UK/EU Trade Deal Reset
What is it?
The UK and EU have agreed amendments to the current trade deal agreed after Brexit to reduce friction across borders and increase trade. There are two main impacts from the deal for retailers; a new approach to food checks across borders and alignment on carbon taxes. The full agreement can be read here
What will change for imports and exports of food?
Currently food is subject to rigorous checks to protect against animal and plant disease and ensure public health known as sanitary and phytosanitary rules (SPS). This means certification by a vet or approved specialist of imports and exports and checks on paperwork and products at the border. This has led to considerable friction at the UK/EU border adding time and costs to supply chains. The UK has not quite completed rollout of SPS border checks following Brexit but these have been in place in the EU since 2021.
The UK Government has agreed to align almost all its SPS rules on production of food with the EU and in return the EU will drop almost all checks and requirements for certification of exports. There are a couple of categories, wine and fish which will still need supporting paperwork but for all other food checks will be removed.
When will SPS changes begin?
It will take some time before the current system is changed. There will be detailed negotiations between the UK and EU on alignment of food law, which is expected to take until the end of 2025 before an implementation period to remove current checks.
What does it mean for GB-NI transport?
As part of the Brexit agreement, Northern Ireland remained subject to EU legislation in food, environment and product safety meaning food moving from Great Britain was subject to checks. Controls were eased for food retailers when the UK and EU agreed the Windsor Framework. A specialist scheme (NIRMS) which for approved businesses reduced, not removed, export processes. This meant retailers still had to provide some supporting paperwork each time lorries moved in their GB-NI supply chains.
Working with members we had pushed Government to get comprehensive alignment with the EU in multiple areas to reduce the burdens of running a UK supply chain. The alignment of SPS rules and other food controls, such as organic designations, removes the need for checks between GB and NI and should make it significantly easier for retailers with UK supply chains.
Retailers will still need to comply with EU environmental and non food product safety regulations if selling in Northern Ireland. They will also still need to continue with customs declarations but overall it should mean a big improvement on the current system. Again, these changes will only be implemented once the UK and EU has agreed alignment on SPS rules.
What about fishing rights?
Access to fishing rights in UK waters was a contentious issue during the Brexit negotiations. The access for EU fisherman in the original was due to be reviewed in 2026 and then negotiated annually. UK fishing businesses were hoping to reduce the EU quotas but as part of this deal, fishing rights will be frozen at their current levels with no change until 2038.
What does the deal mean for CBAM?
The Carbon Border Adjustment Mechanism (CBAM) is a UK proposal to tax imports where production has not matched domestic production costs of reducing carbon in the supply chain. The EU has similar legislation in place, their carbon taxes will be fully implemented by 2026 and the UK’s CBAM by 2027. The proposals cover energy intensive products such as aluminium, iron and steel.
The UK and EU has agreed to align the process which underpins the calculation of these taxes which means products should mean the removal of any carbon taxes on relevant products when moving between the UK and EU. The UK Government has recently published legislation which allows for this which means EU imports should not be subject from its introduction in 2027.
Next Steps
The UK and EU are going into detailed discussions to agree which regulations need to aligned and, where necessary, agree how they are aligned. Once that is agreed there will be a timetable for full alignment and for the removal of checks.
Going forward, dynamic alignment means the UK will need to implement any changes to relevant food legislation as agreed in the EU. The UK will have some input into consultation on new proposals but not voting rights on their final agreement so we will be working with Defra and the FSA to ensure members get the best visibility of changes and the chance to input where possible.
We are also encouraging the UK Government to consider where further alignment is possible and would reduce supply chain burdens in areas of non food product safety regulation and environment. Part of that may be a unilateral decision by the UK to adopt EU legislation, as through the new Product Regulation and Metrology Bill and some through future negotiation with the EU.
