UK government considers delaying introduction of Brexit import labels for EU wine
The government is considering delaying the introduction of import labels for EU wine, which had been due to come into force on 1 October, until January 2024.
The possible delay means that bottles of wine and spirits from EU producers will be allowed onto the UK market if they include EU addresses relating to the importer or food business operator for spirits and non-wine products and the importer or bottler of wine for an additional 15 months.
Importer labels identify the legally responsible business – usually the bottler, vendor or importer – for non-EU wines entering the single market from a third country, which need to be applied to each bottle or container. Following Brexit, EU wine labelling rules were rolled into UK law, meaning that wines from the EU being sold to UK consumers would require a UK based vendor or importer address on the label, in order to give the consumer recourse to a UK based business in the event that any issues arise with the product.
However, this meant that separate labels would need to be used for bottles intended for the UK market, a move likely to cost importers and fine wine merchant tens of thousands of pounds, particularly for those trading in small quantities or purchasing/selling products in the secondary market.
Although a formal announcement has not been forthcoming, the government has let it be known that they intend to hold a consultation on the postponement, a standard practice before introducing changes to legislation.
The WSTA added that it had been asked to respond on behalf of its members.
“Submissions from individual businesses are being discouraged to make drawing together the Government’s response as straightforward as possible,” it said. “Unusually, and anticipating that the deferral will not be controversial, the consultation is both short, due to close on 30 August, and limited in terms of those being consulted.”
Although the WSTA supports the latest development, it has been lobbying Defra over the labelling requirements post Brexit “for months, if not years”, arguing that it may be too late for many businesses, who had already anticipated the 1 October 2022 deadline.
Miles Beale, chief executive of the WSTA told db that the WSTA that many businesses had made extensive preparations for the October date (and the May 2023 date for some wines) and this late change has meant businesses have made significant and costly compliance changes, the rules for which may still change.
Beale said it was hard to put a figure on the cost to businesses. “We estimate an added cost of anywhere between 5p and 50p per label, depending on volumes, business models and degree of control over supply chain. But they key point here is that, whatever costs have already been incurred, we still don’t know what the new regime will be – which means every business will incur future costs,” he said.
“Much of this effort will have been made by EU producers, so there is not just a cost here, this delay in postponing changes will discourage international trade. It also means that regulators will continue to find this aspect of labelling confusing to manage,” he said. “Nevertheless, we are very supportive of the extension to give businesses more time to ensure they are compliant.”
James Miles, managing director of Liv-ex, agreed that while some businesses will have done some labelling, the government has been signalling “for a while that they want to look again at this EU rule”.
“The delay is welcome, but not entirely surprising. As such I think many businesses like ours have been sitting on their hands, until the government’s position is firmed up,” he added.
While it is not definite that the postponement will happen, “it seems highly likely”, he added.
Opportunity to get rid of trade barriers
However James Miles added that it was “only a delay” and it is important that the government “use this delay as an opportunity to look at import labels not just on EU imports but across all of our trade”.
“We have had to put import labels on non EU trade for decades. It is important to understand that import labels are a costly non-tariff barrier. Indeed any UK-centric labelling is a barrier to trade,” he said.
Liv-ex has previously noted that this barrier is not just for unlabeled wines entering the UK market, but also to wines returning to third countries like the EU, which will need to be relabeled to comply with UK and single market rules. In additions, GB importer labels could “seriously impinge” on a fine wine merchant’s ability to resell these wines in the secondary market.
Speaking to the drinks business today, he said there was “an opportunity now that we have left the EU – as with VI1s – to get rid of import labels across all of our trade”.
“This would be a Brexit win. Import labels are very costly and serve no useful purpose other than to protect domestic producers. As the UK imports 99% of its wine, this regulation serves no purpose for us!”
It is unclear why it has taken the government do long to act on this, but it potentially comes as a result of the enormous complexity of Brexit.
“This is one of the many thousands of decisions that the UK government needs to make as we rethink our rules and regulations outside of EU. It is going to take many years or decades to untangle,” Miles warned.
In December 2o21 the UK government published draft legislation to axe VI-1 forms not only for importing wine into the UK from the EU but also from outside the EU, only six working days before Parliament was due to on recess before the legislation came into effect. It brought to an end nearly three years of uncertainty for the UK and EU wine industry, who have repeatedly argued against VI-1 forms, saying they would have introduced needless complication and red tape as well as costing an additional £130 million.
This article was amended on 30 August at 4pm to include additional comment from Miles Beale, chief executive officer of the WSTA.