UK cheese exporters warn of losses if Canada trade deal not reached

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British cheese exporters are warning of damaging losses if the United Kingdom’s government fails to reach a deal with Canada that safeguards access to Canadian markets.

Canada currently allows British cheese imports under a temporary “rollover” arrangement that was agreed when post-Brexit trade rules came into effect in January 2021 but which expire on Dec. 31 this year.

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The two sides are locked in a negotiation to agree a permanent replacement U.K.-Canada trade deal, which has stumbled over issues including whether the U.K. will accept hormone-treated beef from the country, according to experts.

U.K. cheese exporters have warned that failure to agree a permanent new deal — or extend the so-called “cheese letters” that set up temporary arrangements for cheese — will lead to tariff-free export quotas being slashed for U.K. cheese exporters to Canada.

In a letter to trade secretary Kemi Badenoch, major cheese exporter Coombe Castle International Ltd. urged the government to sign an additional two-year extension to safeguard their business with Canada, which receives a third of the company’s exports.

“Every extra day the government takes to negotiate an extension or permanent outcome is a day during which we can’t plan and are thus at the risk of losing contracts with our Canadian partners,” wrote Darren Larvin, managing director of Coombe Castle.

Justin Beckett, managing director of Belton Farm Ltd. in Whitchurch, Shropshire, which sells more than £1 million of cheese to Canada a year as part of a £40 million turnover, said exporters were going to “hit a stone wall” unless the temporary access arrangements were extended.

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“This couldn’t have come at a worse time,” he added. “We’re looking to expand exports because of challenges in the U.K. market around the cost of living, but if this isn’t fixed we’re all going to have to work on about half a shipping container of product which isn’t viable.”

Of the £785.4-million worth of cheese the U.K. exported in 2022, £18.7 million was shipped to Canada, making up 2.4 per cent of the British cheese sector’s total exports, according to the Food and Drinks Federation, a U.K. trade body.

Trade experts say Canada may be unwilling to keep importing British cheese if the U.K. is not prepared to reciprocate on other goods such as meat. Canadian beef is not currently for sale in the U.K., where hormone-treated beef is banned, a regulation inherited from the EU.

Sam Lowe, partner at consultancy Flint Global Ltd., said the negotiations would be difficult. “Canadians don’t want to import any foreign cheese; Brits don’t want to change their food standards to facilitate the import of Canadian beef.”

U.K.-Canada trade issues are politically sensitive in Canada where the cattle industry launched a campaign in September urging Ottawa to block the U.K.’s membership of the Asia-Pacific trade bloc, the CPTPP.

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The industry complained the deal allowed U.K. beef farmers unfair access to Canada and urged the Canadian government to use their current talks as leverage. “We have an opportunity to fix these trade barriers with the Canada-U.K. bilateral agreement that is being negotiated,” the campaigners said.

William Bain, head of trade policy at the British Chambers of Commerce, said the fairest outcome would be for the terms of the cheese side letters to be extended until the negotiations for a new free trade agreement between the U.K. and Canada conclude.

The Department for Business and Trade said it did not comment on live negotiations but that “decisions on our high food standards have never been up for negotiation.”

“Our priority remains to secure a world class trade deal with Canada which delivers for U.K. businesses and consumers — including dairy farmers,” they said.

© 2023 The Financial Times Ltd.

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