Food and Drink, Veterinary Medicines and Residues (Amendment etc.) (EU Exit) Regulations 2019
Baroness Vere of Norbiton
That the Grand Committee do consider the Food and Drink, Veterinary Medicines and Residues (Amendment etc.) (EU Exit) Regulations 2019.
Relevant document: 19th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee B)
Baroness Vere of Norbiton (Con)
My Lords, most of this instrument corrects retained EU law on geographical indication—or GI—schemes. The remainder makes a small number of amendments relating to wine and spirit provisions and on veterinary medicines.
I turn first to the provisions on GIs. GI schemes provide legal protection from imitation for both local and traditional food and drink specialities. The purpose of the instrument is to enable the Government to administer and enforce GI schemes in the UK after exit. This will ensure that our GIs remain protected against imitation in the UK. Together with other legislation on GIs, it will ensure that the UK continues to comply with World Trade Organization obligations after exit, specifically the TRIPS agreement on intellectual property. Currently, we comply with the TRIPS agreement through our membership of the EU’s GI scheme. We will remain compliant with these obligations through this new domestic legislation, which makes provision for the protection of GI products within the UK and empowers the relevant agencies to enforce the rights granted to GI holders.
The instrument also provides a UK framework to administer and enforce GI schemes for agricultural products and foodstuffs, aromatised wines and spirit drink products throughout the UK. It will enable applicants from the UK and third countries to apply for UK GI protection, and it will allow the number of UK-recognised GIs to continue to grow following EU exit.
The UK Government are working with their global trading partners to transition EU free trade agreements and other sectoral agreements, and this includes commitments on the recognition and protection of UK GIs. In addition, the instrument will amend retained EU law on methods of analysis used to ensure that spirit drinks comply with the relevant rules. It also amends retained EU law concerning the documentation that must accompany the movement of wine and imported wine, the certification of wine, and the registers that must be kept by wine operators relating to the wines handled by them.
The Government launched a public consultation in October 2018 seeking stakeholders’ and the public’s views on our proposed new UK GI rules. Under EU rules, we are required to consult on amendments to food law. As we had to do this for wines and spirits sector standards, we also took the opportunity to consult on the wider GI aspects. We received 92 responses from a range of stakeholders, including the Scotch Whisky Association, the UK Protected Food Names Association and Quality Meat Scotland. Furthermore, the majority of respondents—68%—supported the Government’s proposals. This included our proposals to have a three-year implementation period for the new logos and our recommended appeals process using the First-tier Tribunal.
GIs are intellectual property and, as such, this is a reserved matter. The relevant powers currently exercised by the European Commission will therefore be transferred to the Secretary of State. We have worked with the devolved Administrations on the whole of this instrument and, where it concerns devolved matters, they have given consent.
I turn to the provisions on veterinary medicines. This is the second EU exit instrument covering veterinary medicines. The other instrument, the Veterinary Medicines and Animals and Animal Products (Examination of Residues and Maximum Residues Limits) (Amendment etc.) (EU Exit) Regulations 2019, has already been debated in and accepted by both Houses.
This instrument covers three areas. It transfers powers and functions to set maximum residue limits for veterinary medicines. It provides for veterinary medicines that have been approved by the European Medicines Agency to remain on the UK market. It also makes necessary consequential changes to the fees charged by the Veterinary Medicines Directorate, as set out in the Veterinary Medicines Regulations 2013.
MRLs are the maximum safe limit of a particular substance in produce from animals. These limits are used to establish withdrawal periods: the period that must elapse after the last administration of the medicine before produce from that animal may enter the food chain. A UK MRL-setting framework is necessary to ensure the safety of produce from food-producing animals. Veterinary medicines are devolved to Northern Ireland, so the power to set MRLs is shared between the UK Government and the Department of Agriculture, Environment and Rural Affairs. Defra will be able to act on a UK-wide basis with the consent of DAERA and the VMD will continue to act as the UK-wide regulator to ensure consistency.
This instrument brings across the existing MRL application fees from the EMA of £62,300 for a new MRL and £18,850 to amend an existing MRL. However, as stated in the EM, these fees will be reviewed as soon as possible. Until the data is available to underpin a more accurate cost base, the fees will be administratively reduced to better reflect the actual costs incurred as part of the assessment.
Medicines approved by the EMA account for a small percentage of all veterinary medicines in the UK—about 13%. However, they are often novel treatments and substances and it is highly important that these medicines remain on the UK market. This instrument provides for their conversion to UK national approvals, with no charge for the conversion. Pharmaceutical companies will not need to take any immediate action to enable them to continue to market their products in the UK.
Lastly, this instrument makes minor changes to the fees charged by the VMD for the functions it carries out. I must be clear; apart from bringing over the existing MRL fees I have set out above, these are minor corrections and no new fees are being introduced. The amendments proposed to Schedule 7 to the Veterinary Medicines Regulations 2013 are merely to correct deficiencies arising from us leaving the EU.
Although a formal public consultation has not been carried out, the Government have proactively engaged with the animal health industry to discuss how we can ensure that the regulatory regime continues to function effectively after exit day. My noble friend Lord Gardiner of Kimble has met the veterinary pharmaceutical industry association—the National Office of Animal Health—on a number of occasions as part of our extensive engagement. Officials from the Veterinary Medicines Directorate continue to hold regular meetings with key industry representatives. The industry has welcomed our proactive and continued engagement with it. NOAH expressed concerns that introducing a separate MRL-setting regime to the EU could increase burden and cost on the industry. The Government recognise that MRLs are key to facilitating trade in animal produce and will therefore look to align with international standards when setting them. To ensure a high level of protection for human health, MRLs must be based on sound science and data.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I am grateful to the Minister for her extensive introduction, and for her and her officials’ time at the briefing session. This is a further SI covering geographical indications, which we previously covered last week. Relevant EU law provides the framework to enforce this scheme and ensure that the UK remains compliant with the WTO and its Trade-Related Aspects of Intellectual Property Rights Agreement—TRIPS—obligations, as the Minister said.
There are currently 87 GIs in the UK, ranging from Craster kippers to Cornish pasties, and a number of delicious cheeses, from Wensleydale to Stilton. It is likely that there may be further applications for GI status now that the UK and the Secretary of State will decide on what is a legitimate case and the evidence provided. Defra officials will obviously have a role in advising the Secretary of State on what constitutes legitimate evidence. It is reassuring that should an application be refused, there is an appeal process through the Ministry of Justice, which will be running the First-tier Tribunals. However, no doubt there will be a cost to this. Could the Minister say what the cost of applying for a new GI status and appealing to the First-tier Tribunal will be?
Currently, UK regional GIs are protected in the EU. However, this could change once the UK has left—the EU might change their criteria, and so some of our small producers might find that their produce is no longer accepted. I understand that there are some new applications for GI status in the pipeline with the EU. These are extremely unlikely to be agreed before exit day. Can the Minister say how many there are and what the process will be for these producers to apply once exit day has passed? Will their current application just be transferred to the Secretary of State for his consideration, or will they have to restart the process with completely different forms in this country? It is likely that this process could lead to a dilution in protections as smaller businesses may not have the means to robustly defend their WTO entitlements.
Before leaving the topic of GIs, I would like to comment on the logo. Quite clearly, the EU GI logo cannot be used once we are no longer part of the club, so a new logo is needed for the sole use of UK producers. Sub-paragraph 3 of paragraph 7.7 of the Explanatory Memorandum refers to the new GI logo coming forward. In the meantime, the existing UK agri-food GI will be used for three years, and yet another SI will come forward for the implementation of this logo. When the change to this logo takes place, it will cost producers to update their packaging and their marketing administration—yet more bureaucracy and cost for many, including some very small businesses.
I realise that we are nearly at the end of this process of introducing SIs relating solely to EU exit, but it is two years since it was started. I would have hoped that someone in Defra might have trawled through the various instruments and grouped them together more coherently than is the case. Perhaps it would have been too much to ask that all SIs dealing with GIs be dealt with on the same day or that those relating to veterinary medicines be grouped together. However, we are where we are and I hope that we will never have to go through this laborious process again.
The provisions on veterinary medicines are fairly straightforward. I have just one comment, on paragraph 12.3 of the Explanatory Memorandum, in relation to those wishing to apply for a marketing authorisation where one does not already exist. As the Minister said, this will be subject to a fee. The EM states:
“This fee will be reviewed once a cost base has been established to ensure that the fee levels are appropriate”.
This appears arbitrary. Can the Minister say a little more about what criteria will be used for establishing the fees and whether there will be different levels of fee depending on what the veterinary medicine is and what it will be used for? Apart from this, I am happy to support this SI.
Lord Whitty (Lab)
My Lords, my first concern is the same as that of the noble Baroness and the Secondary Legislation Scrutiny Committee: namely, that the regulations cover disparate things. I come to these matters at the first instance and know that some of them have been dealt with previously but that there are still some to come.
The Secondary Legislation Scrutiny Committee pointed out that having SIs on different areas was not helpful to consideration by the House, but, much more importantly, it is not helpful for those who have to use them in the longer term. In other words, as the noble Baroness, Lady Bakewell, has said, if all the GI SIs were in one place—even if not in one instrument then at least in related instruments—those who had to operate the system thereafter would be in a much easier place. Likewise with the veterinary measures, the veterinary profession, farmers and pet owners would know where to find the sequence of regulation which applies to veterinary practice and medicines post Brexit.
I appreciate that Defra has had an incredible throughput of SIs to bring to Parliament and congratulate the staff in Defra on doing so and on reducing them in number—I think that we were originally expecting about 900; by merging them in this way, they have brought their number down—but there were better ways, certainly in these fields, of merging them. I think that there will be some confusion down the line when we come to address them again.
I have a few questions, some of which have already been posed. There is no impact assessment for any part of this SI. In the broad sweep of the costs of Brexit, these figures may be rather low, but for the individual operator they are not necessarily so. A specialist food company which has a protected designation in international terms will have to come out of that, probably lose a chunk of its market as a result and then go through a process of registering with the UK system. There will not be a fee if it has previously been registered in Europe, but it will have to engage in changing its packaging and marketing and possibly change its logo twice. There is a significant cost to the individual producer.
My other point is a general point that relates to SIs that I have seen in other areas as well: it is not clear in these SIs—although I was grateful to the Minister for some clarification in the discussion that we had the other day—quite how the powers of the European Commission or the other European agencies transfer to UK agencies. In some cases, it will be obvious and straightforward—the limited amount of veterinary medicines that are cleared in Europe at the moment will come to the VMD. It is an existing organisation and we know how that works. However, GIs will be dealt with by the department. There is not a specialist operation. There is then the appeals process. The Explanatory Memorandum refers to a single-tier process with the department and the Secretary of State, and that is subject to a different appeals process. I understand that but it is not clear from the text of the SI. The drafters of these SIs need to make it clear to the practitioners who is responsible for what used to be an EU institution’s role.
On the geographical indications schemes, the noble Baroness, Lady Bakewell, referred to the 87 UK products that we already have and she also asked how many were in the pipeline. Civil servants gave me an answer the other day but I recently looked at a list on the website showing that 14 are in the pipeline. That is rather more than I was given to understand was the number. It is important that those products do not have a duplicate process and that they are prioritised under the new system. The case will already have been prepared. They may not have got very far with it in Europe but the case will have been prepared.
The key issue in this circumstance is: what do the Government expect a UK designation to provide in terms of export markets? Because the rather discerning British consumer understands the EU designation, EU products have a benefit within the UK market because they will continue to have an EU designation. A reciprocal arrangement does not apply. We will have to invent, and invest in, marketing our specialist, previously protected products in Europe, as well as the new ones that are coming along the line, and the department may well have to look at promotional activity for these specialist products.
That takes me to the logo, which will be all important in establishing this new quality, both internally and externally. The interim arrangement seems to have been a bit of a problem. I am not entirely sure why it takes three years to develop a logo. Plenty of firms start up in various sectors and get a logo out in a matter of weeks. Therefore, I do not quite see why we need three years to do so. In any case, there will be a double cost to the producer—having to put the interim logo on first and then, in three years’ time, move to an approved UK logo. There needs to be some attempt at costing that.
Because agriculture and, to a large extent, food production are devolved, there is the possibility of having different logos and systems in each of the devolved Assemblies, even though there may be an overall UK recognition system. A lot of the produce is very local, and a disproportionate number of those products—the existing ones and the ones in the pipeline—come from the territory of the devolved Administrations. There might be some difficulty in reconciling the system with the devolved Administrations. It is possible that the Scottish Administration, and perhaps the Northern Ireland Administration, will want a somewhat different logo from the one envisaged as the UK logo under these changes.
On veterinary medicines, I accept that the profession has been fully consulted. It has told me, as it has told others, that it is pretty satisfied with the need for the regulations when we move. The issue again is: what is the reciprocity? If veterinary medicines which were previously recognised in Europe are now recognised by us, is Europe likely to recognise those which are approved only or primarily in the UK, or is that a matter for a long-term treaty or possibly an international arrangement?
Baroness Byford (Con)
My Lords, having listened to the contributions of colleagues in the Committee, perhaps I could raise and reinforce two points. One is the question of logos. I can hardly see Scottish Beef being very happy to become just UK beef, or Welsh Lamb becoming UK lamb. How will that be overcome, because that is clearly a big selling point for them? Can we have more explanation of how the logo system would work?
On the whole question of veterinary medicines, perhaps I could include the use of antibiotics, because that is crucial these days. We are coming to the question of zoonosis shortly, but it is worth addressing the use of antibiotics to the extent that it happens in some countries around the world, which does not happen over here. I seek clarification on those two points.
Baroness Vere of Norbiton
I thank my noble friend Lady Byford for her points, and the noble Baroness, Lady Bakewell, and the noble Lord, Lord Whitty, for their contributions. I take the criticism on the chin at the outset. I agree with noble Lords: there have been circumstances where the structuring of the SIs and the statutory instrument programme has not been ideal. This has been due to many different factors in the way the work happened; sometimes the EU changed legislation as these things were coming through.
In these examples, however, we are discussing certain elements of the retained EU law in isolation, away from other SIs which discuss the same thing. I can only apologise for that. I recognise that this has not been ideal. As one of the two Ministers taking these statutory instruments through, it is not ideal from our perspective either. As the noble Lord, Lord Whitty, said, maybe one day we will be able to smooth it out, soften the edges and ensure that people understand the context. Certainly, the technical guidance that the Government are issuing puts into better context and plain English the sorts of things that the industry needs to look out for as we transition to a no-deal or a deal-supported exit from the European Union.
I turn first to the topic of GIs, as this attracted the most comments today. The noble Lord, Lord Whitty, and I believe the noble Baroness, Lady Bakewell, talked about the recognition of UK GIs by the EU. We consider that protection of UK GIs in the EU should continue automatically after exit. They have been through the EU scrutiny process and have earned the right to their place on the EU’s registers. To remove the UK’s GIs from its registers, the EU would have to change its rules. If the UK GIs are removed from the EU registers, the Government will support UK GI-holders in reapplying for EU GI recognition.
The noble Lord, Lord Whitty, mentioned promotion of GIs after exit. He is right that we will be setting up a new system. The UK GIs that we have at the moment will roll over, but we hope there will be many more. We will support this, as we believe it is an opportunity to build significant consumer recognition of UK GIs in the places with which we trade significantly. We would promote them alongside wider UK Government promotional activity, such as the Food is GREAT campaign. We will also work closely with the devolved Administrations to co-ordinate future promotion of the GI schemes, recognising that some of the products are tied to a particular nation, rather than a particular locality. We will work with all scheme producers to raise consumer awareness in the UK, which is a very important market for these products, and in new markets abroad. We will also encourage new applicants, because we believe that is very important.
Turning to the application process and the cost of the new scheme, the basic application process is fairly straightforward. It is unlikely that the information required will be significantly different from that required by the EU. The application is formally submitted, the initial appraisal is completed, the devolved Administrations are asked to provide their scrutiny and external experts will be involved, as necessary. The application will be published and then the opposition procedure occurs, should there be any opposition. Finally, a recommendation is put to the Secretary of State and a decision is made on whether or not to award GI status to a product.
The department has the right expertise to assess applications. This expertise can be drawn from across the Defra group, and from academia and the private sector if necessary. This happens already, and it will continue under the UK scheme. We do not expect the costs of application to be different from what they are now; there will be no additional costs when compared to the current scheme, and so no new charges.
Turning to the appeals process, it is right that the Commission has a two-stage process, and it is only right that there is a right of appeal for producers who feel that their products should have been granted a GI. Therefore, we have proposed that the First-tier Tribunal is used. It is administered by Her Majesty’s Courts & Tribunals Service, and was set up to, among other things, handle appeals against administrative decisions made by government regulatory bodies. Appeals on GIs are therefore part of its core business. Defra will have an arrangement with the MoJ for the payment of money to cover the cost of these appeals.
The noble Lord, Lord Whitty, and the noble Baroness, Lady Bakewell, spoke about the current UK GI applications which are with the EU. We are pleased to have recently awarded the Vale of Clwyd Denbigh plum, and will continue to process applications to grow this number after exit. The EU is currently assessing 6 UK GI applications. Examples include Ayrshire early potatoes, Cambrian Mountains lamb and Broighter Gold rapeseed oil. If there is no deal, we would expect these applications to continue to be processed by the EU. However, if that does not happen, they will be processed under the new UK scheme. The new Article 52A of EU regulation 1151/2012 will apply to UK applications pending in the EU. They will be converted straight into UK applications, because Article 52A is in the legislation as Part 3 of Schedule 1 to the instrument.
While logos are mentioned in this SI, it is not the main logo SI. Because the setting up of the new system is not dependent upon a no-deal Brexit, it can be done over a period of time. The reason we have chosen three years—we did talk to the industry about it—is to minimise the costs to business, because the logo has to be agreed upon and then there is the transition from the current logo to the new logo; that will happen over that three-year period. There will be an opportunity for noble Lords to discuss this in much greater detail when the logo SI comes to your Lordships’ House. That may not be immediately—we all need a bit of a recess first; that would be wise. We are discussing it in this SI because there is an obligation to create a new logo, and the Government are very mindful of that. We have started talking to industry already, and we do not want all producers suddenly to have to change their logos at very short notice—that would not be cost effective. I have just been given a note saying that the three-year period, and the process by which we intend to do it, was supported in the public consultation that we carried out in October 2018. The process will continue in due course, and the three-year period will be available.
The noble Lord, Lord Whitty, talked about devolved logos, and my noble friend Lady Byford mentioned the issue of national products and their logos. These two things work in slightly different directions, because GIs are reserved as a form of intellectual property, and so the logo will be centrally managed. New logos will cover the whole of the UK, and we are working with them in the logo design process. We will come back to logos, and at that point we should discuss how we incorporate, because at some stage national brands will need to be incorporated into the broader system, particularly as many of them are such important exports.
I believe I have covered everything on GIs for the time being; I will check Hansard to make sure.
The issue of the MRL attracted slightly less attention, not because it is not important but because, I think, it is fairly straightforward. In my opening remarks, I talked about bringing over the EU fees for the MRL, but, within a few months of exit, the VMD will look at the actual cost of administrating this scheme, to makes sure we can charge the most appropriate amount. We expect the fees to come down, and we will do that as soon as we can.