Brexit is now a reality. There will be no second referendum. Johnson will proceed with his withdrawal bill to meet the January 31 deadline, ending debate over whether Brexit will happen.
'Get Brexit Done'
Speaking at the International Press Conference for Alimentaria, this month (a preview to the tradeshow in Barcelona, April 2020), host Graham Keeley, journalist for Spain and Portugal, The Times, said the UK election (December 12) was an overwhelming victory for Boris Johnson but what does that mean for Brexit?
“After more than three years of negotiations his slogan was ‘Get Brexit Done’, but the uncertainty is when or how that will it happen. Maybe there is going to be a hard Brexit without agreements and negotiations or a soft Brexit with an agreement,” said Keeley.
“January 31 is the most likely date that we will see a period of change when it will become a reality for everybody but what’s most important is how this will have an effect on all trade industry, with the food and beverage being one of the most important for Spain.”
As part of Johnson’s withdrawal procedure from the European Union, the transition period can run until the end of December 2022 and the Conservatives have made an election promise not to extend it beyond the end of 2020.
Talking about the decision, Mauricio Garcia de Quevedo, MD, FIAB, said: “We need certainty. There are international challenges ahead that we need to face. But both the EU and the UK will not want to jeopardize the situation or hurt each other in the process.
“Will there be food or drink products most affected? Yes, wine, olive oil and cold meat products, such as chorizo, cured meat, Jamón Ibérico (Iberian ham), these three products will be the most effected in Spain followed by confectionery.
“If it’s a hard Brexit the UK becomes a third party like a third country that has no agreement with the EU that could affect the mutual business we have between the UK and Spain, we are talking about approximately €4bn of exports. It’s not a minor figure. We foresee a €2bn ‘sub loss’ if there is a hard Brexit.
“Not forgetting customs tariffs, bureaucracy costs via an audit system, as well as other hidden costs if regulations start to diverge, to regulate labeling and ingredients.
“If it’s a soft Brexit, which I believe is what will happen there will be a long adaptation period, but there is the political will on both sides to get this done.”
Spanish Exporting Manufacturers Association
Hard Brexit
- Britain gives up membership of the EU's single market. The UK will have the freedom to set up its own trade deals and rules but drawing up independent trade agreements could take a lot of time.
- Imported goods could become more expensive. At present, roughly 45% of the UK's exports are to the EU while 50% of the goods it imports come from the EU
Soft Brexit
- Britain remains closely aligned to the EU by retaining some form of the bloc’s single market. This would minimize disruption to trade, supply chains and businesses in general
Speaking at the roundtable discussion Daniel Domènech, chairman, of the Spanish Exporting Manufacturers Association for the Hospitality Industry (AFEHC) said: “In our case exporting goods to the UK following a hard Brexit will lead to higher tariffs and there is a clear case that the amount of lorries that will need to stop at the border will be havoc.
“A change in logistics costs can be enormous, tariff costs aside. Johnson has won the election and now we have to see whether he has the same (negotiating) trend as when he was the major of London or if he is more aggressive. One of the most delicate points will arrive on February 1 and the following months where there will be a lot of confusion. The UK is not a crucial country for us but it is important. It represents 1%-2% of trade.”
Eva Prada, director of the British Chamber of Commerce in Spain, added the implications for British companies based in Spain is that they want to continue trading as before.
“We have 300 companies where 60% are Spanish and 40% are British. The flavor of the referendum was sour. There has been much more uncertainty than we expected and companies were starting to react. The situation is going to become more complicated,” she said.
“Today’s flavor (after the UK election result) is sweeter because we are now leaving on January 31, but 20 months of negotiation is not realistic. With the data we have, the British companies based here have already diversified into other markets.”
De Quevedo added that the truth is, with a high level of uncertainty, it cannot plan what will happen.
“At the end of the day, the British economy will be affected leading to a reduction in demand. Market dependency will be solved by reinventing their direction," he said.
For example, Spanish corrugated cardboard specialist Saica Group announced it was investing some €12.8m in 2019 to raise the production capacity of its plant in Laveyron, in France.
Saica is one of the major players in the development and production of recycled paper for corrugated cardboard in the European market, with a production volume of 3.3 million tonnes of paper per year.
De Quevedo added, aside from Brexit, Spain has been hit by recent changes in US tariffs on Spanish agricultural products. It plans to impose a 25% import tax on various agricultural and industrial items imported from Europe including olive oil producers and the Rioja wine region of northeast Spain recently unveiled a marketing campaign to increase exports to China and Japan.
Lluís Colomer is the general manager of La Selecta, which is a food distribution company for the HORECA (Hotel/Restaurant/Café) sector near Barcelona.
"La Selecta distributes products that have their origin mainly in France, Germany and Ireland. For this reason, Brexit will not affect us directly when it comes to the import and distribution of our products," he said.
"However, we have relations with other Spanish distribution companies based and with interests in the UK and we know it will have a strong impact on their activity. Not only will their products be taxed with tariffs, but becoming a third party means delivery times will be affected. The Alimentaria 2020 tradeshow next year will be key to facilitating agreements that allow companies and their customers to be affected as little as possible by Brexit.”
Prada believes people don't yet know what the 'fallout' will be.
"It has shone a spotlight on the EU because no country has ever questioned the failings of the EU before and we are listening. But what people want is certainty. If they do not have that they will go elsewhere,” added Prada.
“Officially there are approximately 300,000 British people living in Spain but the real figure is likely to be around 600,000 and they are concerned about their future.”
Domènech added with a soft Brexit there is little to lose and and a lot to win.
“Now is the time for negotiation. None of the two parties want a hard Brexit because they have a lot to lose. A soft Brexit would be easier to minimize the situation,” he said.
“After three years of negotiations if they are too aggressive they know there is a lot to lose. I do hope Johnson goes back to a more moderate position.”