The proposed EU reset centres on 'dynamic alignment' for sanitary and phytosanitary (SPS) measures. However, analysis of current trade flows, cost structures, and comparable international agreements reveals significant concerns about the policy's effectiveness and value for money.
Key Findings:
The proposed EU reset involves a range of elements from Defence to Youth Mobility. We will concentrate on SPS, sanitary and phytosanitary measures. For those that don’t know, this essentially means products of animal origin, produce (fruit and vegetables) and high-risk foods not of animal origin (nuts, seeds etc).
Since the initial announcement, all of the enquiries we have received have been from GB importers of EU SPS goods. We have not had one enquiry from GB exporters, the very group that the reset is supposed to help the most.
The issue centers around the need for Export Health Certificates (EHC’s) and the Border Control Post requirements for GB imports of SPS goods, particularly those from the EU as these controls were not applied until mid 2024.
GB exporters are not so vocal on the EU reset as they have been dealing with GB EHC’s and inspections in Calais or Dublin (for example) since day one (1st January 2021). The flow is pretty much ‘business as usual’ for these traders. Whereas the GB importer is new to this and so too are many of the EU exporters of SPS goods who supply, amongst others, UK supermarkets.
From January 2023 the UK introduced the need for IPAFFS declarations as a pre-arrival notification for EU SPS goods. For all but HIGH risk foods only the IPAFFS was required and the new process went largely un-noticed. HIGH risk required an EHC but this had always been the case, so no real change. Everyday EU SPS goods did not initially require an EHC or inspection on arrival, just an IPAFFS declaration.
Parmesan cheese (Grana Padano) is LOW risk as made from pasteurised milk. Reggiana on the other hand is MEDIUM risk as made from raw milk. Grana only requires an IPAFFS, Reggiana requires an EHC and IPAFFS and has a greater likelihood of being stopped on arrival for inspection.
That doesn’t sound so bad, but it is. There are statutory costs too. DEFRA levy a Common User Charge (CUC) to pay for the infrastructure required; the IPAFFS declaration is the purchase order. The CUC charge for Grana (LOW) is £10, the Reggiana (MEDIUM) is £29. But that’s not the end of it. There is also a charge from Ashford Port Health (APH), £10 for the Grana (to verify that it really is LOW risk) and £68 for the Reggiana to cover inspection fees even if they are not required for inspection. APH fees are collected through a platform known as PHILIS which was originally developed for the Port of Felixstowe. It works well, however all fees have to be prepaid, ie you must have sufficient cash in your PHILIS account in advance. Worst still your PHILIS account is port specific, one can have say £20,000.00 (not unusual) lodged with APH via PHILIS but the truck arrives at Felixstowe and you have no cash in your PHLIS account for that port.
So, a wheel of Parmesan will incur fees of £20 (£10 to DEFRA and £10 to APH) whereas a wheel of Reggiana will cost £97 plus the costs of the EU EHC which one can conservatively put at an extra £200. £20 versus £297? Now you can see why the GB importer is so keen on the EU reset.
There are many options, probably the worst would involve jumping on a Eurostar to Bruxelles and discussing ‘Dynamic Alignment' yet this is precisely what appears to be happening.
The processes that are causing the most concern are OUR own processes. They did not exist prior to June 2024 and still do not exist at the same level on flows from Republic of Ireland to GB or on most produce from the EU. If the EHC and inspection process on SPS flows from EU to GB are causing so much stress, costs and uncertainty why not, just as a wild idea, not bother doing them? Like we didn’t bother doing them prior to June 2024.
I have previously asked senior officials why we want/need these controls and the, somewhat juvenile, response was (and I’m not making this up) “well they check ours so we’re going to check theirs!”. We import far more SPS goods than we export, always have done but our solution to the problem is to cut off our legs because our hand hurts!
GB importers are made to suffer so that far fewer GB exporters (who are not generally moaning) can have less paperwork due to dynamic alignment, a process that they are not keen on as it impacts their exports outside of EU.
Giving control of our SPS rulebook to another ‘country’ without say or sway (and paying for the privilege) will prevent us from doing some trade deals and could even jeopardise those that have already been done, CPTPP for example.
For example, use the IPAFFS as a risking document that only requires an EHC based on the product, region, disease status (FMD, LSD etc) and the trusted status of the consignee or consignor. No fees (DEFRA or Port Health), pay for them with the money you will save by abandoning a senseless SPS reset with the EU, which won’t be free to access.
But let’s not forget about those diligent GB exporters. Their process seems to have settled but there is still a cost. It is estimated that GB exporters are paying around £250m per year on EHC’s for exports to the EU. This could be saved through dynamic alignment, but at what cost? Aside from the lack of regulatory control and the negotiating leverage this allows it is likely that the net result of money saved versus the EU access fee would result in a net loss to the UK. A net loss to the taxpayer, not the exporter who previously paid the fees.
Norway have a similar EU SPS deal to the one the UK is seeking and pay ~£375m per annum. Switzerland the same and they pay around £300m per annum. Both have smaller SPS volumes than UK. Pro-rata’ing up to UK level would suggest a figure closer to £700m per annum or, put another way, £450m more than the cost today.
There are also savings for the GB importer but since these process do not need an agreement with the EU (they are OUR processes) then it would be crazy to pay the EU to allow us to make these savings, there is no world where that makes sense.
So, is dynamic alignment a good idea? No, non, nine, nie – how can it be a good idea when it’s key features are:-
GB importers are keen on dynamic alignment as it potentially makes the MEDIUM risk SPS goods easier to import…but as we have said above, we do not need the EU to agree to a set of rules applied by the UK and applicable in the UK.
I was recently asked what I thought of the EU reset and, in particular, dynamic alignment.
My answer was simple “no thanks!”.
Rob Hardy, CEO and Founder of the EORI Group
Revolutionising customs with innovative solutions, Rob Hardy, founder of EORI (UK), is known for his exceptional business acumen and deep customs network connections. As the All Ireland Business Man of the Year Award winner, Hardy's strategic thinking and unwavering determination have propelled him to trailblazer status. With 35 years of achievements in European shipping, freight, and customs clearance, his record-breaking accomplishments include running the largest 24hr freight clearance facility in the UK.