NFU Consultation Response

NFU response to House of Commons Environment, Food & Rural Affairs (Efra) Committee inquiry UK Trade Policy: food and agriculture

Summary

• The NFU has long called for the government to publish a comprehensive agri-food strategy that helps ensure UK farmers are “match ready” for the increased competition they are likely to face.

• We also believe that there should be an annual assessment of the impact, both positive and negative, of our FTAs on domestic food production and consumption. This annual assessment will provide a clear picture of the cumulative impact of FTAs as they come into effect and allow the government to formulate domestic policy accordingly. It would be a clear signal that food and farming are indeed at the heart of the government’s trade policy.

• Whilst welcoming efforts to date, we continue to call for further government investment in expanding the number and the beneficial impact of our dedicated agri-food representatives overseas. We believe that there should be government match funding of the AHDB levy for export promotion (presently circa £.6 million per annum). Bord Bia’s (Irish Food Board) annual budget is >€76million of which around 80% was government funded.

• We believe that a dedicated government minister specifically responsible for growing agri-food exports and addressing market barriers will undoubtedly help deliver our export targets as set out in the NFU’s 30,30,30+ export strategy.

• The NFU believes that to enable and support a thriving British agriculture sector it is crucial that the UK’s future trade policy respects domestic production standards. The government’s continued push for trade liberalisation increases the risk that food produced to lower standards which would be illegal for UK farmers and growers will be imported in greater volumes. This risks compromising our high animal welfare and environmental standards, undermining British farmers. We continue to call on government to launch a formal process of developing and establishing core production standards that apply to agri-food imports and would form the baseline for negotiators to uphold.

• We are concerned that the dissolution of a dedicated International Trade committee in the Commons will further erode Parliamentary scrutiny and give greater discretion to the government of the day to negotiate and conclude deals. The NFU believes there are a number of measures that should be introduced to improve the government’s accountability to Parliament, including formal approval of the negotiating mandate before negotiations commence, a process of regular updates and consultations throughout the negotiations and a “yes/no” vote following debate once a finalised Treaty has been agreed by the UK Government to decide whether that treaty as drafted should be ratified or not.

• As well as seeking new opportunities to grow exports, we believe that there must be attention to maintain our footholds in existing markets. The EU will continue to be of huge importance, as our largest export customer, to UK agri-food exporters. The government should focus efforts on the forthcoming review of the EU/UK TCA to enhance our terms of trade with the EU and seek opportunities to address outstanding issues and aspects of trade friction.

• The NFU strongly believes that securing protection for UK GIs should be a priority for UK negotiators in trade negotiations.

• The NFU calls for the formation of a government platform ‘one stop shop’ supporting food exporters, including information on overseas markets and regulatory requirements.

Introduction

1. The NFU represents 47,000 members across England and Wales. In addition, we have 20,000 NFU Countryside members with an interest in farming and rural life. Our purpose is to champion British agriculture and horticulture, to campaign for a stable and sustainable future for British farmers, creating the right conditions for a thriving British farming sector including promoting the health, safety, and wellbeing of our members. In 2020 the UK’s agriculture food and drink industry employed 4.1m people and contributed £115billion in national GVA to the UK’s economy.

Q1. How coherent and effective is the UK’s trade strategy for food and agriculture? Is the Government taking account of the potential cumulative impact of new Free Trade Agreements (FTAs)? 

2. The NFU has long called for the government to publish a comprehensive agri-food strategy that helps ensure UK farmers are “match ready” for the increased competition they are likely to face given the government’s liberalising trade agenda and in light of the significant change in approach to support payments they face under Defra’s agricultural transition. The NFU continues to call for domestic policies to be aimed at improving the competitiveness of British farming and strengthening our domestic food security. 
3. In the period from the referendum to 2022, the government’s strategy for trade was led by the Conservative party’s 2019 manifesto commitment to get 80% of UK trade covered by FTAs by 2022[1]. It appeared to be a policy of “simply getting trade deals done.”  Since departure from the EU, over 70 continuity agreements and agreements with Australia and New Zealand have entered into force. The government’s strategy of entering “sprints[2][3]” giving UK negotiators in the Australia and New Zealand talks less than 6 weeks to agree sensitive market access with self-imposed deadlines was undoubtedly a contributory factor to the unbalanced outcomes we saw in both those deals. A similar attempt was made to agree the India FTA by Diwali 2022. The resulting unbalanced outcomes in Australia and New Zealand FTAs ran contrary to farmers’ interpretation of the stated negotiated commitment made by the UK Government to “Secure broad liberalisation of tariffs on a mutually beneficial basis, taking into account UK product sensitivities, in particular for UK agriculture” contained in the strategic approach documents[4] published at the start of those talks. 
4. Since the political upheaval of summer and autumn 2022, the government’s approach to agreeing trade deals at pace does appear to have shifted for the better. In January 2023, SoS Kemi Badenoch set out during her Lancaster House speech[5] how her department would contribute to economic growth, “I want to be clear that just signing on the dotted line is not the objective. These deals will only be agreed if they are the right deals for the people of this country. Bringing in jobs and investment to left-behind communities and capitalising on those areas in which we specialise.”
5. Furthermore, Prime Minister Sunak’s “Open Letter to Farmers”[6] set out his ambition to “change the way we support farming in this country, including by ensuring British farming is at the heart of British trade.” The Prime Minister’s commitments are the clearest articulation of the government’s trade strategy and the principles it will adhere to. Notably, it includes a commitment to use “where appropriate, permanent quotas to protect sensitive sectors,” “to “protect food standards” and “to uphold production standards.” It should be noted that permanent quotas are not a feature of either the New Zealand or Australia FTAs, where quotas are phased out on sensitive products over a period of years resulting in total liberalisation of those sectors.  
6. With regards to the CPTPP accession, the NFU was pleased to see that the Prime Minister stuck to his word and that the government negotiated a far more considered and balanced outcome, particularly with respect to managing market access in our most vulnerable sectors with permanent quotas. We believe such as approach to be more robust and effective than relying on “after the event” safeguard measures, whose efficacy is questionable and only temporary.
7. The government’s export strategy, as set out in “Made in the UK, Sold to the World” has been more successfully articulated and demonstrated through numerous initiatives and commitments, including the appointment of an initial 11 Agri-food attaches in overseas markets (plus a further 5 announced in 2023), the establishment of a Food & Drink Export Council, joint industry/ government initiatives such as DIT’s “Open Doors” which encouraged mentoring and the development of export academy events for the food and drink sector and continued support for the “Great” branding.
8. More engagement and co-operative working methods between industry and government will continue to help grow our exports. We continue to call for levy paid by farmers and processors to be match-funded by government to boost our activity in the promotion of our food exports and bridge the gap that our key competitors have created in terms of brand awareness and business connections in key markets.
9. With negotiations still underway with Canada, Mexico, India and a number of other countries with potential comparative advantage in certain agricultural products, it is vital that the government considers the cumulative impact of tariff liberalisation on sensitive domestic producers. Unfortunately, it is not apparent from the publication of impact assessments with Australia, New Zealand or CPTPP that the cumulative effects are being considered in the baseline for analysis. We understand that the effects of previous deals are only entered into the modelling baseline once those agreements enter into force. This suggests that when considering the effects of the New Zealand deal, the effects of the Australia deal were not taken into effect and vice versa. The NFU continues to call for an annual assessment of the impact, both positive and negative, of our FTAs on domestic food production and consumption. This annual assessment will provide a clear picture of the cumulative impact of FTAs as they come into effect and allow the government to formulate domestic policy accordingly. It would be a clear signal that food and farming are indeed at the heart of the government’s trade policy.

Q2. To what extent has UK trade policy provided benefits to the agricultural and food sectors compared to (1) other sectors of the economy and (2) its international counterparts?

10. We are not aware of empirical evidence yet demonstrating the impact of the UKs newly independent trade policy on the relative performance of agriculture to other sectors and countries. As explained elsewhere in this submission, there are numerous aspects influencing the performance of UK agriculture over recent years, only one of which is trade policy. However, we believe the government should conduct dynamic impact assessments of our FTAs on domestic food production and consumption as they come online in the years ahead. This would provide a clear picture of the cumulative impact of FTAs on agriculture, and could factor in the sector’s comparative performance with other sectors and agriculture in other countries.

Q3. What impact could recent machinery of Government changes, notably the dissolution of the Department for International Trade and its correspondent select committee, have on the development of food and agriculture-related trade strategy and policy and how should any potentially negative effects be addressed?

11. It is difficult to assess whether the merger of DIT and elements of the former BEIS under the Department of Business and Trade (DBT) will have a material effect on the development of food and agriculture-related trade strategy. What is vital is that Defra and DBT work hand in glove to ensure that there is a comprehensive and cohesive strategy in place on these issues. We are somewhat reassured with the evidence via CPTPP outcomes and ongoing engagement on the FTAs under negotiation that working relationships have improved between the Defra and DBT hierarchy to the benefit of farmers’ interests. 

12. We are however concerned that the dissolution of a dedicated International Trade committee in the Commons will further erode Parliamentary scrutiny and give greater discretion to the government of the day to negotiate and conclude deals themselves. The DBT committee’s Business and Trade Committee’s report “Scrutiny of Free Trade Agreements” [7] sets out the Committee’s intended approach to scrutinising the government’s approach to FTA negotiations. We agree that there should be meaningful engagement and scrutiny of the government’s negotiating objectives, including a clear understanding of the government’s negotiating mandates.  A clear understanding up front of the threats and opportunities is vital if inevitable trade-offs and compromises need to be made during the negotiations. The experience of Australia and New Zealand FTAs for the farming sector was that it was too late to influence the outcome once the government had agreed the deals. The quantum of trade-offs the government claimed as necessary to secure a deal was far beyond the expectations of the farming sector. This is something that could have been better managed and debated if stakeholders and MPs had been aware of this during the negotiations.

13. We are also concerned that there will be no line-by-line assessment of the FTAs post agreement. The details of each and every FTA will be different depending on the negotiating parties’ priorities. It is essential that stakeholders can bring to the attention of MPs detailed and technical issues of concern. Not only in relation to the issue at hand, but also for the potential precedent that could be set for future agreements.

Q4.              How could FTA scrutiny and consultation (such as through impact assessment, Parliamentary scrutiny, stakeholder consultation, and the Trade and Agriculture Commission) be improved?  

14. The NFU worked hard to make the case for a strengthened Trade and Agriculture Commission that was formed after one million people signed a petition for the protection of our food standards in trade deals. However, Parliamentary scrutiny of trade deals remains inadequate, meaning that international agreements which could have significant economic implications for farmers and consumers in the UK, as well as on the standards to which the food we eat is produced, are not given sufficient time to be examined by MPs.

15. The NFU believes that stakeholders should be actively consulted and kept abreast of developments prior to the commencement of, and throughout, any negotiations. We strongly believe that the UK Government must take into account the cumulative impacts of successive agreements, including the renegotiation of current terms within existing agreements.

16. We note that with the Australian FTA a debate on the FTA lasting almost 3 hours was held in the House of Lords, but not in the House of Commons during the relevant period of the CRAG process, despite repeated assurances from ministers at the Department for International Trade that time for such a debate would be found. This means that MPs were not given a formal opportunity to debate these reports and assess the merits of the FTA while they retained the ability to delay ratification of the deal under the CRAG.

17. The NFU believes there are a number of measures that should be introduced to improve the scrutiny of trade deals and accountability to Parliament:

• Parliament should have a “yes/no” vote following debate once a finalised Treaty has been agreed by the UK Government to decide whether that treaty as drafted should be ratified or not.
• Parliament should agree to the negotiating mandate before negotiations commence and should be kept updated and consulted throughout the negotiations.
• The devolved administrations should also be consulted throughout the negotiating process, including with respect to draft texts of agreements.
• Stakeholder engagement should involve a higher degree of information sharing, under Non-Disclosure Agreements only where necessary, to ensure proper two-way communication throughout negotiations prior to trade deals being signed.
• Comprehensive economic impact assessment should be published prior to negotiations starting and once negotiations are concluded.

Q5. Are the UK Government's trade policy objectives consistent with those of the devolved Administrations, and has it taken those objectives adequately into account? 

18. It is vital that the UK Government maintains good lines of communication with the devolved governments with respect to UK negotiations. The UK economy is not homogenous, and the Welsh economy differs from the wider UK economy. Owing to Welsh agriculture’s reliance on two key sectors - namely livestock and dairy - and the typically smaller size of the average farming business, certain trade liberalisation scenarios will risk having a disproportionate impact on Wales compared to the rest of the UK. This is coupled with the fact that around a third of agricultural land in Wales is rented (through both formal and informal agreements). Tenants face a number of unique challenges including access to finance and tenancy agreements can often hinder or prevent a tenant from quickly diversifying or switching enterprises to meet changing market conditions.

19. To ensure these factors are given adequate consideration NFU Cymru has been calling for a Wales-specific impact assessment for free trade agreements. This ask has been echoed by the House of Commons Welsh Affairs Committee. By conducting a Wales-specific impact assessment any adverse impacts can be anticipated and potentially mitigated, and any advantages can be identified and capitalised upon. Without a proper understanding of the implications there is a risk that any trade deals concluded could do great damage to Wales’ rural communities or may fall short on delivering potential benefits.

20. Protection of Geographical Indications such as PGI Welsh Lamb and Beef is not just a valuable marketing tool, providing legal assurances, but is also an area of real pride and importance for UK producers. The PGI status of our products reflects the production methods and heritage that is unique to the area. The NFU strongly believes that securing protection for UK GIs should be a priority for UK negotiators in trade negotiations. This is a view shared by Welsh Government who sees PGI products as an important tool in meeting its ambition to grow Welsh food and drink exports. We are therefore incredibly disappointed that several of the trade deals recently concluded by the UK Government, including with Australia and New Zealand, do not offer anything for our PGI products and hence fall short on delivering against trade policy objectives.  

21. We believe that the Welsh Government and the Senedd ought to have an appropriate degree of involvement by being sighted of relevant documents ahead of such agreements being entered into, as well as the development and approval of implementing legislation which underpins concluded trade agreements. This should include involvement in developing the UK’s negotiating mandate and in scrutinising trade negotiations. Within this process there should be a clear and ambiguous role for Welsh stakeholders, such as NFU Cymru, to ensure the views of those who will be impacted are considered.

22. The NFU does not represent farmers in Scotland or Northern Ireland, but by extension we believe that this approach should be reflected across all constituent parts of the UK.

Q6. To what extent has the UK exploited potential opportunities for trade in the food and agricultural sectors since its departure from the EU?   

23. Since 2019 our sector, like many, have faced a number of unprecedented challenges. Our new trading relationships have in part contributed to the headwinds experienced by our sector. Covid 19, Brexit, global economic slowdown and the war in Ukraine have all taken their toll on trade flows. However, to pinpoint and isolate the effects of one particular factor is difficult.

24. In 2022, the UK exported £15.57bn worth of agri-food. This is up 17.3% on 2021 and approaching 2019 figures (-1.27%). The EU continues to be our largest customer accounting for 67% of the value of sales in 2022, down from 70% in 2019. Total value of food and live animal exports to the EU was £10.48bn which is an increase year on year of 19.6% but is still 5.9% down on 2019 levels[8].

25. The outlook for 2023 appears to be more positive, with data for the first five months of the year available (Jan-May 2023), exports to the EU (£4.545bn) are running 8% up on the same period in 2022 and 3% down on 2019.

26. However, the apparent recovery of exports to the EU must be viewed through the lens of unprecedented levels of inflation. The food and drink sector has experienced particularly high inflation[9], with businesses forced to raise prices to meet rapidly rising input costs. In this context, the 2021 to 2022 growth in export values does not necessarily represent increased exporting activity from businesses.

27. Unfortunately, in volume terms HMRC figures show a significant drop in trade of agri-food products since 2019. Overall volumes of agri-food are down more than 20% compared to 2019. There was a 0.46% decline in exports to non-EU countries, and a 25.35% decline in exports to the EU. Within EU exports, the volumes of meat & meat preparation exports to the EU was down 24%, dairy products & birds’ eggs down 20%, and vegetables & fruit down 25%. 

28. Meanwhile, the value of food and live animal exports to non-EU countries (i.e. Rest of World (ROW)) has increased by 10% to more than £5billion in 2022. Outside of the EU, our top five largest markets for food & live animal exports are the United States, China, Norway and Australia (table 1.). Since 2019, we have seen the value of those exports fluctuate.

Table 1. Top non-EU destinations

29. The opportunities to grow agri-food and drink exports occur both within and outside of formal agreements. The NFU welcomes the additional agri-food attachés to support breaking down barriers to agri-food and drink exports around the globe and grasping opportunities to be able to promote British produce overseas. The welcome formation of the Food and Drink Export Council will act as a vehicle to coordinate efforts to grow trade in food and drink, and is something the NFU had called for in its export strategy: Growing our agri-food exports to 2030 and beyond.

30.                      The NFU has long called for government investment in expanding the number and beneficial impact of our dedicated agri-food representatives overseas. Whilst we very much welcome the government’s efforts to develop this network to date, in comparison to other countries, the UK continues to lag behind in the number of dedicated overseas representatives tasked with addressing barriers to trade.[10] We will work closely with government and the attachés to ensure they have the right support and material to truly understand and promote British agri-food products, addressing barriers to trade where these exists. We also call on the government to ensure that each post has sufficient financial resource allocated to it to deliver a successful programme of engagement within that market, and that they are visible and UK industry can engage with them. We continue to believe that a dedicated government minister specifically responsible for growing agri-food exports and addressing market barriers will undoubtedly help deliver our export targets. The minister would also lead in pushing for an elevation of global standards on environment, animal welfare and ethical trade in international forums.

31. We note that trade promotion is strongest when there is one unified voice offering a coherent strategy which is why the NFU continues to call for matched funding of AHDB for their export promotion activities.

Q7.              What impact have FTAs signed since the UK’s departure from the EU, such as those with Australia and New Zealand, had on the agri-food sector? Have opportunities or concerns arising from those agreements been realised? 

32. As an independent trading nation, the UK has now signed more than 70 trade agreements. The vast majority of these were “roll over agreements” made to ensure trade continuity at the moment of EU exit. Since our departure from the EU, the implementation of these roll over agreements has largely been uneventful. Exports to Canada have increased by 33% in value and 9.2% in volume between 2019 and 2022, whist exports to South Korea and Japan have stagnated in volumes but still managed 3.7% and 19.8% value increases respectively[11].

33. Some of these rollover agreements, however, have disappointing limitations. In the case of Canada, the UK did not negotiate lasting access to a quota for the exports of dairy products. In the case of South Korea, organics equivalence is set to expire at the end of 2024 and the UK only secured protected geographical indication (GI) status for Scotch Whisky, whereas the EU negotiated the expansion of the EU-South Korea agreement to include 85 new GIs on 30 November 2022[12]. Given that 25% of UK food and drink exports (by value) are generated by GI, worth £5bn in 2018[13], the NFU believes that this is a vital area for improvement within existing and future trade agreements.
34. The agreements with New Zealand and Australia have entered into force only recently, on 31st May 2023. While there may be some modest opportunities to increase exports to Australia and New Zealand, for instance in relation to cheese, the NFU is concerned that there is much more in the deals for Australian and New Zealand exporters. However, two months is not enough time to evaluate if opportunities or concerns have been realised. So far, for instance, we have noticed that Australia has taken advantage of the TRQs in the UK-Australia FTA, using 3% and 4%[14] of the total volume for beef and lamb respectively and 94% of its sugar quota volume. This is on top of the quantities shipped through the WTO TRQs.

35. The government’s own impact assessment estimated that with respect to the New Zealand deal, UK agriculture, forestry and fishing and semi-processed foods sectors are expected to experience a reduction in gross value added (GVA) of around 0.35% (£48 million) and 1.16% (£97 million) respectively.  And for Australia, the UK’s primary agriculture and semi-processed foods sectors are expected to experience a reduction of around 0.7% (£94m) and 2.65% (£225m) in their GVA respectively, relative to baseline growth in the sectors. The Government estimates that because of the Australia deal, we will see a reduction in gross output of around 3% for beef and 5% for sheep meat as a result of liberalisation. This is equivalent to wiping £87million off the output of UK sheep production and £67million off the UK beef sector and does not take into regard the cumulative effect of agreeing similar liberalisation terms with New Zealand.

36. The NFU accepts that forecasting the impacts of these deals is difficult, and the eventual impact on the competitiveness of UK agriculture is hard to model with a high degree of confidence. Nevertheless, should the impact prove damaging – for instance if geopolitical developments reduce access for those countries to markets in China and the Far East – the UK government has reserved itself very little, if any, recourse to measures for preventing or reducing that damage.

Q8.              What impact will the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have (1) on the agri-food sector and (2) future FTAs? 

37. The NFU believes being a member of CPTPP could provide opportunities for British farmers to sell more great British food overseas. There is potential for the UK’s beef, sheep and dairy sectors to grow exports in South-East Asia where food safety is a key consumer concern and given the UK’s demonstratable safe, traceable, and audited food supply chains, UK exports are well placed to meet growing demand.  

38. The government has clearly negotiated a more considered trade deal, recognising the sensitivities of our farming sectors by limiting market access in the most vulnerable sectors. However, we still have serious concerns about the cumulative impact of trade deals on British food production, especially for those sectors which are already facing very challenging market conditions, such as our beef, poultry and pork farmers. 

39. The NFU believes that to enable and support a thriving British agriculture sector it is crucial that the UK’s future trade policy respects domestic production standards. We are pleased that our government continues to maintain its commitment to our food safety standards which appears to be reflected in the UK’s accession to CPTPP.

40. Nevertheless, we remain concerned that this approach does not extend to production standards such as animal welfare and environmental protection. Under the terms of UK’s accession to CPTPP egg imports will be fully liberalised over a period of 10 years for all countries bar Australia, who will continue to face MFN rates as per the UK/Australia FTA. This has led to particular concerns in relation to Mexico, a very significant producer of eggs (fourth largest in world), almost all from caged systems -a production method banned in the UK since 2012.

41. The government’s continued push for trade liberalisation increases the risk that food produced to lower standards which would be illegal for UK farmers and growers will be imported in greater volumes. This risks compromising our high animal welfare and environmental standards, undermining British farmers. We, therefore, continue to call for the establishment of core standards that should be applied to all food imports.

Q9.              What approach should the Government take to food and agriculture sector priorities and concerns in its ongoing negotiations with the Gulf Cooperation Council, Canada and India? 

42. Each free trade agreement is unique in its opportunities and defensive interests, and we appreciate the government’s commitment to always consider the full impacts and opportunities of trade agreements for our domestic agricultural sector[15]. We are excited by opportunities to export high quality British produce. However, we maintain concerns about the cumulative impact of agreements. Whilst we welcome enduring tariff protections for some of our most sensitive sectors in the CPTPP, we are resolute that further concessions to sensitive sectors such as beef, sugar and lamb in any future agreements risk eroding the viability of farm business operators here in the UK who make up the landscape of our countryside.

43. The NFU wants the government to grasp genuine opportunities where they present themselves, for example lamb to the GCC. The UK is in an excellent place to be able to demonstrate suitability of stunned slaughter for halal under the demonstration of life protocol and as such would be excellently placed to be able to supply the GCC with our high quality, traceable lamb.

44. With regards to the UK-Canada negotiation, there is significant opportunity to grow exports of British agri-food goods, from specialist cheeses to poultry products. However, the NFU is clear that trade deals must be reciprocal and deliver benefits for UK farmers and growers. Moreover, any FTA must protect and uphold domestic production standards, as well as SPS requirements. Given the NFU has consistently warned of the danger of the cumulative impact of trade liberalisation on sensitive sectors and the increasingly sensitive nature of British beef as a result of the liberalisation of the market under both the Australian and New Zealand trade deals, the UK Government should not be considering any additional market access for Canadian beef. We are conscious of the difficult nature of the negotiation around UK dairy access into Canada with respect to the end of year deadline to secure an arrangement. The NFU would welcome additional market access for UK dairy products into Canada, but this should not be done at the expense of sensitive sectors like beef.

45. India is one of the largest agricultural producers in the world yet still consumes much of what it produces. It is, however, on a path of rapid development in its agricultural sector and the NFU would welcome commitments from both countries to work together in areas of shared interest such as AMR and animal welfare. The NFU remains firm on holding the UK Government to account in upholding our animal welfare and environmental standards to ensure that we do not import product produced in such a way as would be illegal to do so in the UK.

46. As a responsible trading nation that claims to uphold and value global trade rules, it is critical that the UK Government does not offer Indian sugar any concessions on access to the UK market while its regime remains in breach of WTO rules. To do otherwise would undermine the rules-based system underpinning the WTO agreements and would undermine the UK’s reputation as a global leader and advocate of the global rules-based system.

Q10.              Should potential new FTAs with specific countries or organisations be prioritised for agri-food reasons and why?  

47. The government has already announced a very ambitious programme of FTA negotiations. Talks are underway with Canada, Mexico, Israel, Switzerland, the GCC, India, Greenland and are planned for South Korea, Turkey and Mauritius. Enhanced market access to those countries should provide us with opportunities to grow our exports. With population increase and rising living standards across many areas of the world, the government should continue to target opportunities for growth. This is especially important given the rising demand for protein and the added value that unlocking new markets can deliver for carcase balance across our livestock sectors.

48. As well as seeking new opportunities to grow exports, we believe that there must be attention to maintain our footholds in existing markets. Enhancing the terms of trade with the EU will continue to be the area of greatest importance to UK agri-food exporters. The government should focus efforts on the forthcoming review of the EU/UK TCA to:

• develop mature SPS systems that recognise the shared objectives of safe and healthy food and the overwhelmingly common legislative starting point of the UK and EU, thereby removing remaining barriers to trade (e.g. seed potatoes), as well as complex administrative requirements and high frequency of border checks;
• jointly investing in the development of IT-enabled, trade eliminating, paper-based systems and streamlining processes, including simplified certificates where these continue to be required;
• mitigate the administrative burden for authorities, food and drink businesses and hauliers to avoid delays, particularly relevant for mixed consignments and fresh produce;
• ensuring facilities and resources are in place at Border Control Posts where there is a requirement of entry into each other’s territories. Seek easements where entry via a BCP is practically not possible, whilst ensuring that biosecurity and human health concerns are upheld;
• cooperating in the development of science underpinning future policy development thereby ensuring a common basis for action;
• introducing processes for consulting stakeholders in Northern Ireland of all regulatory changes that will directly impact their business, including secondary legislation;
• using the TCA level playing field provisions to build processes that provide a basis for the management of proposed future regulatory divergence. 

Q11.              Is the Government’s approach to trade aligned with its commitment to high standards for health (including plant and animal health), food safety, animal welfare and environmental protection, and the UK’s right to regulate in these areas? 

49. UK Farming’s commitments to the environment, biodiversity and responsible use of antibiotics are all public goods that we aspire to deliver while producing the best quality and affordable food. It ought to be an expectation that we will only trade freely with nations that share our values and aims in areas such as climate change, environmental protection and animal welfare. We urge the government to ensure that upholding domestic standards in these areas is at the heart of its trade policy and that liberalised market access provided through FTAs is contingent on goods meeting the UK’s high domestic production standards, including environmental standards. Trade opportunities which uphold those ambitions should be prioritised.

50. The NFU has long championed an approach to imports that upholds product and production standards in the destination market. In short, if the goods fail to meet minimum legal standards for animal welfare and the environment that are equivalent to those for domestic producers, then they should not be granted preferential access to that market. We want the UK Government to take an approach that establishes core production standards that should be upheld. We have not defined which laws, but this would certainly cover some animal welfare and environmental laws and would be developed in consultation with industry and civil society groups. The NFU has advocated for such an approach through multiple forums, including the Trade & Agriculture Commission (non-statutory report) and work with Respublica and RSPCA.

51. The NFU continues to call on government to launch a formal process of developing and establishing core production standards that apply to agri-food imports and would form the baseline for negotiators to uphold.

Q12              What impact has the Government’s approach to trade policy had on the security, quality and affordability of the UK’s food supply? 

52. In 2022, the UK imported £47.6bn worth of food and live animals, up 25.6% on the year and 16.3% higher than 2019 figures[16]. The EU is the dominant supplier, providing over 69% of food and live animal imports in 2022, only slightly down from the 71% in 2019. Inflation has been the driving force behind the increase in the value of imports, with the average price per kg of total food and live animal imports increasing by 23.5% from 2021 to 2022, having increased by less than 1% in the two previous periods. Total imported volume was up only 1.7% on the year and remains 6.26% lower than in 2019. The only areas where volumes have risen since 2019 are live animal imports, up 31.3%, and cereals imports, up 5%. Contrary to expectations, import volumes from the EU have declined by a much smaller proportion since 2019 (-1.19%) than volumes from non-EU trading partners (-14.37%) in the same period.

Table 2. Change in exports of Food & Live Animals 2019 compared to 2022.

Worsening Balance of Trade

53. The increase in the value of imports, coupled with stagnation in the value of our exports, has led to a significant deterioration in the nation’s Balance of Trade in Agri-food products (see figure 1) [19]. The UK has been running a trade deficit in food and live animals of c. £2.7billion a month during 2022, compared to £2billion in 2019.  The NFU would support a thorough investigation into the drivers, indicators and consequences of the widening balance of trade deficit in agri-food products and whether there is a correlation between the rising value of imported goods and inflation.

Fig 1: Balance of Trade Agri Food Imports and Exports

Q13.              Is the Government providing sufficient support and guidance for agricultural and food exporters and importers, and how could that support be improved?  

54. The NFU welcomes the support of the Department for Business and Trade (DBT) in its network of International Trade Advisors and Defra’s support both in the UK and overseas. The Dairy Export Taskforce, with secretariat provided by the NFU, has been working closely with teams in DBT and Defra on how to grow dairy exports globally, as an example of how dynamic discussions between industry and government can be achieved.

55. Exporters will generally service both the domestic and many different international markets and as a result are often time poor. As such exporters, particularly SME’s, may not have the time and resources to search multiple government landing pages for information on how to export, tariff duties to pay, import requirements etc. Therefore, the NFU calls for the formation of a ‘one stop shop’ on how to export goods, containing within it the option for exporters to be notified of third countries changes to import requirements to prevent rejection of goods at the border.

56. We note that each sector has its own opportunities and barriers to trade and would welcome future engagement with DBT and Defra, for example overcoming barriers in existing Export Health Certificates for dairy and securing new ones for the poultry sector. As such it may be useful to discuss the extent to which the UK Export Certification Partnership model seen in the red meat sector could apply to other sectors.

Q14. How effectively is the Government engaging with industry stakeholders and to what extent is it tackling non-tariff and technical barriers to trade for UK businesses? 

Stakeholder engagement

57. Following the outcomes of the Australia and New Zealand agreements, the NFU expressed its concern with the degree of stakeholders’ engagement delivered through forums such as the Trade Advisory Groups (TAGs). In the past, the details of the significant tariff concessions conceded by the UK Government have not been properly shared, tested or interrogated for their impact by affected domestic stakeholders before they were announced as part of a largely “done deal”.
58. Our recent experience with CPTPP has seen an improvement, as well as ongoing engagement with the officials working on ongoing negotiations. We are encouraged by the approach taken by Ministers and officials to engage more proactively with the NFU and hope this will continue.

Barriers to Trade

59. The UK has seen some excellent wins, beyond the FTA programme in the last 12 months, for example the first exports of lamb to the US in over 20 years, expected to be worth £37million in the first 5 years of trading, and the removal of rules prohibiting exports of pork products to South Korea.

60. However, there is still work to be done. In June 2022, the then Secretary of State for DIT, Anne Anne-Marie Trevelyan announced an ambition to unlock 100 priority barriers to trade, potentially worth £20billion to the UK economy[20]. The NFU is aware of a number of key agri-food barriers on the government’s “hit list.”  We understand that there is sensitivity in releasing the full list and that by publishing additional information, negotiators seeking to resolve issues could face additional resistance from overseas government. Nevertheless, we believe that government should seek to regularly update stakeholders on progress in addressing key barriers to trade such as beef exports to South Korea and China, poultry meat to South Africa or pork exports to Vietnam.

EU Relationship

61. The change in our trading relationship with the EU has undoubtedly had an effect on the volume of trade we have with the bloc. Exports of GB agri-products to the EU have faced considerable trade friction since the end of the transition period. For example, every consignment of product of animal origin (POAO) requires an Export Health Certificate signed by an official vet attesting to EU standards. The average cost of a veterinary officer certifying an EHC is £200[21], adding an estimated additional cost of £50 million to the cost of those exports in 2022. As a matter of priority, the UK Government should seek agreement with the EU on digitising the certification of EHCs and consider financial support to assist with the cost of EHCs for SMEs.

62. Some GB exports to the EU remain prohibited, including seed potatoes. In 2019 GB exporters of seed potatoes to the EU were worth more than £12million. The EU also operates a list of prohibited and restricted goods, including chilled minced meat and chilled meat preparations (such as sausages). The UK Government should continue to engage with the European Commission, under the terms of the TCA to address the ban on GB seed potatoes.

63. In accordance with the recommendations of the SPS certification working group “Minimising SPS friction in EU trade” published in June 2021, the NFU agrees that efforts should be made to pursue closer veterinary arrangements with the EU, such as an option similar to the equivalence agreement between the EU and New Zealand, or alignment as with Switzerland. Ultimately both the EU and UK Government should consider the possibility of negotiating an UK/EU/EFTA SPS zone. Such a zone could build on the foundations of mutual recognition and equivalence of each other’s regulations and standards, whilst also maintaining the individual parties’ right to regulate.

Annex 1.

64.                      How does UK network compare with other country’s networks? An NFU assessment.

July 2023