How the European wine industry could be hit hard by consequences of a no deal Brexit
By Richard Siddle
For those that know your Roman history you will only be too aware of the significance of March the 15th, the date of the assassination of Julius Caesar. The Ides of March, as it is more widely known, was also the date in the Roman calendar as the deadline for settling debts.
All of which feels very appropriate to those whose lives are inextricably linked to Brexit as the days leading up to March 15, 2019 could also go down in history as when we finally get to know how the UK is going to kills its own relationship with the European Union. For that’s the week when MPs will get the chance to potentially have multiple votes on whether the UK Parliament is going to accept the deal Prime Minister Theresa May has agreed with the EU - assuming she has been able to get the necessary concessions on the controversial backstop governing trading relations between Ireland and Northern Ireland.
The fun all starts on March 12 with an initial House of Commons vote on May’s re-worked deal. If it passes then all bets are off and the UK will leave the EU on March 29 as planned. But the fact there are already plans in place for subsequent votes shows how little confidence the government has even in its own chances.
If, as expected, the vote on the deal is defeated on March 12, MPs will then be asked to vote the next day on whether they are prepared to leave the EU with no deal. Again if they agree then the March 29 deadline can be met. But, if MPs vote against a no deal then the only option available will be to come back on March 14 to vote on delaying Brexit and extending Article 50. If that gets the thumbs up then Theresa May will have to ask the EU for an extension which could kick the whole proceedings back to what political pundits expect to be the end of June. But again if MPs vote against delaying Brexit, the UK could still crash out of the EU with no deal on March 14.
Confused? At least by March 15 we will know where we are, even if that means we are in exactly the same place as we are now.
No deal costs
But what we do now know are some of the ramifications of what will happen if the UK does end up leaving the EU without a deal - and they do not make for good reading if you are exporting wine out of the EU into the UK.
The UK main drinks trade body, the Wine & Spirit Trade Association has revealed this week that in light of a no deal every single bottle of wine destined for the UK from the EU could be faced with paying to get a laboratory technical analysis of the wine to comply with new regulations - a cost some fear could be £100 per wine. An analysis that would have to cover seven criteria: dry extract; total and actual alcohol strength; total acidity; volatile acidity, citric acid and sulphur dioxide.
The move, says the WSTA, could cost the UK wine industry £70m alone, plus whatever fees producers in Europe will have to pay.
It effectively means all wine from the EU will be faced with the same restrictions that the EU currently places on all wine entering the EU from outside countries. Make sense? Namely each wine has to be accompanied by a Vl-1 form. The same will also apply to all wines leaving the UK for the EU.
The WSTA also claims each Vl-1 form could cost up to £20 each to process and create a bureaucratic nightmare for customs officials who might be faced with over 600,000 additional forms to handle (500,000 forms for EU to UK wines and 150,000 forms for UK to EU). It is estimated it would take 12 full time wine inspectors a year to process all these new forms.
The hope is Defra, the government department tasked with managing the movement of food and wine products in and out of the UK, might be able to negotiate some concessions. Australasia, the US and Chile have all, for example, negotiated a simplified version of the Vl-1 form that speeds up the process, but the proposed system will be familiar to producers in New Zealand, Argentina and South Africa who already have to submit a lab test with their Vl-1 forms.
If not the WSTA fears wine officials “will find themselves drowning in paperwork” and UK wine businesses “will be facing a catalogue of extra costs” that can only be passed on to consumers. EU producers could also be asked to pay up for lab costs to do business in the UK.
As the Brexit stakes get ratcheted up a notch or two the WSTA has been holding talks with leading UK importers and distributors about the necessary steps they should be taking to prepare for a no deal. It is urging UK wine businesses to up stock levels by at least 20% in order to have the right volumes of wine on the right side of the Channel in case of a no deal Brexit.
It has also written to three key Secretaries of State - the Chancellor Philip Hammond MP, Dr Liam Fox,Trade & Industry and Michael Gove at Defra - urging them to do all they can to minimise the impact of no deal by setting a zero rate of tariffs on wine coming into the UK from the EU. Ideally permanently.
The WSTA has also called on the Secretaries of State to look at what certification process will be required for EU wine post-Brexit and if it could postpone introducing the new V1-1 proceeds in the short term, and keep open the current automatic EMCS (Excise Movement and Control Scheme) that allows goods to go through UK and EU ‘duty suspended’.
“In the longer term, there should be a re-evaluation of import controls to ensure that any future requirements for documentation are both fit for purpose and proportionate,” claims the WSTA.
The challenge to be ‘fit for purpose and proportionate’ could well be applied to the Brexit negotiations in general.