For small and medium-sized enterprises (SMEs) in the agri-food sector, Brexit has ushered in a new era of challenges. Previously accustomed to the frictionless trade afforded by EU membership, these businesses now face significant trade barriers, including stricter checks and complicated documentation requirements. SMEs are particularly affected, as they often lack the resources to navigate these disruptions as efficiently as larger firms. Real-world examples illustrate this struggle: UK dairy exporters report costly delays at EU borders due to incomplete veterinary certificates, while fresh fish exporters have faced spoilage as products are held up in customs. For many, this has resulted in lost revenue and cancelled contracts, compounding the pressures faced in the wake of Brexit. The recent Unbound report, published by the Centre for Business Prosperity, highlights Agri-food trade being the trade earea most adversely impacted due to Brexit.

 

The case for a UK-EU veterinary agreement

Amid these challenges, there is a growing consensus among SMEs and industry advocates on the need for a UK-EU veterinary agreement.[1] Such an agreement could help streamlining export processes, reduce border delays, and lower the costs of compliance for UK exporters. But how impactful would such an agreement be? Our recent research shed insights on this question by offering the first detailed analysis of the potential effects of various trade agreements on UK-EU trade, with a specific focus on the agri-food sector. Importantly, we explore how agreemnts featuring comprehensive sanitary and phytosanitary (SPS) measures could help SMEs overcome current barriers.[2]

 

What could a veterinary agreement achieve?

A robust veterinary agreement, with clear and enforceable rules around agriculture and food safety (SPS measures), could have a significant impact on trade. Projections suggest a potential increase in agri-food exports by 22.5% and imports by 5.6%, along with a 0.22% rise in overall value generated by the agricultural sector. This would provide a much-needed lift for the sector, helping businesses navigate post-Brexit challenges and grow in global markets. For SMEs, this could translate into reduced setup costs for exporting, faster export processes, increased export volumes, and more products gaining access to the EU market. As shown in our analysis, trade agreements with comprehensive agri-food provisions have dramatically increased both the value and diversity of agri-food exports within a decade of implementation. For SMEs, typically vulnerable to trade barriers, the benefits of establishing a veterinary agreement would be especially impacful.

 

Designing a practical veterinary agreement

While our study does not advocate for a specific type of veterinary agreement, it highlights the effectiveness of agreements that are comprehensive and legally enforceable over time. There’s an opportunity here for a bespoke approach that aligns with both UK and EU standards but does not necessarily bind the UK to follow EU rules rigidly. For example, the agreement could be based on products or issue specific recognition of rules or certification, where each party acknowledges the other’s regulations as equivalent in protecting consumers and ensuring food safety.

 

Political and practical considerations

The feasibility of negotiating such an agreement is complex, given the politically sensitive nature of Brexit-related discussions. Thus, framing a supplemental agreement as a continuation of the institutionalised relationship between the UK and EU based on the Trade and Cooperation Agreement (TCA) rather than modification of it could be more could produce better results. This approach would avoid the contentious issues of renegotiating or reopening the TCA and might be more acceptable to both parties.

 

Conclusion: A game-changer for agri-food SMEs

A well-designed UK-EU veterinary agreement could be a transformative step for SMEs in the agri-food sector. By focusing on enforceable commitments and clear standards, the agreement could ease trade barriers and enhance competitiveness, allowing UK businesses to regain their foothold in EU markets. To succeed, it will be crucial to engage stakeholders on both sides—governments, industry bodies, and trade advocates—to ensure the agreement is adaptable and meets the needs of businesses. If implemented effectively, this could provide a blueprint for future trade negotiations and a lifeline for SMEs navigating the post-Brexit trade landscape.

 

Jun Du, Gregory Messenger, and Oleksandr Shepotylo

 


 Please note that the views expressed in this blog belong to the individual blogger and do not represent the official view of the

Enterprise Research Centre, its Funders or Advisory Group


 

References
– Du, Jun, Messenger, Gregory, and Shepotylo, Oleksandr, (2024). “Enhancing the Brexit Deal: Exploring the Impact of a UK–EU Veterinary Agreement on Agri-food Trade”. Centre for Business Prosperity Research Paper.
– Hofmann Claudia, Alberto Osnago, and Michele Ruta, (2017). “Horizontal Depth: A New Database on the Content of Preferential Trade Agreements”. Policy Research working paper; no. WPS 7981. Washington, D.C: World Bank Group.
[1] Veterinary Agreements specifically focus on regulations and standards related to animal health and welfare and the safety of animal-derived products such as meat, dairy, and seafood.
[2] Sanitary and Phytosanitary (SPS) measures, as one type of non-tariff meausres, are rules and regulations implemented by governments to protect consumers and environment. In practical terms, SPS measures might include things like inspections at borders, restrictions on the use of certain chemicals in food production, or quarantine requirements for imported animals. While these rules are essential for public health and safety, they can also create significant trade barriers, especially for SMEs in sectors like agriculture and food processing, which may struggle to meet the complex compliance requirements.