjudicator, established in 2013, was seen as world-leading upon its introduction. However, the EU has now gone further – and the UK should follow.
Tom Wills is Policy Adviser at Traidcraft Exchange. @thomasrhwills