Brexit - As the UK formally leaves, the spirits sector outlines its expectations for the new deal

The UK will exit the European Union at the end of the week (January 31st) with a Withdrawal Agreement formally approved. As a result, little will change in the immediate aftermath of 31 January, as, during thetransition period running until the end of 2020, the UK will be legally separate from the EU and treated as a third country (eg, no more UK MEPs in the European Parliament), yet will follow all EU rules until 31 December 2020.

The official negotiating period betwen the EU and UK to reach a Free Trade Agreement (FTA) by the end of the year will start once the UK leaves the EU. spiritsEUROPE believes it to be essential that further cliff-edge negotiation, with all the subsequent economic disruption be avoided. The deadline to reach a deal is extremely tight, yet we believe some essential aspects need to be covered by an FTA covering trading of goods with zero tariff and quotas. The agreement should include a level-playing field commitment mechanism preventing the UK from gaining undue competitive advantages by diverging from (or reducing) EU regulatory standards. We call for a  dynamic alignment system to be put in place making sure the UK stays as close as possible to EU rules as they evolve. This will require a clear process in place that guarantees effective collaboration between EU and UK policy-makers and business when there are relevant changes to the rules or when disputes over the agreement arise.

As of next week, both sides will have to agree their negotiating mandates. As outlined above, our aim is to have an agreement in place that preserves fair competition and maintains consumer confidence. In addition to continued tariff-free trade for spirits between the UK and EU27, we need tariff-free trade for some of our sectors’ key inputs, such as cereals, cream, point-of-sale materials, glass and other packaging materials.

The future trading relationship should maintain a high degree of harmonisation or convergence of legislation including spirits definitions and the recognition & protection of Geographical Indications (GIs) as planned in the Withdrawal Agreement. This practice should be sustained over the years when registering new GIs in the EU or UK. The FTA should also include a comprehensive customs agreement to avoid processing delays, (possible) conformity assessments and related administration costs.

As the UK will most likely not stay in a Customs Union with the EU, both will negotiate their own trade deals with third countries around the world. It will be important to implement a strong collaboration to ensure that coherent regulatory requirements are established in third countries, facilitating a fair and smooth international trade of spirits.