Single Market, 25 years on — what’s next for the food and drink industry?

November 24, 2017, 7:00 pm

A Q&A with Hubert Weber, President of FoodDrinkEurope and Executive Vice-President & President Europe of Mondelēz International

Does food and drink have a role in the debate on the future of Europe?

Yes, and a fundamental one too. The food and drink industry is the largest manufacturing sector in Europe, involving more than 4 million employees and over 280,000 businesses, most of them being SMEs, and accounting for domestic sales of one trillion euros. It is deeply rooted in the lives of millions, as part of the social, cultural and economic fabric of the continent. Our sector’s ability to contribute to competitiveness, growth and job creation is vital to Europe’s future.

Since its inception 25 years ago, how important has the achievement of Europe’s Single Market become to the sector?

The smooth functioning of the Single Market is essential. It ensures the diversity, availability, affordability and safety of our products. It is essential for our businesses and the supply chains which allow us to serve our consumers. This means we fully support the Single Market as well as the European project as a whole.

You say this at a time when the U.K., one of the largest members, is set to leave. How will this affect the sector?

Uncertainty still prevails, but a smooth transition and successful outcome is essential for everyone in the remainder of the EU. A clear roadmap must be agreed upon rapidly, outlining the scope of negotiations and realistic transition agreements. Our sector’s experience is important to making sure it is a success.

What steps need to be taken to advance the Single Market in the sector?

We firstly need to ensure that existing Single Market rules are implemented consistently across member countries. Worrying trends towards renationalization of rules are damaging business and competitiveness. Because of the absence of action at EU level, this further fragments the Single Market. Outstanding regulatory challenges, particularly with technical rules, also need to be addressed. And finally, we need to reduce red tape for companies, in particular smaller ones, to reduce their costs and unlock their competitive advantage at home and abroad.

What kind of areas are being renationalized?

Areas including the implementation of rules on country of origin labelling. Some member countries are now requiring an origin reference on some products, a clear breach of Single Market rules.

Such as?

Milk and meat in France and tomato-based products in Italy.

What effect will this renationalization have?

It will lead to the renationalization of supplies, reducing important sources of revenue for farmers and producers, who depend on cross-border trade.

Has there been any sign of these effects already?

Yes. The French requirement for labels to include the country of origin of the milk used in making dairy products has, for example, led to very significant losses for Belgian and German milk exporters. More broadly it means a less efficient supply chain and, in turn, increased food prices for consumers.

Are there any other areas where renationalization poses a threat to the Single Market?

Yes, in the Common Agricultural Policy (CAP). The last reform granted member countries and regional governments more flexibility, including derogations and exemptions from the general rules. Again, this threatens the Single Market, with the negative consequences ultimately felt by the consumer. The European Commission needs to step in and stop renationalization in the upcoming review.

Are there other reasons to be concerned about CAP?

Some, yes. The changes to the current CAP go beyond simplification and include derogations from EU competition law for farmers. This could have far-reaching consequences in the operation of competition law and on the market orientation of EU agriculture in general. Again, these will ultimately hit the consumer.

Is CAP important to the food and drink sector?

The industry uses 70 percent of the EU agricultural production and around three-quarters of its products are sold within the EU. So, CAP is essential to achieve EU added value in public spending. CAP should be a truly common policy, applied consistently across the EU’s diverse agriculture and rural areas.

Are there other issues in the operation of the sector as a whole?

Farmers are not the only ones exposed to unfair trading practices, food and drink manufacturers are too. These practices adversely affect companies’ capacity to invest and innovate for the long term. The European institutions have acknowledged unfair trading practices in a contractual relationship can come from any level in the chain. Any framework legislation needs to address commercial relationships between the actors right along the food chain.

Reports indicate poorer member countries are offered inferior products, known as “double standards.” What are your views on this?

We completely reject the idea that any consumer in any country should be considered ‘second class’ and so we take all these claims very seriously. That said, we also need to be clear that making a product to a different recipe does not mean it is of lower quality.

Not necessarily, but are they of lower quality?

Where there are differences in the recipes they are generally the result of differences in consumer taste, the sourcing of local products, or local regulations which govern the use of certain ingredients.

How can this issue be resolved?

The discussion has become political and emotions sometimes get in the way of a productive debate. We want to play our part in resolving this. To this end we have called for, and fully support, open dialogue with all parties.



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