Richard North, 24/01/2021  

We touched on this briefly yesterday when the Cheshire Cheese Co ventured briefly onto Twitter to lament the loss of its European online business. Now, the Guardian has picked up the story and developed it, telling us that the business owner, Simon Spurrell, has lost 20 percent of his sales, leaving him with a £250,000 "Brexit hole".

The proximate cause of his grief is his discovery that he needs to provide a £180 export health certificate on retail orders to consumers in the EU, including those buying personal gift packs of his award-winning wax-wrapped cheese worth £25 or £30.

Spurrell says he had hoped to take part in the "sunny uplands" promised by the government post-Brexit but has instead seen the viability of his online retail come to a "dead stop", despite the avoidance of the no-deal and the announcement of a free trade deal.

"What has only become clear in the last week is that our successful B2C [business to consumer] online sales to EU consumers is now impossible to operate", he now says, giving us the makings of a classic Brexit "horror story".

However, the narrative then begins to get interesting. As small businesses up and down the country come to terms with the new and complex export red tape, says the Guardian, Spurrell explains that he thought he was fully prepared for Brexit, and had consulted with the Department for Environment, Food and Rural Affairs (Defra) and the National Farmers Union along the way.

He says knew he would need customs declarations and health certificates signed off by vets to get his cheese into the EU after 1 January, and has successfully been getting pallets of the product across the Channel to wholesale customers. But what he had not anticipated was the requirement for health certificates to accompany online orders from private customers. He thus complains:
It's as if someone forgot to negotiate this part of the deal, they forgot that there needed to be an exemption or allowance for the direct consumer sales. We ship to the USA, Canada, Norway, etc, all non-EU countries; we have never had a problem with at all. It is an oversight in the agreement that does not affect EU producers at all, but is a dead stop for all UK producers selling into the EU via online sales.
It is interesting that Spurrell claims he has no problems with the USA, Canada or Norway, but from the look at the situation with Canada and the US, he should have problems. The US law is quite stringent and similar provisions apply to Canada. As for Norway, that is part of the EEA and what applies to the EU also applies EEA-wide.

This notwithstanding, what happens in other third countries is something of a red herring. The EU has its own rules and, if you wish to export to EU Member States, you have to conform with them.

Helpfully, the EU sets out the rules for "small consignments of goods sent to natural persons which are not intended to be placed on the market" in Commission Delegated Regulation (EU) 2019/2122, which supplements Regulation (EU) 2017/625 on "official controls.

All Mr Spurrell had to do was find and read these regulations or, when he consulted with the Department for Environment, Food and Rural Affairs (Defra) and the National Farmers’ Union, either of them should have told him. Direct sales of products made with milk (including cheese) is not permitted.

As to Spurrell's view that, "It's as if someone forgot to negotiate this part of the deal", that "they forgot that there needed to be an exemption or allowance for the direct consumer sales", this is pure fantasy. Regulation (EU) 2019/2122 only came into force on 14 December 2019, less than two months before the UK left the EU.

The Regulation is applicable to produce from all third countries, and there was no way that there would be a special exemption for the UK, especially in a regulation so recently introduced.

Bizarrely, in response to this report, Defra says it was continuing to "engage with the European Commission and the EU member states to ensure that we share a common understanding of the EU’s export rules and how they should apply", as if that was going to make any difference.

Nevertheless, we get the leaden mantra that Defra had "worked hard" to ensure UK businesses were not disadvantaged by the deal. As more and more government systems mess up, we are constantly and frequently assured that everybody has "worked hard", as if that somehow made it better.

We also learn that the farming and food minister Victoria Prentis would now be in contact with Spurrell and Defra officials to discuss further the issues – something which will achieve precisely nothing. Defra can no longer mark its own homework.

Already, though, Spurrell has got the message. To save his business he is now planning to switch a £1 million investment he was planning to make in a new distribution centre in Macclesfield to the EU, with the loss of 20 jobs and tax revenue to the UK.

"It is a real shame", he says, "because that means I'm now going to invest in France, provide French employment, and then contribute to the EU tax system, which was pretty much going against the whole reason that we were meant to be leaving [the EU]".

This, though, according to the Observer is precisely what other UK exporters are being advised to do by Department for International Trade officials.

This, the paper "reveals" in the usual pompous, self-important way of the legacy media, calling this an "extraordinary twist to the Brexit saga". Even then, it has no real understanding of the issues, stating that registering new firms within the EU single market, from where they can distribute their goods far more freely, is the way UK small businesses can "circumvent border issues and VAT problems that have been piling up since 1 January".

This, of course, misses the point, the problem being – as I wrote in August2017 - that once we'd left the EU and the EEA, our products would no longer be permitted free access. Instead, they would have to be routed via an importer, "a natural or legal person established in the Union who places a product from a third country on the EU market".

Now that has come to pass, UK exporters are finding that they either have to appoint an agent in the EU to perform this function, or set up their own company to act as the importer. And given that UK citizens no longer have right of establishment, even that is not going to be easy.

But the take-away issue from all this is just how badly businesses have been advised by both trade associations and government agencies. Yet even now a government spokesperson has the nerve to say: "there is extensive advice available to support businesses as they adjust to the new arrangements", adding that it was "vital" that traders ensured they had the correct paperwork for exports.

One senses, though, from Spurrell's comments about "exemptions" and from other similar views, that there were unrealistic expectations of Johnson's deal. Come what may, with or without a deal, the system was going to require EU-based importers, while customs formalities and "official controls" were always going to apply.

It is all very well the media lovingly recording the tales of woe, joined by choruses of back-covering trade associations, politicians and government officials, but it would have been much more helpful if they had been warning of the [very obvious] things to come. Too many people, it seems to me, have been asleep on the job.

Also published on Turbulent Times.

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