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So much for Brexit reducing Regulation

Summary:
On 2nd February, the Prime Minister asked the Rt Hon Sir Iain Duncan Smith MP, the Rt Hon Theresa Villiers MP, and George Freeman MP to form a new Taskforce on Innovation, Growth and Regulatory Reform (TIGRR). The announcement included an invitation to send in suggestions.  That apart, and after nearly four months, no action has transpired. As Sir Iain has reached the age where people take longer to cross the road, one should make allowances, but it is disappointing nonetheless. When Lord Frost appeared before the Commons’ European Scrutiny Committee on 17th May, he endorsed this initiative “You will know, I am sure, about Sir Iain Duncan Smith’s work and his team’s trying to identify opportunities for regulatory reform.” Rhetoric but no substance. The wine industry would be a good place

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On 2nd February, the Prime Minister asked the Rt Hon Sir Iain Duncan Smith MP, the Rt Hon Theresa Villiers MP, and George Freeman MP to form a new Taskforce on Innovation, Growth and Regulatory Reform (TIGRR). The announcement included an invitation to send in suggestions.  That apart, and after nearly four months, no action has transpired. As Sir Iain has reached the age where people take longer to cross the road, one should make allowances, but it is disappointing nonetheless. 

When Lord Frost appeared before the Commons’ European Scrutiny Committee on 17th May, he endorsed this initiative “You will know, I am sure, about Sir Iain Duncan Smith’s work and his team’s trying to identify opportunities for regulatory reform.” Rhetoric but no substance. 

The wine industry would be a good place to start. In June 2008, the EU Commission enacted Regulation (EC) No 555/2008 which introduced the VI-1 form. Third country exporters of wine into the EU were required to provide a mass of wholly unnecessary information therein. This was of no benefit to EU consumers, indeed it put up their costs, but was designed as a “TTB” (Technical Trade Barrier) to protect EU wineries.  As far as the Commission was concerned, the EU had plenty of wine of its own. 

EU Regulations are supposed to have Impact Assessments showing the cost/benefits of the proposals, i.e. an “Appraisal showing the expected technical, economic, environmental and social impact.” In this case, no appraisal was made: the requirement (C) has a footnote saying “Member States referred to in Article 5(4) of Regulation (EC) No 479/2008 shall not have an obligation to fill point C and F.” The UK’s European Scrutiny and Regulatory Policy Committees seem to have been asleep at this particular wheel.  If these Committees do not protect UK citizens from costly and unnecessary bureaucracy of this type, and a fortiori, its transposition into British law (see below), one has to wonder what they are for.  

With Alice in Wonderland logic, the government decided that, post Brexit, VI-1 forms, and laboratory tests (now dropped), would be required for all wine imports from the EU, presumably as a tit-for-tat for the above Regulation 555/2008 being applied to UK wine being imported into the EU. Whitehall has now deferred this until January 2022.

Post-Brexit, the rationale for VI-1 Forms for third country wines as a TTB to protect continental wine growers (if that ever made sense) fell away and the expectation was that wines from Australia, Chile or wherever would no longer need them. The Department for the Environment, Farming and Rural Affairs (DEFRA) with their customary generosity put us straight: “Wine imported into the UK that originates in a non-EU country can continue using the existing VI-1 arrangements.”  The Minister, Victoria Prentis, attempted to justify this to the Delegated Legislation Committee on 25th January, by saying that as VI-1 forms were already required from third countries, it was only fair to apply them also to imports from the EU. 

Wines shipped from Northern Ireland to Great Britain do not need VI-1 forms. As Brussels regards the Province as part of the EU, no VI-1 Forms are needed for EU wines shipped directly to the Province.  It follows that wine merchants in Great Britain could avoid VI-1 forms by shipping their EU wines via Belfast. Daft! 

Quite apart from the absurdity of filling in forms, designed to prevent EU wine imports, for EU exports, we have the nonsense of DEFRA requiring third country wines coming into Great Britain to have VI-1s and then to have a further set when they travel on to Northern Ireland.  Some small producers in the EU and third countries are refusing to play these games and thereby depriving the British wine trade and consumers of the most unusual and interesting wines. 

There is an EU/USA wine deal, which does not simplify VI-1 requirements, but does make all paperwork electronic. Since the start of 2021, USA wine (shipped in bulk) coming first to the UK and then the EU has to convert the original VI-1 e-form into a paper one that can be signed by the UK government – with a ‘wet’ stamp by Defra’s Rural Payments Agency. 

In order to get the VI-1 proforma to fill in, one has first to send DEFRA a four page Application for an EU VI-1 pro-forma document for exporting wine to the European Union. The VI-1 proforma may then take a week to turn up. 

Hundreds of thousands of VI-1 forms cause delays and costs for the trade, and then their customers, as they are extended next year.  The cost of bringing in a single pallet of EU wine has nearly doubled from £200, and if multiple wines are grouped together, as was common practice, the charges are considerably higher.  

The taxpayer also bears the cost of all the civil servants processing these forms. The delays mean the trade has to carry higher stocks with financing costs falling on a Covid-struck economy.  Not good timing. Most of the UK wine trade are SMEs, the sector the government regards as critical for post-pandemic recovery and yet this is the sector the government is penalising hardest by failing to remove this bureaucracy. 

The All-Party Parliamentary Group has been very critical of the government’s approach to this bureaucracy. The “House of Lords has supported calls to scrap ‘unnecessary’ wine import documentation, which could cost the UK trade an extra £70 million a year.”

One indication of the artificiality of the justification for VI-1 forms is that they apply to wines but not beers or spirits or, indeed, to any other food or drink product. Of course, the EU was not trying to protect their beers and spirits but neither does the UK wish, or need, to protect our wine producers in such an underhand manner. Most of the EU documentary requirements for food and drinks are related to hygiene but this does not arise in the case of wine. 

It is hard to understand why the government continues to insist on VI-1 forms for all imports and exports. Senior government sources have indicated that, entre nous, they are being maintained as bargaining chips to be given away when doing trade deals with third countries.  As rationales go, that is scraping the barrel: 

  • It does not apply to the requirement for EU wines 

  • They could be eliminated now and the bargaining chip, if it has any value at all, used the other way round, i.e. threaten to reinstate them. 

  • The WTO, rightly, does not like TTBs and would get especially grumpy if they were applied to some third country wines and not others.  

January 2022 will bring another red tape bonanza as organic wines get special attention. Mandatory “Certificates of Inspection” to be checked at each UK Port Health Authority. All kinds of other authorities, like the Soil Association, diving in will add delays and £75 per consignment even though it’s only a few cases amongst a great majority of non-organic wines and they have had much the same checks at the producer’s end. One wine merchant told me that although his customers want organic wines, he is not going to bother with importing them. 

Finally, the regulators are messing about with labelling. Traditionally, labels that sufficed in their domestic markets were fine in the UK.  Now they will need the addresses of the winemakers. An unhappy customer complains to her retailer, not some winemaker on an Andean slope who may not understand English.   

The Commission claims that EU legislation requires a label to have a named EU-based originating company and EU wines in the UK would require two labels (EU and UK). 

Furthermore, there are moves afoot to add the calories, or “energy values”, to help wine drinkers lose weight. American experience has shown that putting calories on menus, or wine labels, will not, as some health lobbyists claim, do anything to reduce obesity. That said, some winemakers believe calorie information to be helpful and they should be free to show it. 

Brexit was sold to the nation on the basis that regulation would reduce and we would trade more freely with the rest of the world.  Unfortunately, that is not what this government is delivering and, so far as wine is concerned, red tape is dramatically increasing. Government rhetoric is not the reality.

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Tim Ambler
Tim Ambler (born 1937) is a British organizational theorist, author and academic on the field of Marketing effectiveness. Ambler featured on Marketing's list of the 100 most powerful figures in the industry. He is cited by the Chartered Institute of Marketing as one of the top 50 marketing experts in the world

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