Brexit already has affected the import of Swiss cheese: due to the drop of the Sterling vs the Swiss Franc, the cost of buying cheese in Switzerland has gone up. After the referendum, instead of 1.42 CHF before, one pound only bought you 1.20 CHF. It still hasn’t recovered: as of February 2018, the pound still only gets you 1.30 CHF.
If we buy cheese now, we have to pay 15% more in average than before the referendum. As the margins are small, it is not possible to digest this on our own – we have to augment prices. But this is only one aspect. What will actually happen when the UK leaves the common market? So far, cheese is the only Swiss product for which we have an integral free trade agreement with the EU. The EU is allowed to export as much cheese as they want to Switzerland, while Switzerland can export their cheeses into the EU free of any charges. So far, this was to the benefit of all involved: consumers of both side of the borders enjoy a wider selection of cheeses, and, yes, there even exists a cheese shop in Switzerland which is entirely dedicated to British cheeses. It opened… in 2007, the year the agreement was signed.
After Brexit, Switzerland will continue to be able to export cheese to the EU, it will still be a simple, straightforward process. Not necessarily so with the UK.
Scenario 1 (the most unlikely one): The EU continues to accept the UK in the common market, all free trade agreements remain intact. Result: We can import our cheese as before (and the UK can export as before).
Scenario 2: No free trade arrangements with the EU and no bilateral free trade arrangement regarding cheese between UK and CH. Result: We will have to pay 5% import duty and it can turn out that the logistics will be so complicated that the cost for transport can easily double. Luckily, we are importing hard cheese. Fresh product will encounter even more difficulties, as importers have to brace for very long delays at customs clearance.
Scenario 3: No free trade arrangements UK/EU but a bilateral free trade arrangement regarding cheese between UK and CH. It is very likely that Switzerland, being not a member of the EU, can negotiate a free trade agreement with the UK based on the existing contracts with the EU. Result: While there would not be any additional cost for customs duty, the logistics would still be a nightmare. There are over 7000 lorries arriving in the UK via the Dover Strait alone. Every single day. Imagine now perishable goods, waiting to be cleared at customs. At the moment, there is not enough infrastructure for these proceedings, and there won’t be in due course. But it’s better than the other way round: British exporters of dairy products will encounter even bigger problems, as companies would need to pre-notify cargos and, at port of entry, these cargos would be held until released by the Border Inspection Post. Currently, there are no border inspection posts at the ports on the other side of the Channel. None at all. There are no parking spaces, no examination buildings large enough to tackle the current numbers of freights. If the EU would be able or wanting to create the required infrastructure? The trade in dairy between UK and EU is not inconsiderable: 619,392 tonnes of fresh milk were exported from the UK to the EU and 144,174 tonnes were imported into the UK from EU27 in 2016.
It is clear that without any agreement, the British dairy export industry will encounter bigger problems than the European one. EU traders can simply focus on other of the 27 EU countries to sell their products, hassle-free. This shift is already happening now. On the other hand, it will be more difficult to sell fresh milk to China or Canada or to whatever country UK politicians think they can negotiate a free trade agreement with than to he EU. In any case: The diversity at your cheesemonger’s and on your supermarket’s cheese shelves is endangered. Of course, we at Alpages will do everything to deliver the world’s finest Swiss alpine cheeses also in the future.