The United Kingdom Minister of the environment, food and rural affairs has warned the nation’s food and drink industry that a possible no-deal Brexit could affect it.
Food manufacturers of the UK already know that if the Brexit is unable to reach an agreement, the food industry will be hit hard. Brexit will allow the UK to trade in accordance with the rules of the World Trade Organization (WTO).
Nearly 60% of the UK’s food and drink exports to EU nations are tax-free. A Barclays bank study has warned that after Brexit, the average tariff on food and drinks would reach 27%. This is much higher than other industries, with an average increase of 3% – 4%.
For some UK food producers, WTO tariffs could mean disaster. In the case of cheese, depending on the variety, a tariff of 40% to 50% may be required.
Ian Wright, chief executive of the Food and Drink Federation, said that for the industry, a no-deal Brexit would be a “disaster.”
In light of this, UK food and drink brands are being encouraged to look for other export markets – mainly in China.
A report released last year by the British House of Commons on the impact of Brexit said that China, India and the United States offer food and drink exporters some of the best opportunities outside Europe.
China is already the UK’s second largest food and drinks export market outside the EU, after the United States. In 2017, China imported 567 million pounds ($721.8 million) of food and drinks from the UK, an increase of 29% over 2016.
Salmon is the UK’s largest food and drink export to China, followed by pork, milk and cream, whiskey and beer. The British Food and Drink Federation (FDF) said that Chinese people are increasingly interested in British “afternoon tea” products, including jams, scones, teas and cakes. This is related to the popularity of British TV shows, including Downton Abbey and the Great British Bake Off.
Sean Ramsden, chief executive of the UK-based wholesale exporter Ramsden International, said that after the Brexit, China has “great potential” for exporters. But he added that the regulatory environment can be daunting.
The complexity and frequent changes in regulations are a major challenge facing foreign companies wishing to operate in China. A strong local partner may be the best way to enter China. According to the new service package ChinaEasy of JumoreGlobal, foreign companies can get an analysis report and a 3-year forecast report of a specific Chinese industry–including food and drink. Ramsden International expects that more standard regulatory issues will help to increase UK trade volumes in China.