Open For Business Series - Food & Drink

Open for Business What a transatlantic trade and investment agreement means to the UK food & drink sector

Henry Bowles, Export Executive

“W

alker & Son has been making savoury pies since its beginnings at Abbey Bakery in Leicester in the 19th century.

Although almost 200 years old, the company only started to sell its Melton Mowbray pork pies to overseas buyers in August 2014.

Exports currently account for less than 1% of our annual turnover, with small shipments being sent to Iceland, Thailand, Singapore and the Caribbean. The US has the potential to be a huge exporting opportunity for us, and could lead to growth and new jobs at our factory in Leicester.

Acquired by Samworth Brothers in 1986, we now have more than 700 employees and operate a 24-hour bakery, producing award winning pies every day. The company now makes almost 90% of the UK’s Melton Mowbray pork pies and is a founding member of the Melton Mowbray Pork Pie Association.” continued on page 3

Open for Business What a transatlantic trade and investment agreement means to the UK food & drink sector

T

The UK-US trade and investment dimension

his leaflet was published following the

Trade and investment is an important driver for growth

event ‘What a transatlantic trade and

in the UK food and drink manufacturing sector. In 2014,

investment agreement means to the UK

food and drink exports, including alcoholic beverages,

food & drink sector’, organised on 25th

totalled almost £19 billion with goods worth £7.36

June 2015 in Leicester, East Midlands. The

billion being exported to non-EU markets6. 2014 also

event explored the UK-US trade and investment

saw a new record for the most countries importing

dimension in the food & drink sector and the

products made in the UK, with over 150 nations

changes and benefits a transatlantic trade and

importing British products7.

investment partnership (TTIP) agreement could

The US is the top non-EU market for British food &

bring to business in the region.

drink products worth over £1.9 billion in 2014, with

Panellists included: Richard Wigley, Senior

whisky accounting for £769 million or 40% of total

Technical Manager, Food & Drink Forum Ltd; Henry

exports to the US8. The US is also by far the most

Bowles, Export Executive, Walkers Charnwood

important source of foreign direct investment9.

Bakery (a Division of Samworth Brothers); and Stephen Hill, Head of Trade Policy, Commercial

Barriers to trade and investment

and Economic Diplomacy Department, Foreign

Despite growing exports10, food & drink manufacturers

& Commonwealth Office (FCO). The panel was

still face barriers or are reluctant to start exporting to

chaired by Richard Currie, Director of Public Affairs,

the US. There are a number of possible reasons for this,

UPS and Co-Chair of the BritishAmerican Business

including:

(BAB) EU-US Forum.

• Tariffs – Although tariffs are generally low, for certain sub-sectors they remain high. Rates can easily go up to 20% or 35% for products such as

The UK food & drink manufacturing sector

yogurts or chocolate milk11, costs that add up for UK

Food & drink is the United Kingdom’s (UK) largest

producers seeking to enter the US market.

manufacturing sector. It has a turnover of £81.8 billion

• Differences in regulation – Differing food safety

for food and non-alcoholic drinks , and about 10,000

certification systems and a lack of clear regional

new products are being introduced to the market

indicators can add further costs and risks to UK

every year2. The sector accounts for almost 16% of the

businesses operating across the Atlantic. For

1

nation’s annual manufacturing output . Nearly 6,500

example, UK food and drink businesses can face

companies in this industry employ around 400,000

difficulty securing US recognition of their food

people – 96% of which are small and medium-sized

safety certification. Regardless of whether the

enterprises (SMEs)4.

goods are British Retail Consortium (BRC) approved,

From large, global brands such as Walkers & Son to

companies may still face costly, additional audit

3

requirements from US authorities.

smaller, specialized firms such as Moonshine Drinks and Mane, the East Midlands is home to a dynamic range of food & drink businesses. Total exports for the East Midlands were worth more than £4.8 billion in the third quarter of 2014, with the US being the top export destination for the region ahead of Germany, Belgium, Singapore and the Irish Republic5.

1

FDF: Statistics at Glance UKTI (2014): Food and drink in the UK: investment opportunities 3 Ibid footnote 1 4 Ibid footnote 1 5 HM Revenue and Customs: Regional Trade Statistics 6 Ibid footnote 5 7 UK Government (2014): UK food and drinks exports reach a record 150 countries worldwide 2

8

Ibid footnote 5 ONS (2013): Foreign Direct Investment Involving UK Companies, 2011 (MA4) 10 Ibid footnote 1 11 European Commission: Trade, Market Access Database 12 CEPR (2013): Estimating the Economic Impact on the UK of a Transatlantic Trade and Investment Partnership (TTIP) Agreement between the EU and the US (page 41, based on modified ambitious scenario) 9

Open for Business What a transatlantic trade and investment agreement means to the UK food & drink sector

What a transatlantic trade & investment agreement means to the UK food & drink sector The UK government and the European Commission are working with industry to lower barriers to trade through TTIP. Independent estimates suggest that an ambitious agreement could boost food & drink exports by up to 5%12. This is likely to affect the entire industry supply chain, with many of the projected increases in exports likely to come from SMEs. TTIP offers an opportunity to improve how food & drink manufacturers in the UK operate, sell and grow in the US market. It is a chance to create a level playing field for UK businesses at home and abroad.

The UK food & drink sector has high quality products and even higher standards to protect them. TTIP will not lower these standards. Where standards are equally high but have been developed differently, the EU and US will seek to agree mutually recognised rules and tests. As part of this the EU will seek recognition for an agreed list of Geographical Indications (GIs), with rules to stop other producers misusing them. Further, the UK government’s priorities for the food & drink sector in TTIP include securing tariff-free market access for products such as beef, lamb and dairy products, establishing a regulatory dialogue to promote coherence between EU and US standards, and ensuring the inclusion of a comprehensive ‘SME Chapter’ that will include among other things, a recommendation for a central hub with all necessary information on exporting to the US. Henry Bowles continued

“Almost anyone can make a pork pie, but to make a Melton Mowbray pork pie there are a number of requirements that must be met. In a similar way to champagne, they must be produced within a specific region and to a certain standard. Walker & Son have received over 300 quality awards in the past five years and achieved Protected Geographical Indication (PGI) status in 2009.

Our PGI status however is not currently recognised in the US. Despite all our accolades as a world class

Walker and Son’s famous Melton Mowbray pork pies

supplier in the UK, to export to the US a separate audit of our bakery must be carried out. Whilst this in itself is not a major concern, the vast amount of paperwork and procedures required is like nothing we have encountered when exporting elsewhere. We therefore hope that the EU-US trade and investment deal, the Transatlantic, Trade and Investment Partnership (TTIP), will help to find ways to mutually recognise lists of geographically protected products and simplify the export process.

The UK and EU should be proud of their exceptionally high food manufacturing standards. The UK government and EU Commission have said that TTIP will not change existing EU foods rules, and it is important to us that this is the case. As a business our commitment to high food standards will remain, regardless of where we export to. Ultimately, manufactures, retailers and consumers on both sides of the Atlantic will benefit from high standards.”

The UK government is keen for industry to provide further evidence of the barriers it faces when trading and investing with the US. Please get in touch at ttip.team@bis.gsi. gov.uk. For any further information, please contact our partners represented on the back cover and click on links provided in box. (on soft copy)

BritishAmerican Business is the leading transatlantic business organization, dedicated to helping companies build their business on both sides of the Atlantic. It incorporates the American Chamber of Commerce (UK) and the British-American Chamber of Commerce (USA), which merged in 2000 to create a single, pre-eminent transatlantic organization under the BAB brand. We represent a pragmatic, creative and conscientious BritishAmerican business community and we are a UK Government: TTIP driving force for a pro-growth transatlantic economic zone.

European Commission: Fact Sheet on Food Open for Business is a series of industry specific events with the objective to explore the changes and opportunities that a successful and comprehensive trade and investment partnership (TTIP) agreement can bring to UK sectors, in particular in regards to the scope and sectorspecific content of the agreement. This initiative aims to build a nation-wide sector case for TTIP and UK-US trade and investment in general that will contribute to the debate in the UK and beyond.

Local partner

Safety and animal and plant health in TTIP All Party Parliamentary Group on EU-US Trade and Investment: Note on agriculture, food & drink and TTIP Non-tariff barriers identified by EU food and farming industry Centre for European Policy Studies: Agriculture, food and the TTIP: Possibilities and pitfalls

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Contact: Emanuel Adam Policy and Public Affairs Manager Email: eadam@babinc.org Tel: +44 (0)20 7290 9885.

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