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News | 01 March, 2022
Last week’s Government announcement of a light touch inspection regime at the end of the Transition period for some goods entering Great Britain will be of no comfort to the UK’s wine and beverage alcohol sector which will face full customs checks from 1 January 2021. And for the UK’s wine importers, the end of the Transition period will result in a double, and possibly triple, whammy: full customs declarations, import certificates for wine and, if a deal with the EU cannot be negotiated, import tariffs.
If the UK Government is serious about seizing the opportunities of an independent UK then scrapping import certificates for wine is an easy win. Yet all signs point the opposite way: to a Government that simply isn’t listening to UK business and one that plans to blindly roll over the EU rules and introduce bureaucratic certification requirements that are not fit for purpose. Not only is this bad news for importers it is bad news for the UK’s 33 million wine drinkers who will be faced with price increases.
Lost in last week’s headlines on post-Transition border controls for goods entering Great Britain from the EU was the critical detail for the UK’s wine and spirit industry that any light touch inspection regime would not apply to imports of wine, spirits, beer or cider. Traders moving controlled goods such as alcohol into GB will be required from 1 January 2021 to complete a full customs declaration when those goods enter GB, as they do currently for goods entering the UK from the rest of the world.
The UK’s wine and spirit trade is not questioning the introduction of customs declarations: they are a logical consequence of implementing last Autumn’s Withdrawal Agreement that confirmed the UK would leave the customs union with the EU at the end of the Transition period. Quite why it has taken the Government so long to confirm the future arrangements is unclear. It may simply be a reluctance to acknowledge that, deal or no deal, the level of friction to trade was always going to be more than political rhetoric had suggested.
So there will be friction to trade with the EU next year. By simply choosing to focus on a gradual introduction of inspections rather than considering whether the rules those inspections enforce are fit for purpose, the Government has missed the opportunity to give businesses a long term solution. The critical question the Government should be asking is whether future controls can keep that friction to an absolute minimum. And, for wine imports, the answer to that question is currently a resounding and categorical ‘no’ – but it doesn’t have to be.
When the UK was a member of the EU and during the Transition period moving wine into the UK from the EU (approximately half of the wine enjoyed by UK consumers) was not classed as importing. This will all change from 1 January 2021, meaning that over 99% of the wine consumed in the UK will be ‘imported’ i.e. it will have crossed a customs border. One consequence of rolling over EU rules into UK law will mean that those wine imports – over a billion bottles of wine and sparkling wine – will be subject to import certification rules. Those rules – rolled over from the EU – require a paper based import certificate (VI-1 form), together with a costly laboratory analysis of the wine. Wine is unique in this respect. Spirits, beer, cider and other alcoholic drinks do not need an import certificate when entering the UK (or EU).
And the impact of those certificates is far from “nil or negligible”, as junior Defra Minister Victoria Prentis claimed in a written answer to a Parliamentary Question last week. We estimate – because, unlike government, we have actually made an assessment – the costs of completing the forms and the laboratory testing to be in the order of £70 million a year. And those costs will not be absorbed by EU wine producers, they will be passed on to UK importers and, ultimately, UK consumers.
What is so frustrating is that it doesn’t have to be like this. Nor can what is being proposed be acceptable politically to this Government.
Simply rolling over, unquestioned, EU legislation which will impact negatively on UK consumers, is manifestly not “taking back control”. On the other hand, scrapping unnecessary and costly EU bureaucracy would be a popular demonstration that things can and will be different when the Transition period ends. It would also provide a long term solution to help business rise to the changes and opportunities of being outside the single market and the customs union. What’s more, a UK-devised solution for wine imports could reduce import costs for all imported wines, not just those from the EU.
Last week Chancellor of the Duchy of Lancaster Michael Gove said: “……At the end of this year we will control our own laws and borders …. but there is still more work to be done by both Government and industry to ensure we are ready to seize the opportunities of being a fully independent United Kingdom.”
It’s time for Mr Gove to match his rhetoric with actions and commit now to scrap these costly and bureaucratic rules. From the industry we stand ready to work with Government to devise an import regime for wine which is proportionate, cost effective – and which will ensure the UK maintains its position at the heart of the world wine trade.