CURRENT ISSUES
Brexit

Food and drink wholesale is a critical part of the British economy. Food and drink wholesale distribution is a sector in its own right, turning over £29 billion, employing nearly 60,000 people and generating gross value added of £3 billion annually. Wholesalers’ depots are located in all regions and devolved nations to distribute goods to independent retailers and caterers in local communities.

There are a number of issues which pose challenges to the future success of the sector including the impending exit from the European Union, food inflation and the automation of manual roles. FWD are already working, along with our businesses in the sector to ensure that we and the sector are well placed to manage the challenges posed by Brexit.

One of the really key challenges for our labour intensive industry will be ensuring a good and skilled workforce. Many wholesalers employ high number of European Migrant workers. It will be critical to us to ensure this supply of labour.

Over 90 per cent of the value of direct purchases by food and drink wholesale distributors are from suppliers in the United Kingdom. However, the food and drink manufacturers that they purchase from import a much larger share of their goods and 70 per cent of their imports come from the European Union. As such, the sector would be best served by a comprehensive trade deal after Brexit which keeps tariffs or trade barriers to a minimum.

If there is no deal agreed between the United Kingdom and the European Union and trade is conducted under World Trade Organisation rules it will be essential to ensure tariffs imposed under these rules aren’t overly burdensome. The sectors which they will affect most are related to food, drinks and tobacco. If a free trade agreement is not reached then the food and drink wholesale distribution sector will face further upward pressure on their suppliers’ prices.

Brussels spouts
7 months and counting: Technical Notices

Aug 23: The Government has produced guidance for how to prepare for a no-deal Brexit.

This technical notices explain the current progress in negotiations and the unlikely circumstances in which a no deal scenario might materialise. The aim is to prepare the UK for this outcome in order to minimise disruption and ensure a smooth and orderly exit in all scenarios.

Trade remedies if there’s no Brexit deal

Trading with the EU if there’s no Brexit deal

Classifying your goods in the UK Trade Tariff if there’s no Brexit deal

Exporting controlled goods if there’s no Brexit deal

Labelling tobacco products and e-cigarettes if there’s no Brexit deal

Producing and processing organic food if there’s no Brexit deal

Key points to note from the first wave:

  • In the event of no deal the UK will have a full third country customs and tariff regime with the EU, with everything that entails around potential delays at the border. The Government will not (as some have suggested) unilaterally open the border or reduce tariffs to zero.
  • Trade with the EU will be on non-preferential, World Trade Organisation terms. This means that Most Favoured Nation (MFN) tariffs and non-preferential rules of origin would apply to consignments between the UK and EU.
  • On VAT, the Government will aim to keep the VAT regime as close as possible to the EU system. They are proposing a Postponed Accounting system to ensure businesses can account for VAT in their VAT return rather than pay at the border. This will pass the cash ow problem from businesses to HMT.
  • The customs paper suggests businesses explore measures to mitigate disruption, including warehousing, Inward Processing and Temporary Admissions.
  • The vast majority of rules on workplace rights will stay the same. However, there may be some issues around insolvency protection for companies operating in EU Member States. Automatic protection will cease and any protection will depend on companies national rules. Companies should therefore ensure they are aware of what protections exist for insolvency within any member states in which they have a business presence.
  • If the UK leaves the EU in March 2019 with no agreement in place, the Tobacco Products Directive and the Tobacco Advertising Directive would no longer directly apply to the UK. The Tobacco and Related Products Regulations 2016, would remain in force, with minor amendments to ensure it still works ef- fectively after EU exit. The Government would introduce new picture warnings for tobacco products as the copyright for the existing picture library is owned by the European Commission

White Paper on the Future Relationship between the UK and EU

The Government has published its White paper which gives proposals for Brexit and addresses the future relationship between the UK and EU

The White Paper sets out how the Government will implement the final Withdrawal Agreement we reach with the EU in UK law. It confirms that the EU (Withdrawal Agreement) Bill will be the primary means by which the rights of EU citizens will be protected in UK law; legislate for the time-limited implementation period; and, create a financial authority to manage the specific payments to be made under the financial settlement, with appropriate Parliamentary oversight.

Food issues are mentioned throughout the document, well over 30 times throughout the 104-pages. The Government will seek to establish a new free trade area and maintain a common rulebook for goods, including food. The Government wants the the UK and the EU to have no-friction access to each other’s markets for goods, including food and fisheries products.

 

Settled Status

Following the Government’s commitment to protect the rights of EU citizens living in the UK (and UK nationals in the EU), details of how EU citizens will be able to apply for settled status has been published here Settled status gives individuals and families, who have lived in the UK for 5 years or more, the right to continue living in the UK indefinitely, with access to public services, even under a “no deal” scenario. The Settled Status scheme will be rolled out by March 2019.

The Home Office has launched a communications toolkit for employers.