Considered in Grand Committee
My Lords, these regulations were laid before the House on 12 January.
Leaving the European Union has given us the opportunity to look critically at the trade agreements we inherited from the European Union and to strike new trade deals on our own terms. The Government are a firm supporter of international trade agreements and the benefits that they can bring to our nation. As such, I am delighted that my department can deliver an essential strand of work to bring the free trade agreement, FTA, with New Zealand into force through the changes being made with this legislation. This will give the UK the necessary implementing measures to meet the obligations and ratify the New Zealand FTA.
The free trade agreement will, among other things, boost business with New Zealand by 60%. It will bring a further £800 million into the UK economy, cut red tape for businesses and ensure tariff-free access to the New Zealand market for British goods. The changes set out in this instrument will bring welcome flexibilities to how wine and alcoholic beverages can be produced and labelled. However, I would like to emphasise that, as this introduces flexibilities, it will not force a change in the labelling practices currently being used by producers and traders, who may choose to continue to label and market as they do now.
I will now set out the three changes this instrument makes to retained EU law. First, it will allow any wine product to show alcoholic strength to one decimal place, for example 12.2% or 12.7%, et cetera. Retained EU law generally limits wine to being marketed to whole or half units, for example 12% or 12.5%, and that will continue to remain a possibility for wine marketed here or exported. The concession to label wine to a single decimal place is not new. The possibility has already been extended to Australian wines by our wine trade agreement with Australia.
Secondly, the instrument will also introduce a change to rules concerning the labelling of grape varieties for wine marketed in Great Britain. Where one or more grape variety is listed on a wine label, the named varieties must total at least 95% of the content of the wine. Retained EU legislation requires this to be 100%. The changes will mean that up to 5% of the content may consist of varieties not shown on the label. This change already has a precedent in our legislation: where a wine label displays a single variety of grape, that variety must account for 85% of the content of the wine. Our domestic wine producers have warmly welcomed the flexibility this will bring.
Finally, these regulations will allow flexibility in how the terms “alc” or “alcohol” and “vol” or “volume” appear with the numerical alcohol content on all alcoholic beverages. For example, current rules require that “alc” appears before the numerical alcohol content of the drink, with “vol” after. This instrument will allow these terms to also appear together after the numerical alcohol content of the beverage.
Together, these changes will bring flexibility that will facilitate trade between the UK and New Zealand, with the UK importing £216 million of wine in 2021. We think the changes will be especially helpful to small producers in both countries who might wish to exploit a niche for their product in that market but where the size of the order would mean a full label change would not be economically viable.
Our wine industry and producers firmly support the changes set out in this instrument and welcome the flexibility it provides. I hope that I have assured noble Lords of the need for this instrument. It represents just one part of the changes being made that will allow the benefits of our new free trade agreement with New Zealand to come into force. I beg to move.
My Lords, I will briefly address the points made. I thank the Minister for the detail in his address. The changes contained in this statutory instrument are relatively minor and are required to implement certain terms of the UK-New Zealand free trade agreement. We have no issue with the intent and can see that the slight flexibility introduced under these measures will benefit New Zealand exporters.
In the other place, questions were raised about other upcoming changes to wine labelling regulations, including the forthcoming requirement for a UK vendor or importer to be listed on the label, rather than accepting an EU address. Can the Minister confirm that this is still the plan? If it is, has any assessment been made of the likely increased cost for producers and consumers?
Paragraphs 7.6 and 7.7 of the Explanatory Memorandum talk about changes to labelling requirements, in particular regarding grape varieties, and how they
“will apply to all wines marketed in England, whether from New Zealand, the United Kingdom”
or elsewhere. Has the department estimated how many producers may avail themselves of this new flexibility? In the other place, the Minister said:
“We will not know … until those who are producing take advantage of the opportunities.”—[Official Report, Commons, Delegated Legislation Committee, 8/2/23; col. 6.]
If there is no demand for the change from non-New Zealand producers, why has the department decided to apply it universally? I look forward to the Minister’s response.
I am grateful to the noble Lord; he raised some good points. I will address the first one, about labelling. I think he asked whether the Government will permanently ease the requirement that wine sold in GB must show the prefix “importer” or “imported by” on the label with the address. The Government engage regularly with the wine sector and recognise that removing the requirement for importer labelling is a key industry request. We are also aware that the current easement that allows the EU importer to appear will end this December. We intend to set out the way forward on this issue and other Brexit opportunities soon.
The noble Lord asked whether the Government would take advantage of the possibility of amending retained EU law to benefit the UK. Yes, the Government are developing a reform package with the aim of making changes to help the thriving wine and viticulture sector to grow and innovate. These changes will look to remove regulatory barriers to growth and innovation and allow greater flexibility to help our producers continue producing quality products for the domestic and export markets. A visit to some of the southern counties of England will show just how the landscape in many parts of the country is changing, with new vineyards appearing every year. This is a growing industry and one that we as a Government want to support.
The noble Lord asked how many producers we think will avail themselves of this. I echo the points raised by my honourable friend in the other place. It is not certain, but this measure has been specifically asked for by the drinks sector—by the Wine and Spirit Trade Association and other bodies. It is not earth-shattering and headline-grabbing stuff, but it is important. It allows a degree of flexibility, which will assist small producers to avoid the cost of having to go through expensive relabelling if they want to approach a market in a niche way. This is important because it will help them adapt their business to market demands.
I believe we all recognise the importance of international trade agreements in moving forward the economy and driving trade. I am delighted that there is support for this measure. The improvements that we make on wine and alcohol labelling generally will provide greater flexibility for our trading partners, as well as our domestic producers, and will contribute to growth in our economically important wine and alcohol sectors.
I hope I have addressed the points that the noble Lord raised and that the Committee will approve the instrument.