The political economy of the post-Brexit agri-food sector: can the UK eat its cake and still have it?

Brexit and the new Trade & Cooperation Agreement offer the UK an opportunity to diverge from the EU’s agri-food regulatory regime. However, it will benefit UK consumers in particular to maintain its alignment with EU food standards.

For almost five decades, the UK’s agri-food sector operated within the EU regulatory and institutional framework. EU regulations and policies such as the Common Agricultural Policy (CAP) controlled most of the activities in the sector – from agronomic practice to trade. This development was driven mainly by the quest to harmonise regulatory standards among member states to ensure the free flow of goods within the Single Market. The UK did not agree with some of the EU’s regulatory decisions and policy directions. For instance, the UK preferred voluntary and market-based measures in veterinary medicines and pesticide regulations rather than legal controls adopted by the EU. Some government officials and key actors criticised the EU’s regulatory approach as “anti-science” and “anti-innovation” (See George Freeman 2014 and George Eustice 2021).

On the 31st of December 2020, the UK officially left the Union after 47 years of membership. As we advance, it will no longer be bound by EU rules and regulations, but the two blocs will liaise under a new Trade and Cooperation Agreement (TCA) – which came into effect on the 1st of January 2021. Per this new arrangement, the UK ceases to be part of the Single Market, yet there will be a 100% tariff liberalisation on the movement of goods between the two blocs. In his speech after the agreement, the UK Prime Minister, Boris Johnson, declared:

“We have taken back control of laws and our destiny. We have taken back control of every jot and tittle of our regulation. In a way that is complete and unfettered… We will be able to set our own standards, to innovate in the way that we want, to originate new frameworks for the sectors in which this country leads the world…” 

Photo by Rocco Dipoppa on Unsplash

The disposition of the UK government to have unfettered access to the EU market while maintaining regulatory independence raises critical questions regarding post-Brexit regulatory politics between the two blocs. This blog argues that the UK will be compelled to maintain regulatory alignment with the EU for three interrelated reasons. 

First, the Single Market is guided by EU rules, and the EU has one of the strictest agri-food regulatory regimes in the world. For instance, the EU has comparatively stricter safety limits for additives, pesticides, veterinary medicine, and food contact materials. Regulations on food ingredients, compositions and additives also prohibit the use of certain substances, such as chlorine in the treatment of poultry carcasses, from the single market. The EU also has stringent food labelling requirements that demand mandatory presentation of the composition, food origins and health or identification marks. These rigorous requirements will attract UK local businesses to voluntarily follow the standards that will enable them to sell locally and in the Single Market.

Moreover, the EU has a considerable market size advantage. Market size is a principal factor that shapes countries’ regulatory and bargaining power relations. It follows that ceteris paribus, countries with more extensive internal markets tend to have substantial gravitational pull-on producers from other countries to mirror their standards to sell in their markets. Market power can, thus, shift the contours of the regulatory game in favour of the EU. To illustrate, the combined GDP (PPS) of the EU with 27 Member States (EU-27) in 2017 was US$19.094 Trillion (16% of global GDP) with about 450 million consumers compared to the UK with US$3.036 Trillion (2.5% of global GDP) and population size of about 55 million. Thus, the EU’s economy is six times bigger than the UK’s, and it is eight times larger in consumer (population) size than the UK’s.

Furthermore, the decades of harmonisation and membership of the European Single Market have caused the agri-food supply chains of the regions to be closely interwoven. For instance, in 2019, the UK supplied only 55% of its consumed food, with 26% from the EU. At the same time, the EU remains the single largest market for UK agriculture and food products, receiving over 60% of the UK’s agri-food export. This illustrates how these trading blocs’ markets and supply chains remain integrated. Hence, attempts for regulatory divergence will bring about disruption in the agri-food chain linkages and eventual food security challenges since supply chains are not a quick fix in short to medium term.

In conclusion, even as the TCA allows the UK to diverge from the EU standards, a continuous alignment with EU regulatory regimes will benefit agri-food producers and consumers in the UK. Conversely, divergence from the EU regulatory regime may entail lowering food standards in the UK to facilitate trade with other countries. This scenario will imply that UK producers will compete with cheaper products from countries with lower standards, which will instigate ‘the race to the bottom’ and an eventual decline in food standards for UK consumers. 

This blog is the fifth in the series ‘The political economy of everyday life’ by SPERI’s Doctoral Researcher Network. You can access the full series here.