As the clock ticks towards the UK’s formal departure from the EU, predicting the kind of Brexit we will face remains an impossible task. And few would have predicted that over two years on from the referendum, meaningful negotiations with the EU on detail would have yet to begin and the debate would remain centred on what the UK Government negotiating position will actually be.
The Chequers deal is two months old, embracing the concept of a common rulebook with the EU and essentially promoting a form of free trade deal, but outside a formal customs union and single market.
At this point, it is impossible to avoid commenting on the politics of it all. Scotland Food & Drink is an apolitical organisation, so the following comes with a massive warning that this is my own personal view on where we are – feel free to disagree and you very likely will!
There are real questions as to whether the Chequers deal will survive the Conservative party conference this month. If the Chequers deal collapses, there is a high chance the Prime Minister could fall with it resulting in the prospect of a general election in the run up to Brexit D-Day on 29 March 2019. Add into that, a growing clamour for a second referendum on any eventual UK/EU deal.
If business hates uncertainty, this is the perfect storm.
However, rather than focus on what we don’t know on the Brexit outcome (which is pretty much everything), let’s focus for a minute on what we do know and what Scotland Food & Drink have been doing about it.
We know how important our trade with the European Union is. A third of all Scottish food and drink exports (some £2 billion annually) are destined for the EU. However, if you remove Scotch Whisky, the figure for food exports is even more stark; 70%. When it comes to labour, a third of our talented workforce are nationals of other EU countries. On funding, our farmers receive over half a billion pounds of support every year and EU-funded grant schemes have driven capital investment in food and drink businesses across the country.
The good news is that our Scottish food and drink voice is being heard. Just this week I was in front of the House of Commons Scottish Affairs Committee stressing the critical importance of a tariff-free, bureaucratically-smooth trade deal with the EU. Defaulting to a trading relationship based on World Trade Organisation rules would be a disaster for our industry. I don’t think it’s alarmist to say that it would spell the end of Scottish red meat exports to Europe, as an example. The price would rise by around 50% overnight. Our products may be world class and highly sought after by the likes of the France and Germany, but their willingness to buy has its limits.
The Chequers deal won’t deliver the smoothness of trading that either the single market, not a customs union would achieve. But it would avoid the potential nightmare scenario of no deal.
We’ve spoken to many Parliamentary Committees and Ministers from both UK and Scottish Governments over recent months and will do so many more times in the weeks ahead. Government officials too are working hard to try and prepare for an outcome that seems so far from certain. We’re talking to them almost daily.
Importantly, once again, the collaboration which is at the heart of our sector – and which forms the engine-room of Scotland Food & Drink – has meant that different industry bodies have been speaking with the same voice. Individual trade associations are working hard, emphasising the big issues and the “nitty-gritty” stuff which is of critical importance.
The focus on the big trade deal is critical. However, beneath the “big deal” lies that nitty-gritty detail. What will the export paperwork look like? Who will be certifying our plants for export? If that sounds likes minor points, take a read of the research published recently from Imperial College London: if the port checks on each lorry heading for Europe took just one minute longer, the queue on the M25 at peak times would stretch 20 miles. 20 miles!
So, what can Scotland Food & Drink do? We can share the latest information, hence the special Brexit newsletter we’re issuing. We can open access to some planning tools that our colleagues at Scottish Enterprise have developed. And we will keep banging the drum for a common sense Brexit deal.
Lastly though, let us not forget that there are many reasons to be cheerful too. The long-term prospects for our sector are unbelievably bright. Our home market is ripe for further development (indeed, a hard Brexit makes that even more the case). We’ll be launching a new UK market strategy soon. Internationally, we are already broadening markets across North America, the Middle East and the Far East as well as in Europe. 70% of food exports go to the EU, but 10 years ago it was 80% - so our investment in an export strategy and trade specialists overseas is already broadening our global reach.
Even on Brexit itself, we mustn’t forget that 27 member states have a real interest in a good deal too; every single one of them sells more to the UK than we sell to them. The economic logic that will drive their view, may well trump the ideology of the European institutions.
Yet, whatever happens, the work of Scotland Food & Drink and our partners across industry and the Scottish public sector may be as important over the next six months as it has been during the decade of work so far.