With the UK's withdrawal from the EU getting up a head of steam, recent government consultations and technical notices on changes to the legal and regulatory framework governing the food and drink sector provide a useful insight into the potential effects of Brexit on this sector.
That the food and drink sector might be particularly impacted by the UK's withdrawal from the EU was also highlighted in the European Commission's notice to stakeholders, published in February 2018, entitled Withdrawal of the UK and EU Food Law.
In this article we review the recent government documents relating to food labelling and outline the possible impacts of Brexit on food labelling requirements.
Brexit with a deal
A draft of the withdrawal agreement which has been negotiated between the UK government and the EU has now been published and agreed to by the remaining 27 member states. Should the proposed form of the withdrawal agreement be approved and signed off by the UK Parliament (which seems challenging in light of the noises being made by various elements) there will be a transition period running from 'exit day' on 29 March 2019 until (at least) 31 December 2020. The transition period may well be longer as the draft withdrawal agreement includes a provision by which both parties can agree to extend it (but once only) as long as they agree to do so before 1 July 2020.
The existence of a transition period will mean that, in practical terms, little will change for UK food businesses during this period (and therefore until the start of 2021 at the earliest). During the transition period, notwithstanding that the UK will formally have left the EU, all existing EU rules and requirements will continue to apply and any new EU law made during the period will also apply. In other words Brexit will have taken place in name only.
The transition period is intended to give some breathing space for both sides to finalise the details of the future trade agreement that will apply between the UK and the EU, and for the UK government and Parliament to make the legislative changes required (including in respect of EU rules and requirements) for the period following transition. In practice, what this really means is that many of the more difficult decisions are being pushed back.
Brexit without a deal
The position becomes more complicated if the draft withdrawal agreement (or indeed any other withdrawal agreement) does not get approved by Parliament before 'exit day'. In this scenario, the UK would cease to be a member of the EU after 29 March, but without having agreed the terms of its withdrawal and without a transition period within which to do so.
Nonetheless, even in this scenario, much (if not all) of the EU law to which UK food businesses are currently subject would (by virtue of the provisions contained in the European Union Withdrawal Act 2018) continue to have legal effect following exit day. However, certain legislative changes will need to be made in order for the retained rules and requirements to work in the context of a 'no deal' Brexit, and this job becomes more pressing given the absence of the transition period.
It is the effect of a 'no deal' Brexit on food businesses that have been the focus of the recent consultations and technical notices, mentioned above, on food labelling matters.
We discuss these further below.
General food labelling impacts
On 6 November 2018, the Department for Environment, Food and Rural Affairs (Defra) set out its proposals for changes required to retained EU law on food labelling in a 'no deal' Brexit scenario.
The proposed changes essentially fall into two categories. The first being general "tidying up" changes, including for example replacing references to 'Union' with 'UK' and similar legal fixes, which in essence are simple amendments to ensure the retained law continues to function properly in the context of it applying only within the UK.
The second category includes more substantive changes that will have a direct impact on the labelling of food products in respect of the information provided on the label. These changes will have a direct impact on the operations of food businesses as they will necessitate labelling changes. The consultation focuses on two areas, namely information relating to (i) the name and address of the food business operator, and (ii) the country of origin.
Name and Address of Food Business Operator
Article 9(1)(h) of Regulation (EU) No 1169/2001 on the provision of food information to consumers (the Food Information Regulation) requires that a prepacked food product includes the name and address of the food business operator that is responsible for the information shown on the product.
At present the address provided can be an EU one. The proposed change requires the label of a prepacked food product placed on the UK market to include either (i) a UK address for the food business operator that is responsible for the information on the product, or (ii) where the food business operator is not established in the UK, the name and address of the person importing the food product into the UK.
Similarly, although this cannot be implemented through a UK legislative change, any food product exported from the UK to the EU will need to include an address which is within the EU and not an address in the UK.
Country of Origin
For certain types of food products, and also for other products where it would otherwise be misleading not to do so, there is a requirement for the label to include country of origin information, including in accordance with Articles 9(1)(i) and 26 of the Food Information Regulation.
In some cases, the country of origin can be stated to be the EU. Therefore at present a food product originating in the UK which requires to be labelled with the country of origin can, assuming all other applicable conditions are met, show the country of origin as the EU. In a no deal scenario, the label could not continue to show the origin as the 'EU' (as the UK would not be part of the EU) and would instead need to refer to the UK. Of course, this change is also likely to arise even in the event of the draft withdrawal agreement passing through Parliament, but this would not take effect until after the end of the transition period.
On a similar point, Defra's technical notice on producing and processing organic food in the event of a no deal Brexit (published in August 2018) had already confirmed that "organic logos" on food products would also need to change as the EU organic logo would not be permitted for use by UK organic operators.
Health marks on meat, fish and dairy products
The Food Standards Agency (FSA) has also issued a technical notice (in October 2018) on the issue of health marks on meat, fish and dairy products in the event of a no deal Brexit.
The current position is that products of this type that are produced in the UK are required to carry an appropriate health or identification mark (under and in accordance with Regulation (EC) 853/2004 on food hygiene issues). The mark essentially states that the food is produced in the EU, and identifies which EU country specifically.
In a no deal scenario UK producers would not be entitled to use marks that imply membership of the EU. The FSA, together with other competent authorities in the devolved administrations of Scotland and Northern Ireland, is developing a new health mark for use by UK producers. Following consultation with stakeholders it will be communicating the changes that would be required to the health mark for application on UK products.
Operational impacts of these proposed changes
In the event of a no deal Brexit, these proposed changes will inevitably create certain operational challenges for UK based retailers and food businesses in respect of food products that are sourced from the remaining EU member states or are made available throughout the EU internal market. They may also require UK businesses to add further layers to the supply chain in the form of specialist importers, or even perhaps establish separate legal entities in other jurisdictions within the EU.
Defra recognises that business operations are likely to be impacted by the proposed changes. It has indicated that businesses will be given time to make the required changes which will enable them to continue, for a limited time period following exit day, to place on the UK market prepacked food which has an EU address and to allow for products placed on the UK market before exit day to remain on the market until the stocks are exhausted.
However, it is possible that there may be no such adjustment period in relation to health marks. Such changes may need to be made more quickly, with the possibility that UK businesses exporting to the EU will have to comply immediately after exit day in a no deal scenario (although this is within the ambit of the EU to decide). We note that the FSA is considering an adjustment period for UK businesses when making domestic supplies.
In summary - what does Brexit mean for food and drink businesses?
With continuing uncertainty about how the UK will leave the EU, it is difficult for businesses to make firm plans and to develop strategies for the medium to long-term future. However, food businesses will be pleased to know that, should there be a no-deal Brexit, they will not necessarily need to change food labels and packaging from day one - as the government is proposing grace periods for some of the required labelling changes.
Businesses in the food and drink sector will already be considering changes to their internal and international operations in preparation for Brexit, taking account of the potential removal of frictionless trade with the EU and the potential introduction of tariffs and border controls. While the possible changes to food labelling rules should not cause as many headaches as these importing and exporting issues, food businesses will still wish to consider the changes they may need to make, whether sooner (in the case of a no deal Brexit) or later (i.e. following the transition period provided for in a deal), with regard to labelling and packaging of their products.