It will be some time before South Africans and other third country fresh produce suppliers to the European Union and the United Kingdom know exactly how they will be affected by the Britain leaving the EU. The process which will be followed, is, however, likely to have a significant number of implications for the fresh produce trade as we know it today.
For South Africa there is a huge amount at stake. During the past season the South African grape sector sold just more than 80% of its grapes in the UK and Europe, while the sales of citrus fruit amounts to more than 600,000 tons per annum. The UK and Europe are the most important marketing regions for South African stone fruit, apples, pears and avocados. Furthermore, South African produce currently benefit from the free movement of fruit and vegetables between the UK and the European members of the EU.
This is as a result of the various trade agreements between South Africa (and its Southern African partners) and the EU. Britain leaving the EU will have implications for these agreements, because the legislation giving effect to them will have to be changed and it is generally accepted that these negotiations will be time-consuming and will probably only happen once the complex issues between the EU and Britain is resolved.
The only thing that is certain is that until the day the UK leaves, which will at this stage be more than two years from now, the status quo will remain. What the impact of new negotiated settlement will be, will, for the time being, be uncertain.
The European Organisation for Fresh Fruit and Vegetables, Freshfel, says Brexit negotiations would have to be undertaken in line with the provisions of the Lisbon Treaty and completed within a period of two years following the UK’s decision – so far not made – to invoke Article 50 of that treaty. Freshfel says it would remain “business as usual” for the time being in terms of the single market and trade agreements with third countries.
“Other benefits of the Common Agriculture Policy, food safety legislation, and research and innovation projects will also remain fully applicable,” Freshfel says in its first major statement since the result of the British referendum.
Reported in the Fresh Produce Journal, Freshfel is quoted as saying that it is still very early to speculate on the outcome of the Leave negotiation. “Moreover, no precedent exists on this kind of dismantling negotiation.”
“The process is also likely to imply high political and legal complexity. As a result of this process, it could lead to significant number of implications for the fresh produce trade.”
Frershfel says the European trade currently enjoys the benefit of the free circulation within the single market and trade is facilitated by the existence of the ‘acquis communautaire’ securing harmonised rules within the single market. The negotiation of the new treaty will have to address these matters and access conditions.
Freshfel states that the UK is also a significant importer of fresh produce originating from third countries. These imports were currently taking the benefits of trade liberalisation conditions set by existing Free Trade Agreements that the EU had signed on behalf of its 28 member states.
As a result, the UK, like other EU members, can currently import fresh produce from countries in the Mediterranean basin and Southern Hemisphere, as well as former ACP countries and nations in South-East Asia, free of any duties.
“That could change with an exit: “The FTA negotiated by the EU will most probably cease to apply for import into the UK,” Freshfel warned.
Freshfel says to maintain similar conditions, it will need to be governed by new bilateral trade deals, to be negotiated by the UK individually with the third countries. These negotiations processes are usually time consuming, lengthy and need to comply with the requirements of World Trade Organisation (WTO).
The FPJ says in 2015, the UK spent around €6.8bn on more than 5.6m tonnes of fresh fruit and vegetables from either the EU or other parts of the world. About 2.9m tonnes of that total came from the EU itself.
It is reported that the UK’s main suppliers last year were: Spain (1.4m tonnes), the Netherlands (700,000 tonnes, including some produce re-exported from elsewhere), South Africa (350,000 tonnes), Costa Rica and Colombia (300,000 tonnes each). The Dominican Republic, France, Germany and Ireland all shipped around 200,000 tonnes each.
In terms of volumes for individual product categories, the largest imports were bananas (1.1m tonnes), apples (450,000 tonnes), soft citrus (300,000 tonnes), oranges (280,000 tonnes) and table grapes (280,000 tonnes).
Fredo says the British vote has turned the fresh produce trade in Europe upside down and South African fresh produce exporters will have to engage with their government, partners in the UK and the EU as well as will the EU government to ensure that it is not last in the queue when the hard talking starts.