Since the start of the COVID 19 crisis, all negotiations have been stopped to allow authorities to concentrate on the fight against coronavirus. No public information is available as to when talks will resume, nor when the UK will publish its draft free trade agreement. The EU published its draft text on 18 March. According to Brexit analysts in Brussels, intense discussions can be expected, particularly on those fundamental issues where major differences persist: what type of agreement will eventually be concluded? Can a common interpretation be found on the “level playing field” provision – essential to maintain fair competition? On the role of the ECJ in dispute settlements? On Northern Ireland? And all the other open points?
In light of the above, spiritsEUROPE has started to elaborate its views and positions that will be sent to both the EU and UK negotiators soon. Europe’s spirits sector has benefitted hugely from the creation of the EU’s Internal Market, and from the range of bilateral and multilateral trade deals, the EU has concluded with countries around the world. As a product that has been widely traded and exported for centuries, spirits depend on the free movement of goods. Within the EU, distillers have benefitted greatly from the free movement of people and capital: spirits worth €2.7 billion are shipped each year between the EU27 and the UK.
UK spirits exports to the EU27 amount to €2.1 billion, while Member States’ spirits exports to the UK reached €631 million last year.
Keeping these trading flows uninterrupted and maintaining a close relationship between the EU and the UK are therefore of critical importance for our sector. In particular, we welcome the Protocol which ensures continued tariff-free movements of goods between Ireland and Northern Ireland. This also protects important cross-border supply chains for the production of spirits such as Irish Cream. Like many other industries, we need a living agreement between the EU and UK to preserve fair competition and maintain consumer confidence in our products.
As to our specific expectations on what an ambitious agreement should be made of, we call for a comprehensive customs agreement to avoid border tariffs, processing delays, conformity assessments and related administration costs. There must be an effective dispute resolution mechanism and a strong level of mutual recognition and protection of Geographical Indications (GIs). We call for a commitment that, wherever possible, common rules should remain closely aligned. If this is not the case, a mechanism should be put in place to report any divergence by the UK or EU, supported by a joint committee with industry representation to raise formal concerns. We believe it is important to adopt a clear governance structure to allow experts from the UK and the EU to exchange on matters of relevance for the sector and to raise formal concerns.
There must be enough time foreseen for adjustments to prevent disruptions of supply chains. There are huge risks, particularly for smaller operators, many of whom will be facing procedures for the first time, to suitably prepare as they often lack the required resources. We have always said, and continue to say, that no-deal is not an option. Given the obvious delays resulting from the coronavirus crisis, we urge both parties to be flexible and ensure an implementation period following the end of the transition that is predictable, pragmatic, and non-disruptive for businesses.
