Brexit: we can play games too

By Pete North - February 11, 2021

It is unwise for trade generalists to pontificate about EU food regulations. There are customs formalities and product controls and then there is food – which is a whole galaxy of complex and detailed rules, with different types of food having their own subset of rules. This is not something you can pick up by skim reading a few executive summaries – particularly when it comes to byzantine EU rules.

It has always been the case that developing countries have struggled to export to the EU. There are innumerable barriers to trade and the goalposts are always moving. In Africa there is a shortage of cooling capacity. laboratory facilities and accreditation bodies. Limited work has been done to improve matters but the problems don’t end there. The number and stringency of SPS regulations adopted by the EU is steadily increasing, and market access for food and agricultural products from ACP countries is being greatly reduced.

The EU enjoys the propaganda value of tariff free arrangements such as Everything But Arms, but qualifying for such preferences is something of a moot point if the technical barriers and costs of compliance make exporting to the EU unworkable.

EU producers are also wise to the exclusionary properties of SPS rules. The agricultural industry seeks to convince regulators to put in place non-tariff barriers in the form of SPS regulations. In many European countries domestic industry provides significant input into the regulatory process, resulting in SPS regulations that favour domestic producers or reflect their “best practices”.

As we note, the UK has been the beneficiary of this arrangement for half a century. Inside the “walls” of the Single Market, we’ve been shielded from the realisation of how bad it really is. We’ve gone from relatively trouble free trade to drowning in a sea of bureaucracy where even as a wealthy knowledge economy we find the weight of it kills off a number of sectors virtually overnight.

This is certainly exacerbated by way of the government holding off things like mutual recognition of conformity assessment and a failure of business to anticipate the kind of obstacles they would encounter. Had there been a greater appreciation of the issues at the top of government before commencing trade negotiations things might look a little different now.

All the same, though, the system is of self-defeating complexity. If the average trade wonk struggles to comprehend how the basics of the system works, notionally having familiarity with the essential principles, how is anyone else supposed to? We are told that having chosen to become a third country we must simply accept this as a consequence. But we don’t – and nor should we. After all the whole point of the WTO TBT agreement and the processes therein is to overcome these exact difficulties.

As Denise Prévost, Institute for Globalisation and International Regulation, notes, “the WTO TBT Agreement tries to promote equivalence by requiring WTO Members to “give positive consideration” to accepting as equivalent the technical regulations and conformity assessment procedures of other Members, if these adequately fulfil the legitimate objectives of their own regulations or procedures. Unfortunately, practice has shown that many WTO Members require “sameness” rather than equivalence (equal effectiveness in meeting the objective) of TBT measures, and thus the rules on equivalence in the TBT Agreement are poorly implemented”.

The EU is especially guilty of this, being that the objective is to proliferate its own rules and its own authority through its FTAs – which amounts to a form of bureaucratic imperialism when harmonisation of technical requirements is not always feasible or desirable. The “one-size-fits-all” approach inherent in harmonization ignores the fact that regulatory policies and institutions often differ for good reasons. If, though, third countries decline to adopt EU rules they are, in effect, banned from exporting to the EU.

This is defended by EU advocates as enhanced protections under the precautionary principle – and any divergence is, de facto, a lowering of standards. On paper it may certainly seem that way, but when the UK adopted this approach it saw the mass closure of smaller, more sustainable local slaughterhouses, in favour of corporate scale enterprises built to the EU regulatory standard, favouring cash rich multinationals. There are now fewer than a hundred small abattoirs in the UK.

It now transpires that those same corporate scale slaughterhouses are Covid incubators, while the veterinary inspection system is a box ticking exercise (and largely a make-work scheme) adding costs that exclude smaller scale competition. This must change anyway since the end of freedom of movement makes it harder to poach Eastern European vets.

Though it would have been preferable from a trade perspective to maintain the single market status quo we at least now have the opportunity to undo some of that damage and rebuild a more sustainable industry. An easing of the regulatory requirements designed for larger scale agribusiness could result in an overall improvement of meat quality.

The supreme irony there is that the UK could end up restoring its once first rate food safety regime, producing higher quality goods and still not be able to export to the EU precisely because it doesn’t do equivalence – even for first world neighbouring economies. Its approach is wholly dogmatic as well as protectionist. The UK may end up abandoning the EU market in favour of global buyers and pitch our exports as the highest possible standard.

We might very well wonder, though, when LPF chapters and comprehensive tariff elimination in the TCA seemingly does nothing for our exports, whether the TCA is in our interests to maintain. The EU appears to be dead batting requests to improve it and if that is the shape of things to come, there is no incentive to stay aligned. We are as well cultivating our own protectionist measures to stimulate UK agriculture.

Of late UK farms are increasingly turning to B2C, restoring the local connection between producer and consumer and selling through their own websites. I now do a monthly freezer order instead of buying meats from supermarkets. It doesn’t cost much more and the meat is a magnitude better. I’m quite happy to keep Irish racehorses off my dinner plate.

In the meantime, the UK must look to likeminded countries who have similar difficulties exporting to the EU. The WTO TBT and SPS agreements are good but they could go further. Prévost notes that “the SPS Agreement encourages the conclusion of equivalence agreements between WTO Members by obliging Members to enter into consultations to this end upon request. However, there is no obligation to actually conclude such agreements”.

This weaker requirement attests to the difficulty of negotiating formal equivalence agreements, as opposed to the ad hoc recognition of equivalence with respect to specific products or measures. The UK could work toward firming up this area, consulting with CPTPP members and others. Prior to the formation of the WTO, such alliances were able to force tariff concessions from the then EEC, but now the EU uses regulation as its primary weapon of protectionism. The game has changed and we must change also.

Being that we are in part responsible for creating the Brussels regime we have a certain insider knowledge and a great deal of expertise we can contribute to working parties aimed at overcoming EU protectionism. We may have chosen to become a third country but we are not obliged to tolerate the EU’s bullshit as a third country.