Food and drink bosses lament Rules of Origin in EU trade deal, warning supply chains face disruption

Wed 6 Jan 2021
Posted by: William Barns-Graham
Trade News


The food and drink industry has raised concerns that the UK’s trade deal with the EU could cause disruption to supply chains, warning that the current Rules of Origin chapter is problematic. 

Under the deal, businesses could face tariffs on goods imported from the continent for processing at British distribution hubs which are then re-exported to member states. 

Industry leaders say these tariffs will block existing pan-European supply chains.

EU tariffs

“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 FT

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

“Our EU-UK supply chains are so interdependent . . . especially businesses that have factories across the Channel and use the facilities to store goods and re-ship them,” she said.

Products off shelves

According to Loadstar, retailers in Northern Ireland have already been forced to localise supply chains to avoid new customs obligations under the NI Protocol.  

Sainsbury’s said that “hundreds of product lines” have already been removed from supermarket shelves in Northern Ireland as a result, despite the government’s insistence that the Christmas Eve trade deal meant “no border” across the Irish Sea.

In the meantime, Sainsbury’s has plugged the gap in shelves with a “temporary supply” deal through wholesaler Henderson Group, which has replaced around affected 700 lines with about 100 own-brand products from Spar.

Henderson said the deal is expected to be in place for at least three months.

Calm before the storm

Border operators in the UK and EU continue to experience relative calm following the end of transition, but truckers anticipate that the full impact of the UK completing its split from the trade bloc is still to come, Politico reports

Usually around 2,000 trucks travel each way through the Dover-Calais strait per day, but that number has been around 400 in the post-holidays lull. 

Stockpiling ahead of Brexit and Christmas has lightened the load, while concern over new procedures and requirements for Covid tests have made some companies reluctant to send trucks right now.

Better than feared

Marc Declunder, the French customs manager overseeing Brexit freight flows in Calais, told Politico that so far there had been few lorries pulled over for the additional inspections that freight companies feared would cause backlogs.

The situation in the ports of Portsmouth, Dover and Newhaven since January 1 has been “nowhere near” the UK government’s worst-case scenario from last year, admitted Richard Ballantyne, chief executive of the British Ports Authority.

However, Rod McKenzie, managing director of policy and public affairs at the Road Haulage Association, said nail-biting times lay ahead for the rest of this week and next.

New trading conditions

BIFA – the association for British freight forwarders – has published an update to its ‘Standard Trading Conditions’ document as a result of the UK leaving the EU customs union and single market, Lloyd’s Loading List reports

Robert Keen, director general of BIFA, said: “Over time, in the same ways laws must change, so do contractual rights and obligations that flow from these changes, and therefore it is essential to review any set of industry terms against changes in legislation and industry practice.”