Food for Thought – Cooperation Versus Competition in the UK Internal Market: Part II

We have all become familiar with labels on food packaging that tell us how many calories and how much fat, carbohydrate, protein and salt a product contains. The intention behind this type of information regulation is to give consumers a basis for making choices about the types of food they want to consume. 

Food labelling in the EU is governed by the 2011 Food Information to Consumers (‘FIC’) Regulation. It harmonises a set of pan-EU mandatory labelling requirements, albeit that the provision of information via Front of Packaging (‘FOP’) labelling is voluntary. EU rules on food labelling will form part of a domestic body of ‘retained EU law’ at the end of the year. But it is a body of law that falls with areas of devolved rule-making competence. Accordingly, it comes within the programme for the creation of ‘common frameworks’ described in Part I to manage any future modifications of retained EU law. 

So how will common frameworks on food labelling operate and what impact would a United Kingdom Internal Market Act have?

Common Frameworks on Food

In early October, the UK Government published a Nutrition Related Labelling, Composition and Standards Provisional Common Framework (‘NLCS Framework’). This signified that the common framework had reached Stage Three of a five-part development process allowing for parliamentary scrutiny prior to Stage Four (when the framework gets formal ministerial sign off) and Stage Five (when the framework is implemented). Other frameworks are still in development including one on Food Compositional Standards and Labelling (‘FCSL Framework’) and one on Food and Feed Safety and Hygiene (‘FFSH Framework). 

Whether a particular aspect of retained EU food law falls under one or other frameworks is driven less by the particular EU instrument that is retained in domestic law and more by the functional division of responsibilities between different parts of government. That is important because the cooperation which underpins a framework is between the responsible officials of those departments or agencies within each of the UK nations. 

So at UK Government level, although food labelling generally falls within the remit of the UK Department for the Environment, Food and Rural Affairs (‘DEFRA’), issues relating to nutrition are a responsibility of the UK Department for Health and Social Care (‘DHSC’). The NLCS Framework is, therefore, a framework for cooperation between officials of the DHSC, the Welsh Government, the Food Standards Agency (‘FSA’) and Food Standards Scotland (‘FSS’). The ‘concordat’ which implements that framework is a multilateral agreement between the UK, Scottish and Welsh Governments and the Northern Ireland Executive.

The Northern Ireland Executive resumed its responsibilities in January 2020 but this is not fully reflected in the outline text of the NCLS provisional framework published in October. Importantly, the 2011 EU FIC Regulation is listed in Annex 2 of the Northern Ireland Protocol and will continue to apply directly in Northern Ireland by virtue of Article 5(4) of the Protocol. A subsequent amendment to that Regulation – for example, to make FOP labelling mandatory – would also be applicable to Northern Ireland.  At the same time, the Protocol also requires respect for the ‘unfettered access’ of NI goods to the UK internal market. All of which is a useful reminder that the mechanisms and processes for cooperation under the common frameworks are subject to the obligations and procedures applicable under the Withdrawal Agreement and the Protocol.

The NLCS framework also recognises that the interest of the UK Government in what is otherwise an area of devolved competence is that the negotiation of trade agreements falls within its domain. Indeed, devolved administrations may be compelled to ensure that their rules do not conflict with international obligations, and so the operation of common frameworks is subject to any trade deals the UK does with the EU and/or with other trading partners including the USA.

The NLCS Framework – How Does it Work?

So what does a common framework actually do? The essential idea is that future changes in policy within the scope of a framework will be subject to agreed mechanisms for intergovernmental cooperation and dispute resolution as set out in the framework and a ‘concordat’ between the participating governments. In the absence of a legislative approach, it is these mechanisms that do the heavy lifting. 

In terms of the NLCS framework, it is changes to the baseline body of retained EU law (which currently reflects harmonised EU nutrition labelling and composition rules) that will fall within the scope of the framework. The aim of the framework is to determine first, whether a common approach across the four nations can be taken to future regulatory changes, and second, in the absence of a common approach, to manage – through a dispute-resolution mechanism – any objections to any proposed divergences which are considered by one or more governments to be unnecessary or disproportionate. 

Information sharing and discussions between the parties to the framework will take place in a NLCS Policy Group as the central decision-making body. So any new requests to make changes to registers or lists of vitamins or minerals or foods for specific groups or policy proposals within the scope of the framework – and this could include future FOP policies – would be channelled through this Group. Where consensus can be reached, the Group will make ‘common recommendations’ on proposals for change. It will also be the forum for dispute resolution with escalation upwards to more senior officials and then ultimately ministers (drawing on the structures and processes for managing issues under the Devolution Memorandum of Understanding). 

The UK Internal Market – Filling Gaps or a Rival Governance Technique?

The appearance of the United Kingdom Internal Market Bill in September 2020 seems surprising given that policy cooperation through common frameworks ought to help eliminate or manage future potential barriers to trade before they emerged. However, the Bill has been presented as a safety-net to catch those divergences that falls outside the scope of the frameworks and as a means of protecting the functioning of the internal market as a whole rather than within specific sectors. It is also significant that the UKIM Bill covers services as well as goods. But when it comes to trade in goods, it is important to be clear about what is really different between the approaches and what implications a UKIM Act would have on the operation of common frameworks

The first is that the common frameworks described here are intergovernmental, voluntary and ex ante in managing potential rule changes as they are being proposed. By contrast, the UKIM Bill would be an instrument in the hands of private litigants, imposes binding legal obligations and is ex post in its disapplication of new rules that conflict with its terms. These are not differencing in scope but in governance technique. 

Second, it is certainly the case that the UKIM Bill is a ‘horizontal’ overarching instrument rather than a ‘vertical’ sectoral tool. But it seems likely that the governance technique of information exchange and intergovernmental cooperation will be replicated across different frameworks. This raises the issue of whether it might have been wiser to develop a horizontal concordat template common to all frameworks thereby making the distinction less apparent. 

Thirdly, the starting point for the common frameworks process is the common baseline of retained EU law, with its cooperation and dispute resolution mechanisms triggered by a proposal in one or more of the UK nations to modify that body of law. The aim of the process is to seek consensus on a common approach, but it may legitimately result in policy divergence. What triggers the UKIM Bill is any new divergence in rules relating to the offer of sale of goods whether or not a change is made to retained EU law or any other source of law. Given that a new divergence may result from policy cooperation through common frameworks, it is clear that this new divergence may itself trigger the UKIM Bill.

Which leads to the fourth point. It is entirely possible that a divergence in approach between the four nations could be the outcome of intergovernmental cooperation without that change then being immune from disapplication by virtue of the operation of the UKIM Bill. While the new rule could apply in the jurisdiction in which it was created, the effect of the UKIM market access principles would be to disapply the rule to goods originating in another part of the UK. In practice, legitimate policy divergence as a product of intergovernmental cooperation could be undermined by regulatory competition created by the UKIM Bill.

Finally, while the focus of analysis under the common frameworks approach is upon the necessity and proportionality of any rule change, there is no proportionality analysis if the UKIM market access principles are engaged.

FOP Labelling

Take the example of FOP labelling again. Following the 2020 publication of a review, the European Commission is set to come forward with future proposals to make FOP labelling mandatory. If the Scottish ‘Continuity Bill’ becomes law, then Scottish Ministers may seek to keep pace with EU law by making FOP labelling mandatory and consistent with any other changes to the EU regime.  A common frameworks approach could be applied to seek a consensual all-UK approach. In the UK, a common approach to FOP labelling is already set out in a Guide developed between the DHSC, FSA, FSS and the Welsh Government. But it may be that either England or Wales might prefer to maintain a voluntary approach leaving it to manufacturers to choose whether it is appropriate to provide FOP labels and to which types of foods. Any resulting regulatory divergence, however, would be within the scope of the UKIM Bill and products lawfully sold in other parts of the UK and which did not display FOP labels could not be excluded from the Scottish market. The Scottish Government would have no ability to exclude non-compliant goods on grounds of public health despite this being within its devolved competence.

Conclusions

And so it is a mistake to see the UKIM Bill as either filling the cracks or offering UK-wide legal coherence in a way that common frameworks cannot. Instead they need to be understood as different and rival governance techniques with different rationales and different tests. 

It is not unusual for an internal market framework to be made up of different governance techniques and indeed this is the case with the EU internal market. But what matters is how these instruments interact and what balance they create. There are good reasons to believe that a UKIM Bill could undermine rather than support the common frameworks strategy and in doing so placed the relationship between UK and devolved governments under further strain.

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