Monday, 2 March 2020
The Agriculture Bill is currently winding its way through Parliament, while the Trade Bill is awaiting reintroduction after being shelved last year. Neither bill contains provisions for the food standards the UK will adopt. The NFU and other farming organisations have expressed concern at this omission, highlighting that UK producers could be undercut by imports that are produced more cheaply in countries producing to lower standards. They have called for rules on minimum standards on imports to be made law.
Why are standards important?
Standards in agricultural production and processing exist broadly to protect consumers, plants and animals from harm. Markets around the world set their own standards, based on cultural factors, economics and their enforcement capabilities.
For trade to take place between two countries with different regulations, ‘equivalence’ of standards must first be agreed. This means recognition that the other country’s standards of production offer the equivalent level of protection, despite being different. Agreement on equivalence is a complex and lengthy process within trade negotiations and is often the subject of disputes between countries.
The World Trade Organisation (WTO), which covers more than 96% of world trade, has set guidelines for equivalence. In essence, there are two basic obligations under WTO law:
- Apply any measures consistently both to domestic and to imported products from all countries.
- Not to be more trade-restrictive than necessary to fulfil a legitimate objective.
Sanitary and phytosanitary (SPS) measures
SPS rules are applied to protect human, animal or plant life from disease, toxins or pests. They can take many forms, such as a requirement that products come from a disease-free area, that products are inspected or treated in a certain way, or that the product doesn’t contain certain ingredients or residues.
The WTO’s SPS agreement aims to ensure that strict rules are not used as an excuse to protect domestic producers from competitive imports. Rules must be based in strict science, though a precautionary approach may be taken when sufficient scientific evidence does not exist. The SPS agreement also states that standards should only be applied to the extent that is necessary to protect human, animal or plant health or life. Governments must accept measures taken by countries, provided they achieve the same level of protection. This ensures healthy economic competition, quantity and variety for consumers and safe inputs for producers.
In practice, agreeing which standards are equivalent or necessary is sometimes easier said than done. For instance, the EU currently bans six different growth hormones for use in cattle farming. It therefore also bans the import of beef that has been treated with these hormones, which are legal to use in the US and Canada. Both countries assert that there is no evidence the hormones cause harm, while the EU insists otherwise.
Though first raised in the 1980s, this dispute is still not fully resolved. The WTO has ruled against the EU on the issue, authorising the US to impose retaliatory tariffs on trade coming from the EU.
However, the ban is still in place, though beef from the US can now be exported to the EU under tariff rate quotas, providing it has been certified under the non-hormone-treated cattle programme.
Technical barriers to trade
The WTO aims to prevent regulations, standards, testing and certification procedures from creating unnecessary obstacles to trade, while recognising that countries have the right to adopt standards appropriate to their market.
Under WTO rules, such technical barriers to trade (TBT) should not give domestically produced goods an unfair advantage and procedures deciding which products meet standards should be fair and equitable. Countries are also encouraged to recognise each other’s procedures, reducing bureaucratic burden for trading companies who would otherwise need to have their products tested, first in the exporting country and then the importing country.
TBT measures can cover any subject, but, in food, matters such as labelling requirements, nutrition claims, quality and packaging are subject to the TBT agreement of the WTO.
What do these rules mean for UK trade policy?
For some, SPS and TBT measures hold hope for protecting UK producers from competition in trade deals that we strike in the future. However, any protection is likely to be only temporary, as the example of hormone-treated beef illustrates. Despite the ban on such beef being imported into the EU, US beef still enters our market, providing it has the correct certifications proving it has been raised without the use of hormones.
In addition to this, WTO rules on equivalence tend to be concerned with the final product, rather than its production method. If two products are identical but have been produced in different ways, then they may be considered of equivalent standard. While it may be easy to exclude products containing certain ingredients or residues, the extent to which production method can be used as a barrier to trade is an area of ongoing debate.
In short, UK producers are likely to be facing a future of more competition from international trading partners. Certain standards may offer some protection, but, over time, competing suppliers will be able to adapt. To find out how to prepare for change, visit ahdb.org.uk/Brexit for advice and tools to help make your farm business fit for the future.