Food trade between the UK and EU will be slashed by almost a quarter in both directions even if a free trade agreement (FTA) is reached before the end of this year, new research has found.
A London School of Economics (LSE) report, Vulnerabilities of Supply Chains Post-Brexit, found the average reduction in UK food exports to the EU would be 22.5 per cent under a FTA, while EU exports to the UK would fall by 22.6 per cent.
The drop in trade would be primarily driven by ‘non-tariff barriers’ (NTBs) such as new paperwork.
The authors of the report, commissioned by dairy co-operative Arla, estimated that compliance with rules of origin checks when importing into the EU would be in the range of 8 per cent of the value of the underlying good, while import declarations would cost traders from the UK and the EU around £4bn a year.
The estimates of NTB costs are believed to be in the low range, given uncertainties surrounding the impact of port waiting times and the need for firms to navigate the new border system, among other things.
Ash Amirahmadi, UK managing director of Arla Foods, told Farmers Guardian NTBs were one of his primary concerns.
“What the LSE report shows is even if you have a free trade agreement and there are zero tariffs, there is a whole stack of other things which need to be in place to make sure goods flow and costs do not rise.
“I would say I am spending 90 per cent of my time focused on those things, not on trying to lobby for a free trade agreement, because I think the Government fully understands the need for a free trade agreement.
“The bit I do not think the Government is really prepared enough for is what needs to happen when it comes to the non-tariff related issues.”
Mr Amirahmadi said Ministers had asked Arla to put together a roundtable on the back of the LSE report, where academics will share their findings with Defra, the Department for International Trade, the Department for Business, Energy and Industrial Strategy and HMRC.
The meeting will take place next week.