Free-from thresholds, may contain what happens at the moment of Brexit? 21 November 2017 Brian Kelly bkelly@cov.com
Overview of Covington In an increasingly regulated world, we have an exceptional ability to navigate clients through their most complex business problems, deals and disputes. Over 1,000 lawyers and advisors firm wide, over 150 of whom are based in Europe In addition to our in-house expertise, our clients benefit from our network of relationships with leading lawyers at firms around the globe, which enables us to select the right local counsel for the specific task at hand 2
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Outline Free From regulation Current position on Brexit Post-Brexit models Model-specific implications for food law Looking further ahead and next steps 4
Free From regulation (1) Allergen Labelling (Regulation (EU) No 1169/2011) Annex II - substances or products causing allergies and intolerances May contain claims? Tolerances? nut-free, wheat-free, lactose-free etc. Gluten-free, very low gluten (Regulation (EU) No 828/2014) 5
Free From regulation (2) Nutrition Claims (Regulation (EC) No 1924/2006) fat-free saturated fat-free sugars-free salt-free Most of the law is EU-based Affected by Brexit 6
Current Position (1) Business as usual from a legal/regulatory perspective EU law binding until moment of exit Infraction proceedings against UK (e.g., traffic light scheme)? Likewise appetite of UK courts to refer matters of EU law to the EU Court of Justice Existing referrals unaffected 7
Current Position (2) UK Position Papers Continuity in the availability of goods, 21 August 2017 future relationship should be built from our commonalities [CETA] establishes sector-wide mutual recognition precedents are a useful [but] integration between UK and the EU [is] unlike any existing arrangement, recognize our common regulatory systems market surveillance and enforcement authorities should have access to information about unsafe products, such as food, and mechanisms to take action [if] non-compliant food held for the purpose of sale (= placed on the market) before Brexit-day, must continue to be made available after that date. Northern Ireland and Ireland, 16 August 2017 aim to avoid any physical border, seamless border as possible such as SPS measures for agri-food, waivers from security and safety declarations, go beyond any previous precedents, regulatory equivalence on agri-food, UK and EU agree to achieve same outcome and high standards, flexibility on method for achieving this, including regulatory cooperation and dispute resolution mechanisms ( 57) 8
Current Position (3) This EU position paper (7 September 2017) contains a brief reference to protected geographical indications : In the specific case of protected geographical indications, protected designations of origin and other protected terms in relation to agricultural products (traditional specialities guaranteed and traditional terms for wine) protected under Union law before the withdrawal date, this principle should also imply that the United Kingdom puts in place, as of the withdrawal date, the necessary domestic legislation providing for their continued protection. Such protection should be comparable to that provided by Union law 1. 1 N.B. there is currently no domestic legislation in the United Kingdom on the protection of designations of origin and geographical indications as well as on other protected terms in relation to agricultural products. 9
Post-Brexit Models Dependent on the exit model Single Market (e.g., modelled on EEA) Other (e.g., free trade, customs union, WTO rules) Tension between UK desire to participate in EU single market and conflicting desire to limit immigration Free movement of people could be a deal-breaker Divorce settlement is a sticking point 10
Single Market Model EEA Agreement as example (or Norway model) Norway, Iceland and Liechtenstein are European Economic Area (EEA) Member States, alongside the EU Participate fully in the EU internal market Free movement of goods, services, capital and persons Pay dues Very little influence No MEPs No vote in EU Council of the European Union Observer status in EU procedures 11
Unlikely to be a material change No transfer of legislative power but EEA Agreement requires implementation of bulk of EU food laws Food Chapter XII, Annex II EU-wide approval/notification measures (novel foods, health claims etc.) would continue to apply in the UK Possible administrative approvals required e.g., for novel foods Reliance on EU principles of free movement and mutual recognition UK supply chain infrastructure largely unaffected, as are supplies to UK BUT Implications of the EEA Model for Food Law UK observer status means loss of influence in policy/legislation/regulation Does not cover common agricultural/fishery policies 12
Non-EEA Model Various non-eea models being discussed the Swiss model -- a range of separately negotiated bilateral treaties with the EU; Switzerland has approximately 130 some of which require free movement of people); the Turkish model (a customs union); and the default model (the WTO/free trade approach, where the UK would simply be a third party with no preferential access to the EU market) UK would need to enter into free trade relations with the EEA and EU and negotiate bilateral agreements on a case-by-case basis the WTO model in particular would presume a total separation of the UK systems for food regulation from the EU Most Favoured Nation tariffs 13
Implications of Non-EEA Model for Food Law (1) No obligation to implement new EU laws or maintain existing ones General perception that mandatory EU food law requirements relating to food production (traceability, hygiene, risk analysis, responsibilities and requirements for food business operators, precautionary approach, labelling ) are satisfactory so likely new UK laws would reflect these Currently approved additives also likely to be permitted under new UK laws Trade pressure from countries outside like the U.S. to adopt different standards Precautionary principle Codex Alimentarius! 14
Implications of Non-EEA Model for Food Law (2) Food-specific trade law impact UK currently operates under the EU Schedules of Concessions UK intends a copy and paste approach as part of an FTA Market access tariffs should be relatively straightforward but significant cost implications if not quotas and subsidy limits (appears to be agreement in principle between UK and EU on apportioning quotas (11 October 2017) Rules of Origin Regulatory convergence Likely to be a sector-by-sector approach If no FTA reached: key principle of WTO is that countries do not discriminate against one another both EU and UK would have to place tariffs on the other 15
Looking Further Ahead What about laws governing health claims (and nutrient profiles, botanicals, and novel foods? UK-only approach? Additional labelling requirements? Traffic lights? Creating other UK-specific rules? Tolerance thresholds May contain labelling rules 16
Summary We do not know whether UK will Brexit and outcome if it does Companies should begin planning: Identify existing/pending/future applications or notifications for foods (e.g., novel foods, GM foods, health claims) that are managed by the UK Check timing Consider alternative Member State as rapporteur going forward Labelling and establishment issues (EU food business operator) Check shelf life since products may have long shelf-life Are UK entities participants in an EEA supply chain, consider alternative or supplemental suppliers (any other commercial/tax/ip considerations) Consider establishing greater links in other EU Member States to better enable influence of EU laws Consider likely impact on pricing due to change in tariffs 17
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