EU exit related trade challenges UK shellfish exporters Introduction As the UK is set to leave the EU, what could it mean for the £299m worth of shellfish exported from the UK each year? We’ve explored the implications of trading scallops, Nephrops, brown crab and blue mussels under World Trade Organisation conditions, which has been highlighted as a potential trading situation under a no deal EU exit. This paper identifies practical actions that industry, Government and other institutions are taking – or could take – in response.
Key facts: •
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The UK seafood trade portfolio includes imports from, and exports to, a wide range of countries around the world. In 2015, trade in all seafood species represented over 2m tonnes (liveweight), worth £4.15bn. UK shellfish operators are diverse. In 2018, there were 150 seafood operating sites processing shellfish, of which 75 processed shellfish only. For the shellfish only processors, finished product was sold to UK domestic markets (68% of sales), exported to EU markets (27% of sales), and exported to the rest of the world (5% of sales).
Highlands & Islands (7 sites)
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The majority of UK shellfish exports are destined for the EU but those to Asian markets are increasing. In 2017, the UK exports of these shellfish species totalled 84,618 tonnes (liveweight), worth £299m.
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From 2010-2017 total UK exports of these species has fallen 31% by volume and increased in value by 15%. By volume, exports of these species to the EU have decreased by 35% but increased to non-EU markets by 56% (driven by increased brown crab exports to China).
Seafood trade is subject to international trade rules supervised by the World Trade Organisation (WTO). Within this, UK-EU trade is currently conducted under Single Market conditions. With EU exit, UK-EU trade could change and be conducted under World Trade Organisation (WTO) conditions.
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WTO conditions would mean trading would be the same as any other country without an EU trade agreement.
NE England (6 sites) Wales & Northern Ireland (7 sites)
Exporters include small operators (with limited suppliers, species, formats and markets), medium-sized operators (with several suppliers, species, formats and markets), traders and wholesalers specialising in export/import trade. Exporters rely on transport that best supports their export market. For all formats sent short distances transport includes vivier trucks, refrigerated trucks for dry goods, road and ferry/channel tunnel. For long distances, additional options include air freight (live) and container ship (frozen).
NE Scotland (5 sites)
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Export supply chains can be complex and time critical. Products are exported in a range of formats: live/fresh, frozen, prepared and preserved, or smoked with markets paying prices that reflect product freshness, quality and shelf-life. In general, higher prices will be paid for live shellfish than chilled/ fresh shellfish products that, in turn, will pay higher prices than frozen shellfish products. Time to market, monitoring and control are critical factors for supplying premium markets.
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What does trading under WTO mean and what changes could this bring?
Shellfish exporters are located around the UK coast
South England & Midlands (10 sites)
SW England (8 sites)
Main export destinations 2017
EU member states (76,071t and £266m) – particularly France, Spain, Italy, and the Netherlands.
Important non-EU markets are China (and Hong Kong)
o Trade with the EU single market would mean paying a charge (tariffs) on products sold, and additional paperwork and enforcement checks at borders (non-tariff measures).
o Trade with markets with 3rd party agreements with the EU (e.g. South Korea), could mean paying a charge on products sold (tariffs), additional paperwork and enforcement checks at borders.
o Trade with markets without any agreement with the EU may not change in the near term but could be eased through any future UK trade agreement arising from the UK having an independent trade policy.
EU exit related trade challenges UK shellfish exporters
What challenges could this bring? •
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Trading under WTO conditions would mean shellfish exporters to the EU would face trade tariffs, various non-tariff measures, and additional enforcement checks.
How can organisations respond?
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There are near term and long term implications for shellfish exporters to the EU.
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Organisations are already engaged in a range of responses to this challenge. Options for shellfish exporters include:
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Near term these may include: direct increased costs from tariffs; practicalities of handling paperwork in adverse conditions (in remote locations, bad weather); lack of infrastructure to cope with backed up freight traffic; uncertainty over the documents required; problems liaising with public organisations (who work to office hours). Ultimately this could undermine the quality of exported products (for example increased shellfish mortality in live trade and forcing premium products into lower paying markets) and mean UK exporters lose out to non-UK suppliers that can supply the same product faster and at lower cost.
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Near term: protect and defend existing trade (for immediate practical advice, see UK Government and Seafish resources1).
The relevant EU external tariff charge for these species of shellfish ranges from 7.5% to 12%, depending on the species and product format. Feedback from shellfish exporters suggests that this additional cost could be offset by market price fluctuations, advantageous exchange rate shifts or increased domestic landings, however, higher costs might have to be absorbed by the supply chain rather than the customer. The main non-tariff measures relevant to seafood trade are: o Sanitary and phytosanitary (SPS) measures (e.g. bivalve molluscs must be stored and transported at temperatures that won’t compromise food safety). o Technical barriers to trade (e.g. some operators may require catch certification).
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Longer term, these may include: exploring and reorienting to alternative nonEU market options, investing in new products and facilities to support EU and non-EU market access; consolidation as some exporters take on the business of others no longer supplying the EU market (through closure, turning to alternative markets etc).
o Pre-shipment inspection and other formalities (e.g. operators needing to be registered as an exporter to the EU, all seafood must enter the EU through a Border Inspection Post authorised to check seafood). o Non-automatic licensing, quotas, prohibition and quantity control (some categories of seafood can be imported at zero or low tariffs up to a set annual quota).
On top of existing paperwork (landing information and export declarations), exporters will need approval that hygiene standards are equivalent to EU requirements, be required to show a health certificate, a catch certificate (for some wild capture products), and that production zones are approved (for aquaculture products). Shellfish exporters suggest new measures would result in additional paperwork and administration costs, transportation delays and additional shellfish handling, penalties for non-compliance (e.g. product return and dissatisfied customers), and potential problems with truck drivers operating in the EU. •
What could be the implications?
Additional enforcement arrangements will be required for UK exports to the EU. In addition to current requirements to liaise with Defra/Marine Scotland etc (to provide landing information) and HMRC (for export declaration), exporters will have to liaise with the UK Fisheries Authority (for catch certificates), Local Authorities and the Animal and Plant Health Agency / DAERA in Northern Ireland (for export health certificates). There will also be additional checks at the UK port of departure, at the nominated EU Border Inspection Post, and by EU National Customs Authorities (for food safety and hygiene). Shellfish exporters suggest these additional requirements will mean delays in paperwork, administration and in transportation, with increased handling of shellfish.
Capture or aquaculture
Handling/ processing
Transport
Importer in the EU
o understanding the potential changes, challenges and options.
o checking tariff rates, non-tariff measures, enforcement requirements relevant to exported products.
o liaising with customers, suppliers and service providers (e.g. Bank, freight company).
o hiring staff for additional paperwork;
o and, as a last resort, closing operations to avoid inescapable costs.
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Medium term: broaden trade options, prospect new avenues.
o increasing control over the supply chain (including vertical integration, exploring holding ponds for live trade);
o relocating, or establishing, facilities in the EU to avoid costs; changing transport modes (e.g. from road to air).
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Longer term: re-orient towards new trade options.
o moving into other product formats to ease critical time periods.
o investing in new facilities (e.g. processing) and market development.
Options for Government and other institutions include: In the UK
Transport
In the EU
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improving communication and engagement with industry; adopting an ‘enabling’ orientation and fleetness of foot; streamlining documentation e.g. digital forms and authorisation; investing in staff and other resources (particularly Customs and Local Authority Environmental Health); providing easily accessible funding; and stimulating UK domestic demand. Finally, fish markets should consider starting and ending market sales earlier to cope with potential delays downstream in the supply chain (arising from border delays).
For further information and updates, please visit the Seafish EU Exit webpage: https://www.seafish.org/changing-landscapes Contact: Seafish, 18 Logie Mill, Logie Green Road, Edinburgh. EH7 4HS. Tel: +44 (0)131 558 3331 1 Information resources are available through this review, the Seafish EU exit guide (https://www.seafish.org/article/preparing-your-business-for-eu-exit) and UK Government guidance (https://www.gov.uk/guidance/exporting-and-importing-fish-if-theres-no-brexit-deal)
Email: seafish@seafish.co.uk Web: https://www.seafish.org
This document combines data, opinions and conjecture and is a position paper at the time of press. It is important to bear in mind that evidence today might suggest trends that turn out to be very different in the longer-term.