Brexit Breathing Space for Food Business Operators
Whatever your views on Brexit, the deferment of the UK’s leaving date from the EU provided British industry some welcome breathing space to prepare for Brexit.
Given the issues that still divide the two main political parties, the UK may yet leave the EU without a deal on 31 October.
There are potential ramifications in such a scenario: stockpiling of non-perishable goods and alternative sourcing for product just a flavour of the more notable, as well as a number of important administrative consequences for food business operators (FBO’s) that will need to be addressed.
The need for an EU FBO
The majority of current UK Food Law is derived from EU legislation, namely EU Regulation 178/2002 on Food Law and Food Safety and EU Regulation 1169/2011 on Food Information and Labelling. In the absence of any transitional arrangements (and in the event of a no-deal Brexit) there would, by definition be no transitional arrangements: EU food laws require that a food business operator, being a party responsible for ensuring that requirements of food law are met within the food business under its control, is established in the EU or is the importer into the EU market.
What needs to be established?
Guidance from DEFRAwas somewhat vague, and our food and drink team questioned certain scenarios with DEFRA officials as to what level of “establishment” would be acceptable.
Some level of legal presence is required, and as a bare minimum might be sufficiently satisfied by a “brass plate” operation through a contracted arrangement with an EU-registered entity. One solution therefore is for a UK business to contract with an EU entity, either within its own group or via a third party importer, with a requirement that party fulfils the obligations of FBO for the purposes of exports to the EU.
The relationship between the UK-based company and the FBO must be carefully documented. The FBO needs to have a degree of presence in the EU, and it is essential that goods supplied into the EU are traceable through the FBO. Labelling will also need to be modified in order to show the European FBO. Contractual arrangements must also be set out to include whoever is responsible for shipment, customs declarations and handling of claims. It would be reasonable to include provisions for notification of changes in specification of the food product, including any relevant ingredients or allergens, in order to comply with food information laws.
Convergence or divergence?
At the outset there could be limited divergence between UK and EU law. A food product that was compliant with EU law pre-Brexit would, subject to the above comments, be capable of complying post-Brexit. However, over time, EU and UK legislation may diverge – positively (by further EU law coming into force) or negatively (from EU law being repealed in the UK). While the terms of the EU (Withdrawal) Act 2018 envisaged significant “grandfathering” of EU law (in which old rules would continue to apply in some existing situations) into UK law post-Brexit, it should not be assumed that government would not seek to repeal certain measures, although a far more pressing initial priority may be ensuring that import and export traffic can flow.
Use this period to plan
While the recent Easter break provided a welcome holiday from all things Brexit, the period between now and October 31 should nonetheless be used to plan for any and all eventualities.
Shepherd and Wedderburn has been helping companies of all sizes with their Brexit scenario planning, including in relation to the matters outlined above, and will be happy to provide further advice as matters develop.
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