What should the Labour Government prioritise on agri-food trade?

This roundtable discussion was convened by the Centre for Inclusive Trade Policy on 3 December 2024 at the University of Sussex. The discussion was held under the Chatham House Rule of non-attributable dialogue.

Summary

A roundtable discussion, prompted by the question "What should the Labour Government prioritise in agri-food trade?", was convened by the Centre for Inclusive Trade Policy to gather insights from experts and generate actionable recommendations for the new Labour Government, which took office in July. The discussion highlighted the growing domestic and international challenges facing the UK agri-food sector post-Brexit, including disruptions in EU-UK trade flows and increased fragmentation as regulatory powers shift to devolved nations. A major focus was the potential for an EU-UK Sanitary and Phytosanitary (SPS) agreement to streamline trade. While participants considered the EU-New Zealand model a feasible starting point, they cautioned that it may not fully address all sector challenges. Key recommendations for the UK Government include developing a dedicated agri-food strategy, enhancing food traceability through digitalisation, and adopting a more inclusive approach to devolved governance and stakeholder participation.

Introduction

In July, the Labour Government assumed office in the UK, promising to implement a mission-driven approach to rebuild Britain, starting with initiatives to spur economic growth. As the new government begins outlining its next steps and priorities, the Centre for Inclusive Trade Policy convened a roundtable discussion, bringing together stakeholders and academics with expertise in agricultural trade, sustainable finance, food policy, and supply chain management. This roundtable aimed to foster an exchange of ideas on the question, "What should the Labour Government prioritise in agri-food trade?" with the ultimate goal of providing actionable recommendations to the government.

As a starting point for the discussion, Emily Lydgate, Deputy Director of the Centre for Inclusive Trade Policy and Professor of Environmental Law at the University of Sussex, along with Alex Carson-Taylor, FRGS, an Independent International Trade Specialist, prepared a briefing paper entitled “An EU-UK SPS Agreement: The perils and possibilities of (re)alignment.” This paper was circulated among the participants prior to the roundtable and presented at the beginning of the session. Following this, participants were invited to share their thoughts on the briefing and contribute their perspectives on the broader question on what should be prioritised in the context of agri-food trade policy by the new UK government.

This document summarizes the four main points that emerged from the discussion.

Current state of the UK Agri-food sector

Agriculture is an important sector of the UK economy, contributing 6.5% of Gross Value Added and employing 13% of the workforce in agri-food. It is also one of the sectors most deeply affected by Brexit, which has introduced significant trade barriers and caused an 18% decline in exports to the EU. Those in the Agri-food sector—spanning production to port operations—are now grappling with extensive paperwork, including over 156 new export health certificates, requiring stakeholders to acquire new skills to navigate the evolving trade dynamics.

While UK farmers face increasingly complex EU regulatory and border requirements, domestic border checks remain in disarray. The sector is also experiencing sweeping domestic subsidy reforms amid broader pressures on UK land use. These challenges are compounded by the impending implementation of new regulatory frameworks aimed at addressing societal concerns about environmental sustainability and animal welfare. These include carbon taxes on certain products and enhanced traceability requirements to prevent imports of products linked to deforestation.

Amid these shifts, the Labour Government has yet to announce the direction it plans to take for agricultural policy. This uncertainty undermines both short- and long-term planning for supply chain management and food security, leaving the sector in a precarious position. To make the situation worse, channels for stakeholder engagement are being modified, with the Trade Advisory Group being replaced by unspecified consultation arrangements. Some participants noted that, although the new government appears more open to stakeholder input, the lack of formal communication channels makes meaningful engagement challenging.

Domestic and international considerations for UK policy

Following Brexit, UK agricultural policy has become increasingly fragmented due to the domestic context of devolved governance. Many aspects of agri-food policy fall under the jurisdiction of devolved nations, leading to divergent approaches across the UK.  Northern Ireland faces unique challenges in harmonising with the rest of the UK due to its commitment to align with EU regulations under the Windsor Framework as a way to avoid a hard border with the Republic of Ireland. This divergence complicates trade and supply chain management, with some products required to carry "Not for EU" labels.

Some participants also highlighted that the appropriateness of the current "just-in-time" supply chain model for food is being questioned in light of rising geopolitical tensions and concerns about food shortages due to trade disruptions. In this context, a UK domestic policy focused on addressing obesity and other health issues within the food chain would fall short of the broader approaches to food safety and security adopted by other countries. For example, Sweden is passing a law that makes the 'right to be fed' a mandatory government responsibility as part of its Food Preparedness Strategy.

The UK has the potential to play a central role in global discussions on environmental protection, particularly regarding deforestation. The UK Forest Risk Commodity Regulation (UKFRC) restricts trade only on products from illegally deforested areas, while the EU Deforestation Regulation (EUDR) also targets legally deforested areas. The narrow approach adopted by the UK is perceived by trade partners as being less intrusive to national sovereignty or internal matters, potentially leaving the UK in a better position to engage with Global South nations in an open and cooperative dialogue about effort to halt deforestation.

Prospects for an EU-UK SPS Agreement

The new Free Trade Agreement between the EU and UK, the Trade and Cooperation Agreement (TCA), does not require the parties to recognise the equivalence of their Sanitary and Phytosanitary (SPS) standards. The Labour Government has announced its intention to negotiate an agri-food SPS with the EU to reduce border checks. However, details on the timeline and structure of these negotiations remain unclear.

Existing models of bilateral SPS agreements vary widely in terms of the level and type of border barriers they address. For example, the EU-Switzerland veterinary agreement removes virtually all border controls for animal and animal product trade, creating a common veterinary area. However, this broad regulatory equivalence is not typical of the EU's approach with third countries, where documents, identity checks, and physical inspections are commonly required for nearly all consignments. The agreement with New Zealand offers an intermediate model, with reduced physical checks and simplified certification for mutually agreed low-risk products.

The EU-New Zealand model would be easier to achieve but would not resolve the border issues facing UK agri-food exports. As highlighted by one participant, the SPS agreement in the style of the EU- New Zealand model uses the World Trade Organization definition of SPS, which limits the scope of subjects that can benefit from regulatory alignment. Issues such as animal welfare, deforestation, nutrition, and other quality-related matters are often considered Technical Barriers to Trade (TBT) measures rather than SPS measures.

Additionally, both the UK and EU will need to clarify their red lines before negotiations can begin. The Labour Government has reiterated in its manifesto its commitment to maintaining the ‘red line’ set out by the Conservative Party of not joining the EU Single Market as a condition for greater cross-border collaboration. Meanwhile, the EU has repeatedly stated during Brexit negotiations that its ‘red line’ for post-Brexit negotiation is the rejection of ‘cherry-picking’ or sector-specific areas for deep cooperation. Both sides would need to exhibit some flexibility with respect to their positions if fully frictionless trade in agri-food products between the EU and UK is to be achieved.

Political bravery

There is an urgent need for political bravery to tackle head-on the challenges of ensuring the UK's agri-food sector is sustainable, resilient, and able to support economic growth, food security, and strong international relations. To begin, it is crucial for the new government to clarify how agri-food will feature in its broader growth strategy and self-sufficiency. Some participants emphasised the need for the government to acknowledge the sector's significance and address its unique and exceptional nature.

The current lack of a cohesive domestic strategy on agri-food weakens the UK’s ability to leverage its trade policy on global issues like food security and sustainability. Political bravery will be needed to engage in tough conversations about land use and farm subsidy reforms to align goals across sectors, alongside addressing governance gaps and finding a balanced approach to devolved administrations, which must preserve local choices while harmonising policies for a fluid agri-food supply chain.

Trust must be regained, particularly with farmers, as the growing rural-urban divide continues to impact confidence in government policy. There is also a need to resolve enforcement tensions at UK borders due to disagreements over funding and responsibilities between Port Health Authorities and central government agencies like the Department for Environment, Food & Rural Affairs. These tensions, compounded by reduced operational capacity and inconsistent application of standards, are creating challenges for businesses to comply with trade requirements and eroding public trust.