Agricultural food and drink sector - impact of future UK Free Trade Agreement scenarios: research

5. Trade Barriers Assessment

This Chapter summarises the key trade barriers that currently affect UK trade with the non-EU partners. It focuses specifically on tariffs, tariff rate quotas (TRQs), and non-tariff measures (NTM). Although the Trade and Cooperation Agreement (TCA) between the UK and the EU permits tariff- and quota-free trade between both parties, NTMs are now applicable. Accordingly, section 5.3 also sets out the estimated NTM AVEs on UK-EU trade as this will have indirect effects on UK trade with non-EU countries. Supplementary information is provided in Annex III.

5.1 Tariffs

To calculate how the UK Global Tariff (UKGT) would apply to UK imports from non-EU partners, as well as the levels of tariffs in the opposite direction during 2018-2020, this study firstly derived prices for each selected product based on trade data. Table 5-1 shows the pricing data for each selected partner and product using data from UN Comtrade. The pricing data are based on each selected partner's exports and imports from all countries. The UK's export prices for the selected products, based on HMRC data, are also shown for comparison purposes.

Some might argue that the pricing data should focus on exports to, and imports from, the UK and the non-EU partner in question. However, with the small amount of trade taking place in some instances (due to the absence of an FTA), UK-only pricing data is potentially flawed. This is because trade is likely to change significantly once an FTA is in place. Using pricing data for total exports from the UK and other selected partners illustrates the potential competitiveness of each partner by commodity.

Contrary to some expectations, the prices of UK exports are generally competitive. That said, averages should be interpreted with caution. A significant proportion of UK beef trade is influenced by cross-border operations on the island of Ireland where product is regularly shipped between processing plants owned by the same companies on both sides of the border. Transfer pricing is often a feature of such trade, and it can downplay the actual prices of the products in question. This is also a feature to an extent in the dairy products' category. Another issue is that although UK lamb prices are on average lower than NZ or Australia, seasonal factors heavily influence UK lamb prices. Imports from Australia and NZ arrive at a time of year when UK lamb prices are traditionally high due to lack of local supply.

Based on pricing data in Table 5-1, Table 5-2 outlines the resultant tariffs when the UKGT is applied on export prices from each partner. It also shows the tariffs applicable on imports for each non-EU partner within scope. Generally, despite the slight refinements and simplifications made to the UK Global Tariff (UKGT) vis-à-vis the EU Common External Tariff (CET) (see Annex III for more detail), the UKGT is significantly higher for most products than their selected peers. Canada is the main exception to this as it imposes substantial tariffs on dairy and grain imports in particular (and beef to an extent). It too is keen to protect its domestic producers from cheaper global competitors.

While Australia also imposes some tariffs on dairy imports, they are relatively low (<20%) and for most other products no tariff is applied. The GCC is a net importer for most products and, therefore, has a broadly liberal tariff regime. That said, some tariffs are imposed on dairy products as there are domestic dairy industries in Saudi Arabia and Qatar in particular.

NZ is at the opposite end of the spectrum insofar that no tariffs are imposed. This is in line with the policy stance that it has taken since the 1980s when it decided to expose its farming industry to global competition and to remove the protection (tariffs and agricultural support) it had offered previously.

Based on the analysis presented in Table 5-2, it is evident that despite some TRQs being in operation (see next section), domestic UK and Scottish producers are afforded a high degree of protection presently from the UKGT.

Table 5‑1: Average Prices by Selected Commodity for Imports and Exports for Each Selected Partner (2018-20), £ per Tonne

HS Code	Short Description	UK Exports (to All)	AU Export (e.g. to UK)	AU Import	CA Export	CA Import	GCC Export	GCC Import	NZ Export	NZ Import
020110	Chilled beef carcases/half-carcases	2,171	2,809	3,322	6,339	1,695	2,320	2,320	6,474	N/A
020130	Chilled boneless Beef	4,840	6,618	9,020	4,204	7,460	2,600	5,103	6,654	5,180
020230	Frozen boneless beef	2,220	3,875	3,711	3,806	5,175	2,941	2,941	3,925	3,527
020410	Chilled lamb carcases and half-carcases	4,537	4,821	5,982	3,565	3,591	1,447	5,656	5,557	5,111
020422	Chilled sheepmeat cuts, bone in	4,617	6,798	4,815	12,612	8,976	5,164	5,776	7,075	6,194
020423	Chilled boneless sheepmeat	5,753	7,104	5,947	4,960	6,921	4,899	6,200	8,759	8,976
020442	Frozen sheepmeat cuts, bone in	3,136	3,610	3,823	11,462	5,063	3,426	3,596	4,470	3,262
020443	Frozen boneless sheepmeat	4,660	4,791	2,068	6,938	8,521	2,109	3,802	5,709	4,105
040510	Butter (excl. dehydrated butter and ghee)	3,390	4,132	3,854	2,436	8,162	3,519	3,801	3,719	4,584
040590	Fats and oils derived from milk, and dehydrated butter and ghee (excl. natural & other butter)	4,492	3,223	4,251	3,336	3,699	5,103	4,336	4,130	5,036
040610	Fresh Cheese (unfermented)	2,819	3,006	3,383	3,335	3,769	2,340	2,810	2,931	3,937
040690	Cheese (excl. fresh cheese, incl. processed and blue-vein cheese)	3,784	3,279	4,338	4,399	7,041	3,083	3,337	3,084	4,533
070110	Seed potatoes	517	729	3,836	306	249	474	318	355	N/A
070190	Potatoes (fresh, excl. seed)	336	418		417	391	327	227	432	604
100199	Wheat and meslin (excl. seed)	167	196	474	184	N/A	708	233	347	215
100390	Barley (excl. seed)	157	176	1,465	176	460	580	180	865	246

Sources: HMRC, UN Comtrade, Canadian Government and Andersons

Note: Import and Export prices are based on UN Comtrade data for all imports and all exports (i.e. UK, EU and Non-EU) by HS code for each Country/Bloc converted into Sterling using average ECB exchange rates for 2018-2020.

Table 5‑2: Indicative Tariffs (Ad-Valorem Equivalents (%)) for the UK and Selected Territories

HS Code	Short Description	UKGT (from AU) (%)	UKGT (from CA) (%)	UKGT (from GCC) (%)	UKGT (from NZ) (%)	AU %	CA %	GCC %	NZ %
020110	Chilled beef carcases/half-carcases	64%	35%	75%	35%	0%	27%	0%	0%
020130	Chilled Boneless Beef	50%	72%	109%	50%	0%	27%	0%	0%
020230	Frozen boneless beef	60-78%	61-79%	75-98%	59-77%	0%	27%	5-6%	0%
020410	Chilled lamb carcases and half-carcases	42%	52%	111%	38%	0%	0%	0%	0%
020422	Chilled sheepmeat cuts, bone in	27-39%	20-27%	31-48%	26-38%	0%	0%	0%	0%
020423	Chilled boneless sheepmeat	49%	64%	65%	42%	0%	0%	0%	0%
020442	Frozen sheepmeat cuts, bone in	33-66%	19-29%	34-69%	29-56%	0%	0%	5%	0%
020443	Frozen boneless sheepmeat	53%	40%	105%	46%	0%	0%	5-7%	0%
040510	Butter (excl. dehydrated butter and ghee)	38-47%	65-79%	45-55%	42-52%	0%	299%	6%	0%
040590	Fats and oils derived from milk, and dehydrated butter and ghee (excl. natural & other butter)	60%	58%	38%	47%	0%	314%	10%	0%
040610	Fresh Cheese (unfermented)	51-62%	46-55%	66-79%	53-63%	19%	246%	6%	0%
040690	Cheese (excl. fresh cheese, incl. processed and blue-vein cheese)	38-56%	29-42%	41-60%	41-60%	15%	246%	5-6%	0%
070110	Seed potatoes	4%	4%	4%	4%	0%	1%	0%	0%
070190	Potatoes (fresh, excl. seed)	4-10%	4-10%	4-10%	4-10%	0%	1%	0%	0%
100199	Wheat and meslin (excl. seed)	0-40%	0-43%	0-11%	0-23%	0%	77%	0%	0%
100390	Barley (excl. seed)	44%	44%	13%	9%	0%	21%- 95%	0%	0%

Sources: UK Government, Canadian Government and Andersons

Note: Tariff ad-valorem equivalents (AVEs) are based on the prices shown in Table 5-1 above. The UKGT varies significantly due to its tariffs having both a specific (fixed) and a percentage component which leads to significant differences in the AVEs when applied to products with varying price levels.

5.2 Tariff Rate Quotas (TRQs)

For this study, there are two types of TRQ currently in operation which are of interest. The first are 'WTO TRQs' which were introduced when the UK was an EU Member State and have since been split between the UK and the EU27. These are discussed in section 5.2.1. Secondly, some TRQs have been granted by the UK via FTAs ('FTA TRQs') which are currently in force. This includes the Canada-UK Trade Continuity Agreement (CUKTCA). Details of relevant FTA TRQs are detailed in section 5.2.2.

5.2.1 WTO TRQs

Some preferential trade already takes place between the UK and Australia, Canada and New Zealand via 'WTO TRQs' which have been split between the UK and the EU-27 since Brexit. These are set-out in detail in Table III-2 of Annex III, with a top-level summary given in Table 5‑3.

Table 5‑3: Summary of UK WTO Tariff Rate Quotas for Imports arising from EU Exit

Category	In-Quota Tariff Rate	Quota (T)	Comments
Beef	Varies (≥20%)	61,230	7.5% specifically available to Australia; 1.6% specifically available to Canada/US.
Sheepmeat	0%	127,562	NZ has 89.5% specific share; Australia (10.5%)
Dairy products	Varies by product	53,383	NZ has 60.8% specific share; Australia (5.5%) and Canada (7.5%)
Wheat	£10.04/t	123,325	Canada has 30% share of this (though TRQ jointly managed with EU27)
(Malting) Barley	£6.69/t	30,101	Available to all non-EU countries

Sources: HMRC and HM Treasury^[21], analysed by The Andersons Centre

Note: detailed breakdown provided in Table III-2 of Annex III.

In terms of meat, the most significant WTO TRQ is the 114Kt of sheepmeat (lamb) which is available to NZ. Australia also benefits from a lamb TRQ surpassing 15Kt. In recent years, the uptake of these TRQs has been significantly lower than the quota limits as both Australia and NZ have focused on the Asia-Pacific market, particularly with the onset of African Swine Fever (ASF) in China.

The market access via TRQs for beef is more limited (just over 61.2Kt for selected non-EU partners) because, whilst tariffs are reduced vis-à-vis the UKGT, they are not removed completely. These in-quota tariffs range from 20% upwards. In addition, there are also restrictions on the types of products permitted for import, with a number being limited to frozen products which are open to all non-EU countries. There is a specific beef TRQ for Australia and it is permitted to import nearly 4.7Kt annually. NZ's TRQ is much smaller (just under 0.5Kt). Previously, Canada also had access (along with the US) to an 11.5Kt TRQ when the UK was an EU Member State, however, the UK's is now offering a 1Kt TRQ to the US and Canada.

In terms of dairy products, the UK grants sizeable access to NZ for butter (27.5Kt), cheddar cheese (2.6Kt) and processing cheese (2.3Kt). Canada also has access to the UK market via a 4Kt cheese TRQ. Australia's access is currently limited to TRQs available to all non-EU countries, the largest of which is an 8.3Kt TRQ for processing cheese. In total, importers can now access dairy product TRQs of nearly 53.4Kt for the UK market.

For wheat, the UK grants access of over 123Kt via two main TRQs. Canada has access to a 37.4Kt TRQ for low and medium quality wheat, although this is jointly managed with the EU27. There is an additional 85.9Kt TRQ available to all other countries (excluding Canada) for low and medium quality wheat.

The TRQ for malting barley amounts to just over 30Kt. It is therefore, of particular relevance to the Scottish barley sector, given the importance of whisky distilling.

5.2.2 FTA TRQs

Under the CUKTCA^[22], additional TRQs have been allocated for wheat and beef imports into the UK from Canada. These are outlined in Table 5‑4 below. Access for wheat is more than double the WTO TRQ with an additional TRQ of nearly 52Kt. Access for beef has increased by nearly 3.9Kt.

The CUKTCA also made provision to continue UK exports of cheese to Canada via the WTO TRQ in operation when the UK was an EU Member State. This shall be the case until December 2023 with a review taking place by June 2023. This WTO TRQ currently totals just over 20.4Kt^[23]. It is divided into two reserves, of which the EU has access to 69.9% (nearly 14.3Kt)^[24]. Under CUKTCA, the UK would continue to access this TRQ as part of the 14.3Kt EU reserve.

Table 5‑4: Additional TRQs Granted to Canada by the UK via the CUKTCA vis-à-vis WTO TRQs

Sector / Commodity	Annual Quantity (T)	In-Quota Tariff (%)	Years applicable	Comments
Wheat	51,600	0%	2021 to 2023	Relates to low and medium quality common wheat
Chilled beef & veal	2,708 (CWE)	0%	From 2022	Encompasses HS codes 020110, 020120, 020130 and 020610
Frozen beef & veal	1,161 (CWE)	0%	From 2022	Encompasses HS codes 020210, 020220, 020230, 020629, 021020 and 021099

Sources: UK Government and Andersons

Note: CWE denotes carcase weight equivalent. All products imported via these TRQs need to be converted from their product weights to a CWE. This has the effect of lowering the volume of access overall.

5.3 Non-Tariff Measures (NTMs)

This section summarises the results of the NTM cost assessments undertaken during this study. As alluded to at the outset of this Chapter, it focuses on NTMs for the UK's trade with the non-EU countries within scope in addition to UK-EU trade. The NTMs are primarily expressed in ad-valorem equivalent (AVE) terms. The methodology is outlined in Annex I and is broadly similar to that of the 2020 Brexit study that Andersons undertook for the Scottish Government. Annex III provides more detailed information on the NTMs applicable for each non-EU partner.

Results are presented below on a probabilistic basis (i.e., averaged out over 100 loads). The estimates have been derived using a combination of desk-based and primary research. Within some product categories, such as beef, sheepmeat and dairy, NTM estimates have been compiled at a sub-product level (i.e., using HS6 commodity codes and associated trade) for the top-3 to 5 most commonly traded products within each category. This is because there can be significant variation in NTM costs within some products (e.g. frozen beef versus chilled beef). These NTM costs were then weighted based on the share of each selected sub-product to derive an overall NTM AVE for the product category. It is this weighted average which is then used for the CGE modelling.

The prices used in the NTMs assessment (see Table 5-1) are also worth noting. For imports potentially coming into the UK from selected countries / blocs, the prices used are based on the global export price (value of exports / net weight of exports) of each product for each country or trade bloc. Accordingly, for imports coming in from Australia for example, the price is based on the average Australian export price to all countries for a given product during 2018-2020. Similarly, for any exports that the UK might potentially undertake, the price is based on the UK export price to all countries for 2018-2020. For UK exports, this has the advantage of facilitating a comparison of NTM costs between Canada and GCC countries for instance.

5.3.1 UK - Australia

Table 5‑5 summarises the NTM AVEs for Australian trade for the products within the scope of this study. Further detail including NTM AVEs by commodity code within each product category and associated pricing data are provided in Annex III. Notably, the prices underpinning the NTM AVEs are based on the export prices from Australia and the UK to all countries during the 2018-2020 period. Whilst it is arguable that the NTM AVEs should be based on Australia-to-UK trade only, this trade is currently relatively small. With the introduction of the new FTA, greater volumes of Australian product will be available to export to the UK which was not available previously. As such, this additional volume will be coming from product that was previously routed elsewhere. Therefore, focusing on the exportable surplus price from Australia is a more realistic starting point for the level of competition that Scottish and UK suppliers will face in the future.

As Table 5‑5 shows, the NTM AVEs for beef and sheepmeat average at 2.6% and 2.9% respectively for exports from Australia to the UK. In comparison with imports into Australia from abroad, the AVEs for Australian exports (assumed to apply for Australian exports to the UK) are relatively low. This is partly a function of the high prices for Australian red meat exports to the UK which are approaching £5,000 per tonne, significantly higher than the corresponding prices for imports into Australia.

Conversely, for the dairy products category, the average NTM AVE for Australian exports are estimated at 2.7%, slightly lower than the corresponding imports' figure (2.8%). Again, differences in prices are a key factor.

Given the large shipment sizes involved, NTM AVEs for grain are minimal and average at 0.2% for Australian exports and 0.1% for imports into Australia from overseas. These small NTM costs also reflect the industry feedback which mentions that whilst NTM-related administration takes time and paperwork, it is a small fraction of the value of shipments traded.

NTM AVEs for potatoes (6.0-7.2%) are significantly higher than for grain. This is chiefly a function of potatoes being shipped via containers, each assumed to hold around 26t on average. The NTM AVEs outlined below have been used in the CGE modelling, the results of which are set-out in Chapter 7.

Table 5‑5: NTM AVEs for Australian ( AU) Trade across Selected Product Categories

Commodity Category	AU Exports (Imports into UK)		AU Imports
	Price (£/T)	NTM AVE (%)	Price (£/T)	NTM AVE (%)
Beef	4,959	2.6%	3,445	6.5%
Sheepmeat	4,780	2.9%	3,876	4.9%
Dairy	3,214	2.7%	3,677	2.8%
Wheat	347	0.2%	167	0.1%
Barley	865	0.2%	157	0.1%
Potatoes	470	6.0%	517	7.2%

Source: The Andersons Centre (2022) based on pricing data from UN Comtrade and HMRC

Note: prices per tonne are aggregated and weighted by the amount of trade taking place for each HS code within the commodity category.

5.3.2 UK - New Zealand (NZ)

Table 5‑6 shows the summary NTM AVEs for NZ-UK trade. Again, the NZ exports column is based on the prices of NZ exports to all countries converted into Sterling. NZ imports are based on export prices from the UK to all countries. As noted earlier, whilst NTM estimates for UK exports are provided for comparison purposes, given the products within scope and New Zealand's distance from the UK, any exports from the UK to NZ are minimal.

The probability-based NTM costs for NZ are generally lower than those for Australia and this is primarily a function of the veterinary agreement that applies to trade in products of animal origin between the UK and NZ. For imports into the UK, NTM AVEs are estimated at 1.3-1.6%. Again, NTM AVEs on grain is minimal and the potatoes NTM AVE for exports from NZ to the UK is 2.7%, although industry participants thought that any potatoes' trade between both countries would be minimal.

Table 5‑6: NTM AVEs for NZ Trade across Selected Product Categories

Commodity Category	NZ Exports (Imports into UK)		NZ Imports
	Price (£/T)	NTM AVE (%)	Price (£/T)	NTM AVE (%)
Beef	4,292	1.6%	3,208	3.1%
Sheepmeat	5,364	1.3%	3,345	2.7%
Dairy	3,641	1.4%	3,642	1.8%
Wheat	347	0.1%	167	0.1%
Barley	865	0.1%	157	0.1%
Potatoes	690	2.7%	336	5.7%

Source: The Andersons Centre (2022) based on pricing data from UN Comtrade and HMRC

Note: prices per tonne are aggregated and weighted by the amount of trade taking place for each HS code within the commodity category.

5.3.3 UK - Canada

Table 5‑7 shows the NTM AVE estimates for Canadian trade in the selected agri-food commodities. For commodities such as beef, it is conceivable that trade could flow in both directions. Therefore attention needs to be paid to both sets of NTM AVEs. The data show that NTM levels are lower for imports into the UK from Canada. This is partly as a result lower check rates which have been applied to red meat imports from Canada as a result of the CUKTCA. For red-meat, the probability-based NTM AVEs for UK imports from Canada are based on 10% physical checks, which is lower than the default of 15%. This is why the NTM AVEs are somewhat lower for Canada than they are for Australia.

However, the prices per tonne are again the key determinant of lower NTM AVEs on Canadian exports than for imports into Canada. The value of Canadian beef exported (£4,169/t) is higher on average than the UK (£3,890/t), meaning that when fixed costs such as customs declarations and certification are applied on a per shipment basis, the AVEs are higher for a lower value load.

This effect is even more pronounced for lamb, where the export price from Canada surpasses £10,000/t. As Canada is a minor player in sheepmeat, and indeed, is a net importer, this high price is likely to be associated with specialist niche trade. Given that the UK is a net exporter of lamb, particularly in the Northern Hemisphere summer, it is highly unlikely that imports of Canadian sheepmeat will be of any significance in the UK. Canadian and UK-based industry experts acknowledge that exporting lamb to Canada is a definite opportunity for the UK and the reputation of UK (and EU) lamb is such that it would be positively perceived by Canadian consumers.

The NTM AVEs for dairy products are broadly similar (1.2-1.3%) with the aggregated AVE for Canadian imports being slightly higher due to the lower price per tonne.

As mentioned above, wheat (and barley) trade is dominated by bulk shipments, so that NTM AVEs are approximately 0.1%. Given these low levels of trade barriers and the price competitiveness of Canadian grain, the UK market is seen as a significant opportunity by Canadian wheat exporters.

Once again, potatoes have higher NTM AVEs due to the small shipment size (relative to grain) and the lower price per tonne. Canada has disease issues with seed potatoes in particular. Disease pressure on Canadian commercial grade seed potatoes have curbed Canada's ability to serve the US and Mexican markets. This, in turn, is exerting pressure on its domestic seed potatoes' sector. In such times, it is unlikely that Canada would permit significant volumes of Scottish seed potatoes into the country. Also, Canadian import controls are quite strict as it is seeking to prevent additional disease entering the country. Therefore, industry experts believe that the export potential for Scottish producers is limited.

Table 5‑7: NTM AVEs for Canadian Trade across Selected Product Categories

Commodity Category	CA Exports (Imports into UK)		CA Imports
	Price (£/T)	NTM AVE (%)	Price (£/T)	NTM AVE (%)
Beef	4,169	1.5%	3,890	2.6%
Sheepmeat	10,037	0.9%	4,079	2.3%
Dairy	4,078	1.2%	3,713	1.3%
Wheat	184	0.1%	167	0.1%
Barley	176	0.1%	157	0.1%
Potatoes	404	4.6%	357	5.3%

Source: The Andersons Centre (2022) based on pricing data from UN Comtrade and HMRC

Note: prices per tonne are aggregated and weighted by the amount of trade taking place for each HS code within the commodity category.

5.3.4 UK - GCC

As UK trade with GCC countries is currently based on WTO Most-Favoured Nation (MFN) conditions, the NTM AVEs presented below are based on the higher end of the NTM costs spectrum vis-à-vis the estimates presented for NZ and Canada who benefit from veterinary deals with the UK. As noted in Chapter 4, agri-food exports from the GCC are small, but the region is a significant net-importer and viewed by some as offering opportunities to the UK and Scotland.

For beef, as mentioned in Chapter 4, the biggest NTM issue for UK exporters concerns Halal certification and the fact that British retailers do not permit Halal slaughtering in the premises that they procure from. Therefore, whilst the aggregated NTM AVE for beef exports from the UK to the GCC is estimated at 7.2%, in effect, large swathes of the supply-chain will not be permitted to participate in future exports to the GCC region.

The NTM AVEs for lamb exports from the UK to the GCC are estimated at 5.5%, higher than for Canada. This is mainly because of the requirements around Halal certification and the fact that UK trade with the GCC countries is subject to standard regulatory checks applied on an MFN basis. As alluded to in Chapter 4, there is greater scope for Halal-certified exports of lamb to the GCC from the UK.

The aggregated NTM AVE for dairy products is estimated at 2.5%. This suggests that with the significant levels of exports currently taking place any enhanced access to the region should present further opportunities for Scottish dairy products' exporters.

As with other regions, the NTM AVEs for wheat and barley are minimal, but opportunities for UK exporters are likely to be curtailed by more competitive produce emanating from the Black Sea region.

Potato NTM AVEs are estimated at 8.4% for exports to the GCC region. Here, phytosanitary certification features prominently with some suggesting that the requirements in Saudi Arabia have become more stringent recently and may pose a more significant barrier to future exports.

Table 5‑8: NTM AVEs for GCC Trade across Selected Product Categories

Commodity Category	GCC Exports (Imports into UK)		GCC Imports
	Price (£/T)	NTM AVE (%)	Price (£/T)	NTM AVE (%)
Beef	2,929	4.7%	3,074	7.2%
Sheepmeat	2,684	5.9%	4,282	5.5%
Dairy	3,140	2.5%	3,536	2.5%
Wheat	708	0.1%	167	0.1%
Barley	580	0.1%	157	0.1%
Potatoes	329	7.2%	380	8.4%

Source: The Andersons Centre (2022) based on pricing data from UN Comtrade and HMRC

Note: prices per tonne are aggregated and weighted by the amount of trade taking place for each HS code within the commodity category.

5.3.5 UK - EU

The UK has not yet imposed full regulatory controls on imports. These controls are now not expected to be fully imposed until the end of 2023, but they will become effective at some point. As such, in the long-term, imports from the EU will be affected by NTMs. This, in turn, will influence the competitiveness of EU imports into the UK market (and UK exports in the opposite direction) meaning that imports from the selected non-EU partners could become more competitive.

Table 5‑9 summarises the estimated NTM AVEs for each commodity for UK-EU trade during 2018-2020. Again, further detail is set-out in Annex III. As Chapter 4 illustrates, substantial agri-food trade takes place between the UK and the EU each year. Whilst post-Brexit trade is lower, it is still significant. Accordingly, unlike the non-EU partners where direct trade with the UK is generally lower, and likely to grow and evolve with future FTAs, trade with the EU is unlikely to experience such shifts (unless there is a major trade dispute). Therefore, given the level of trade taking place, it was decided that the NTM AVEs set out below should be based on HMRC pricing data with the EU for each commodity (and associated HS codes) for 2018-2020.

Overall, with the possible exception of sheepmeat, import and export prices on trade with the EU are closely aligned. This reflects the geographic proximity between both markets and the level of trade taking place.

For red meat, the NTM AVEs for UK exports range from 1.8% to 2.3% for beef and sheepmeat respectively. For UK exports to the EU, the NTM AVEs for beef are slightly higher (2.1%) than sheepmeat (1.9%), but this is also a reflection of the higher prices for sheepmeat exports to the EU. Of course, it is important to recall that these NTM AVEs are probability-based. Some shipments will be subject to the full range of regulatory checks and the NTM AVEs for those "unlucky loads" will be significantly higher; surpassing 25% in some cases.

The NTM AVEs for dairy products are very similar and are estimated at 2.0% and 2.2% for UK imports and exports respectively.

As with non-EU partners, NTM AVEs for wheat and barley are negligible in both directions (0.1%) and whilst there is added bureaucracy on UK grain trade with the EU, it is not considered to be a big barrier.

NTM AVEs for potatoes are estimated at 4.5% and 7.1% for UK imports and exports respectively. Of course, seed potatoes are no longer eligible for export from Scotland to the EU. This has been a major challenge for the industry since the TCA became effective. Whilst theoretically, imports of seed potatoes into the UK from the EU should also be ineligible, the UK has permitted some imports to take place. Some industry participants believe that this has created an additional challenge for the Scottish seed potatoes sector.

One industry expert suggested that there are good commercial reasons for UK-EU seed potatoes' trade to continue, particularly given Scotland's high-quality reputation, but whilst there is a willingness from UK and EU producers to address the current restrictions, the political will is not yet there. Industry participants hope that this will change in the long-term but many have been left disappointed with how the industry has been treated since the TCA was agreed.

Table 5‑9: NTM AVEs for UK- EU Trade across Selected Product Categories

Commodity Category	EU27 to UK		UK to EU27
	Price (£/T)	NTM AVE (%)	Price (£/T)	NTM AVE (%)
Beef	3,901	1.8%	3,787	2.1%
Sheepmeat	3,761	2.3%	4,461	1.9%
Dairy	3,173	2.0%	3,307	2.2%
Wheat	172	0.1%	168	0.1%
Barley	164	0.1%	159	0.1%
Potatoes	540	4.5%	346	7.1%

Source: The Andersons Centre (2022) based on pricing data from the HMRC

Note: prices per tonne are aggregated and weighted by the amount of trade taking place for each HS code within the commodity category.

5.4 Concluding Remarks

Taken together, there are substantial trade barriers currently affecting trade between the UK and the selected non-EU partners, particularly in terms of imports into Britain. The FTAs recently announced between the UK and Australia as well as NZ will diminish these significantly over time. It is anticipated that greater market access for Canada will also offer similar levels of access. On the exports' side, trade barriers between the UK and selected non-EU partners are generally lower, with the exception of Canada for dairy products. Long-term, the value for money of Scottish produce vis-à-vis its peers will be the crucial determinant of the Scottish agri-food industry's future success.