Existing frameworks for how trade is facilitated between countries in this sector

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the EU.

The EU has previously agreed a range of preferential trading arrangements with its global trading partners, which reduce and simplify the requirements for trading with the EU.

Under WTO Most Favoured Nation (MFN) rules, tariffs, duties paid on imported goods, must be consistent for all countries, except those with a preferential trade agreement. In the absence of any preferential trade agreement, goods imported into the EU from nonEU countries must pay the MFN tariff. EU applied MFN tariff rates vary significantly depending on the particular sector and product. Tariffs and non-tariff measures (NTMs) are used to protect domestic production from losing out to cheaper imports. Higher trade barriers are put on sectors which are more sensitive. The product categories with the EU’s highest simple average applied MFN tariff include dairy products (35.6 per cent), fish and fish products (12.2 per cent) and fruits, vegetables and plants (13 per cent).117,118 Tariffs for certain commodities, including for some meat (including lamb and beef) and sugar products, can be substantially higher. In addition to preferential trade agreements, the EU has agreed a number of tariff rate quotas (TRQs) that allow trading partners to access the EU market with reduced tariffs on specific products within set quota amounts. Once the quotas are exceeded the tariff rate reverts to the MFN rate.

Eligibility for preferential tariff rates is determined by Rules of Origin (RoO). RoO are used to ensure that only goods that originate in an FTA partner country receive the preferential tariff rates specified by that FTA. Evidence of the originating status, or “nationality” of the good is therefore required.

Negotiations between the EU and agricultural trading partners often begin from a starting point of existing tariffs. Removing these tariffs creates both gains and losses. While the gains should outweigh any losses, the social and political importance of groups losing from the change can make it painful for certain sectors.

In addition to tariffs, agri-food products must be compliant with EU law. This can be demonstrated in a number of ways, such as Export Health Certificates or other documents that demonstrate how an importer’s product is compliant. International agreements often provide for more streamlined border checks.

The EU’s free trade agreement with Canada (CETA) is an example of a modern “deepening” or “living” FTA. It is ambitious in scope, covering both “traditional” areas directly related to trade as well as social development, environmental protection and labour standards.

CETA provides for the phased elimination of tariffs for the majority of agricultural lines, as well as of all tariffs in fisheries and other goods. However, the EU retains strict quotas on some products such as beef, pork and poultry. CETA also provides for the protection of 171 of the EU’s Geographical Indications. Although no UK GIs are protected under CETA, Scotch Whisky is registered as a GI independently of the agreement. CETA falls short of
eliminating non-tariff barriers between the two parties, as Canadian agricultural imports still require extensive EU-Canada border controls.

The EEA agreement excludes trade of most agricultural goods, but bilateral provisions can be negotiated to cover liberalisation in this area. In practice, the level of tariffs on agricultural goods varies between each of the agreements as countries look to protect their sensitive sectors, but is generally lower than the comparable MFN rate. Norway does not face sanitary and phytosanitary border checks as it implements the EU acquis, but is
subject to customs controls and tariffs on some products despite harmonisation through its EEA membership. EEA states voluntarily opt to comply with animal health rules. EU food law, food composition, food labelling rules apply to EEA states, however plant health rules (other than seed marketing rules) are not currently part of the agreement.

110. Switzerland is not part of the EEA Agreement, but trades agricultural products with the EU by close bilateral agreement. This allows unhindered Single Market-like trade in most cases (including zero tariffs on some important agricultural products), although in some circumstances products entering the EU are treated as third country products. The EU/Switzerland Veterinary Agreement is based on regulatory equivalence. The EU and Switzerland operate a common veterinary area (with reduced checks and certification); to achieve this Switzerland harmonised with a large amount of EU regulation.

Unlike the EEA and EFTA countries which maintain free trade arrangements with the EU, Turkey is treated as a member of the EU Customs Union. This applies to processed food and drink, but not to agricultural products. Customs Union status enables Turkey to have reduced non tariff measures although some checks remain, but requires Turkish tariffs to align with EU tariffs. As Turkey is not able to access EU-negotiated free trade deals, EU FTA partners can export to Turkey while keeping barriers on Turkish imports.Turkey is also unable to negotiate free trade agreements that improve on EU equivalents.

The EU-South Korea free trade agreement takes a progressive, step-by-step approach towards the reduction of tariffs for agri-food and fish products. It provides for the phased elimination of the majority of tariffs on agricultural goods, but sets out lengthy transition periods (or exemption from tariff liberalisation) for some sensitive agri-food products. While the agreement seeks to reduce barriers to trade, it does not provide for regulatory
equivalence or a reduction in sanitary and phytosanitary (SPS) controls and is therefore less effective at reducing non-tariff measures.

The EU has a veterinary agreement (covering animal, but not plant health) with New Zealand that has reduced the frequency of physical border checks on animal products. The agreement is based on outcome-based regulatory equivalence, aiming to provide both parties with flexibility in meeting the sanitary requirements of other trading partners. However, physical border checks are still required for one per cent of imports.The agreement however does not remove the need for all imports to enter the EU through a Border Inspection Post with a relevant Export Health Certificate and undergo a documentary and identity check.