Brexit can hit Cyprus food exporters to UK

Food producers in the EU and Europe have expressed alarm about the effect of certain terms in the Brexit deal reached at the end of last year.

Sainsbury’s has already been obliged to remove hundreds of product lines from supermarket shelves in Northern Ireland as a result of a Brexit issue, according to the UK Institute of Export and Trade, despite the government’s insistence that the Christmas Eve trade deal meant “no border” across the Irish Sea.

Food exporters from  EU Member States are subject to the “rules of origin” provision in the Brexit deal, meaning that they must obtain certification that their exports are indeed produced ‘locally.’

But foodstuffs no longer travel only from one country to another. Often they are distributed via complex supply chains that involve both several EU Member States and the UK.

There are reports that some of these complex supply chains are already blocked because of the Brexit deal provision on “rules of origin.”

“Food exports to the UK must be accompanied by a declaration from the exporter that confirms the origin” explains Leonidas Paschalides, Deputy Secretary General of the Cyprus Chamber of Commerce and Industry.

“But many EU-UK supply chains have become interdependent especially businesses that conduct operations across the Channel and use the facilities to store goods and re-ship them. In the handling of such supply chains, certificate of origin credentials may not make their way all the way through the chain,” Paschalides points out.

“Goods shipped to distribution hubs in Great Britain face the payment of full EU tariffs when they return to the EU and as a result, suppliers are being forced to cancel the delivery of products to customers in Ireland,” said Dominic Goudie of the Food and Drink Federation (FDF) told the Financial Times.

Muriel Korter, the director-general of the EU’s Association of Chocolate, Biscuits and Confectionery (Caobisco) said he was seeking an “immediate solution”.

Goudie says there are already some “unforeseen consequences” because of the rules of origin. EU finished goods, for example, are arriving at UK distribution centres to be re-exported to Ireland or other European markets. However, without further processing, these products do not count as originating in the UK and so do not qualify for tariff-free access to the EU.

Paschalides suggests that these issues with “rules of origin” may arise for another reason.

“UK food producers and distributors may not be used to third-country status, and may not be ready to fulfil the more complex compliance requirements that this entails. It may require a certain period for them to adapt.”

Goudie warns that, if action is not taken, consumer food prices could go up in both the UK and Europe.