In addition to market instability and political and economic uncertainty, Brexit entails some risks for the agro-food sector, depending on the "clauses" of the divorce and the terms agreed for the relationship between the European Union (EU) and the United Kingdom (UK).
The principle of agreement reached by both parties on November 14 establishes the conditions for an exit that is pending to be ratified by the British Parliament.
On March 30, 2019, the United Kingdom will become a "third country", with a transitional period that will last up until December 31, 2020, and which will come into force as long as a withdrawal agreement is reached and an abrupt departure is avoided.
What Brexit?
"Everything depends on the type of Brexit we are going to face; if a feasible agreement is not reached in 2019, our exports to the United Kingdom, a priority customer, would be severely affected. There may be delays in shipments, saturation of ports and logistics centers or new documents to fill," explains the professor of the International San Telmo Horacio González Alemán Institute.
Based on its own data, "the British Government has already announced special measures, such as enabling extra space in the port of Dover, recommendations to increase stocks, etc. It could be a complex and difficult situation."
"If an agreement is reached, and therefore there is a transitional period, the situation would remain as it is now and there would be time to design the new framework without abrupt alterations in trade flows. Better to trust that politicians find a solution; otherwise, it could be a hard blow for the two parties and a hurdle for our exports," he said.
Spain sells food and beverages to the UK worth 4,000 million Euro, which is 10% of its total agro-food shipments. Sectors such as horticulture, wine and fishing are some of the most concerned about a change in the export conditions.
Some of the biggest fears are regulatory changes or the imposition of non-tariff barriers and preferential agreements for Spain's competitors in the UK market. There are also concerns regarding inflation, the impact of the devaluation of the pound or about whether London will recognize the designations of origin.
And while perishable foods could suffer the consequences of the bureaucratizing processes, quality products such as oil or wine may be threatened by competition from third countries.
The Secretary of State for Commerce has launched a campaign to guide companies based on their sector and their relationship with the United Kingdom, and fruit and vegetable exporters are getting ready to face issues such as customs and phytosanitary controls and possible market disruptions.
Source: EFEAGRO
