Caobisco confectionery body calls for extension of EU-UK trade talks to avert major industry impact

With trade relations between the UK and EU nations set to undergo major changes from 2021, a renewed trade deal hangs in the balance, as Caobisco, the European association for chocolate, biscuits and confectionery reveals. Neill Barston reports

Caobisco, the European association for chocolate, biscuits and confectionery, has called for an extension to negotiations between the EU and UK over future trading relations to avert what it believes would be a “hugely detrimental” effect on jobs and trade from a no-deal Brexit.

The trade body, which represents around 13,000 companies in the sector, said the major business disruption caused by coronavirus should be factored into the current transition agreement between Britain and European Union members, which is due to expire in December, and should be allowed to continue until a new revised, tariff-free deal is secured for the mutual benefit of both parties.

Presently, products from Caobisco members across the confectionery and bakery sector are the top food and drink products traded with the UK (total trade represents more than €6 billion per year). Biscuits/pastries and chocolate are respectively the second and third most valuable group of food exports from the EU to the UK, and the second and fourth most valuable food imports to the EU from the UK.

Michel Barnier, the EU’s chief negotiator in the Brexit process warned in January that 11 months was not sufficient time in order to gain a comprehensive replacement free trade agreement with the UK – with negotiations stalling for the past few months owing to the ongoing coronavirus pandemic.

Observers within Britain have noted that many within government have cited the EU deal with Canada as a potential model for future relations with the rest of Europe, which was a major undertaking lasting seven years. The EU presently has a total of 50 trade agreements with nations and trading groups from around the world – and virtually none have been concluded inside a year.

As Caobisco, which celebrated its 60th anniversary at the end of last year, noted, the social and economic impact the coronavirus crisis has on the chocolate, biscuits and confectionery sectors will have to be measured but the “cost will be high”. In this context, the organisation said it makes sense to provide our industries with elements of certainty in a volatile time and thus, extend the transition period.

In a statement on the issue Caobisco said: “A no-deal Brexit or a bad deal as of 2021 would be hugely detrimental to our industry, and the whole food supply chain with a significant decrease in EU exports and revenue coupled with more important job losses.

“We are hopeful that in order to preserve business activities between the EU and the UK, a balanced and ambitious trade agreement with appropriate product-specific rules of origin, will be implemented as of day one of the end of the transition period.”

The organisation said it is calling on EU negotiators to maintain free trade between the UK and EU27 in the future, preserving trade from any tariff and non-tariff barriers. The Free Trade Agreement must uphold long-term growth for our sector, investment, stability and the same standards of hygiene, safety and quality in order to ensure the continued competitiveness of our sector in the EU27 and the UK.

In addition, it said any such Free Trade Agreement between the EU27 and the UK must also ensure tariff- and quota-free trade for Caobisco products and its agricultural ingredients (sugar, dairy, cereals, cocoa, dried fruits and nuts), in order to continue to operate in Europe.

In 2019, more than 1.5 million metric tonnes of Caobisco products were exported to the UK representing a value of around €5 billion. Imports from the UK to EU27 represented roughly 500.000 MT (around € 1.6 billion). Meanwhile, Ireland imports more than 45% of Caobisco products from the UK. Consequently, as the trade body noted, these figures show a highly integrated and inter-dependent EU-UK trade in our products.

Furthermore, Caobisco industries are major users of EU and UK agricultural raw materials such as sugar, milk and cereals. Commodity markets and processing depend on integrated supply chains involving thus both farmers and processors operating in both EU27 and the UK.

Among other major areas for consideration that the organisation believed were vital to the success of a deal were an agreement on  product-specific rules of origin. To give fair competitive advantages to both UK and EU manufacturers of confectionery and snacks products and in order to avoid administrative complexities, the preferential rules of origin for Caobisco product categories must, in its estimation, be based on the well-established value-criteria for non-originating ingredients (sugar, milk and cereals).

Key challenges

In addition, Caobisco said that confectionery interests within the UK and EU faced “a unique challenge in terms of seasonality and climatic conditions” that meant from one year to the next, sourcing arrangements will frequently change. For producers of value-added food and drink products such as chocolate, biscuits or confectionery, existing new models of rules of origin proposed by the EU based on the weight of the final product, fail to address these challenges.

If applied in future trade between the EU and the UK it will inhibit rather than promote exchanges, to the detriment of the combined confectionery industries, as well as consumers and shoppers. In its view, manufacturers on both sides would face the unwelcome prospect of either a costly restructuring of supply chains or a de facto barrier that blocks valuable trade links between the EU and UK.

In terms of regulatory operations, Caobisco said maintenance of a close relationship between the UK’s Food Standards Agency (FSA) and EFSA is of the utmost importance to ensure continuing joint risk assessment with a common data base to manage divergence in standards and avoid trade impediments. The UK should continue to be part of the EFSA Focal Point and Advisory Forum networks and participate in the Rapid Alert System.

Related to this, the organisation noted that the UK’s status as a third country, no longer being part of the EU Union Customs Code, will lead to more red tape, in customs procedures. The EU-UK FTA should include a framework of permanent cooperation to facilitate procedures and, minimise border checks by addressing risk management techniques and security measures. As part of this, the organisation said there should also be simplified customs procedures in order to protect trade flows that form a key part of any future trading relationship.