Trade Perspectives©

12 February 2024

 

The EU to introduce rules on Binding Customs Valuation Information decisions: Towards enhanced legal certainty and commercial predictability for traders?

On 25 January 2024, the European Commission (hereinafter, Commission) published draft Commission Delegated Regulation (EU) …/... amending Delegated Regulation (EU) 2015/2446 as regards decisions relating to binding information in the field of customs valuation and decisions relating to binding origin information, which aims “to increase transparency, legal certainty, compliance and uniformity in customs valuation, to the benefit of economic operators, customs authorities and the financial interests of the Union” and to “meet international standards regarding advance rulings for customs purposes”. By applying for and obtaining binding decisions relating to the method for determining the customs value of goods, importers and exporters can obtain greater legal certainty regarding the customs duties to be paid with respect to the goods being imported into the EU since, at the moment of importation or exportation, the customs authorities will be required to treat the goods in accordance with that decision.

The Union Customs Code

In general terms, goods imported into the EU are subject to the EU customs rules, including the payment of the applicable customs duty. Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (the Union Customs Code, hereinafter, UCC) sets out the legal framework for customs rules in the EU. The UCC delegates the power to adopt more detailed rules concerning certain provisions of the UCC to the Commission. In that context, the Commission adopted Commission Delegated Regulation (EU) 2015/2446 of 28 July 2015 supplementing Regulation (EU) No 952/2013 of the European Parliament and of the Council as regards detailed rules concerning certain provisions of the Union Customs Code, which is regularly updated to take into account, inter alia, of the relevant developments in EU legislation and to clarify customs formalities.

Establishing mechanisms to facilitate compliance with customs requirements

Essentially, it is the responsibility of the importers and exporters to ensure compliance with customs rules. Commitments undertaken by Members of the World Trade Organization (hereinafter, WTO) encourage the establishment of mechanisms that facilitate traders’ compliance with customs requirements. Binding decisions on the customs treatment to be given to imported or exported goods, also known as “advance rulings”, which exporters and importers can apply for and obtain in advance from customs authorities, are one of the key means of enhancing transparency, legal certainty, and commercial predictability in the course of trade.

Article 33 of the UCC requires EU Member States’ customs authorities, upon application, to take decisions relating to Binding Tariff Information (hereinafter, BTI decisions), which enable importers to determine the correct classification of goods for tariff purposes, and Binding Origin Information (hereinafter, BOI decisions), which enable importers to ascertain the correct origin of goods in order to, inter alia, benefit from preferential arrangements. Additionally, on the basis of Article 35 of the UCC, customs authorities are required, following an application, to “take decisions relating to binding information with regard to other factors referred to in Title II, on the basis of which import or export duty and other measures in respect of trade in goods are applied”. Title II of the UCC includes the “value of goods for customs purposes”.

In the EU, on the basis of Article 33 of the UCC, a decision relating to binding information taken by one EU Member State is valid in all EU Member States, as it is binding on its holder, as well as on the customs authorities. While the EU has already put in place a well-established legal and operational framework for issuing BTI and BOI decisions, set out in the UCC, as well as in Delegated Regulation (EU) 2015/2446, this is currently not the case for decisions relating to the valuation of goods for customs purposes. In 2017, the European Court of Auditors had formulated, in its 2000 and 2017 Special Reports, the recommendation to “make the issuance of EU-wide valuation decisions possible without further delay”. From 21 December 2022 to 18 January 2023, the European Commission had sought stakeholder feedback on an earlier draft of the Delegated Regulation introducing more detailed rules on decisions on Binding Valuation Information (hereinafter, BVI).

The importance of binding decisions on customs information has been acknowledged in various international agreements, such as the WTO Trade Facilitation Agreement (hereinafter, TFA) and the World Customs Organization’s (WCO) revised Kyoto Convention, as well as in preferential trade agreements. Many countries around the world, such as Australia, Canada, China, Japan, New Zealand, and South Korea, already issue binding decisions regarding all three categories of advance rulings relating to tariff classification, origin, and valuation. With respect to the TFA, the Commission notes in the Explanatory Memorandum to the draft Delegated Regulation that “Article 3 of the TFA sets an obligation for the WTO Members to issue advance rulings on tariff classification and origin, while in what concerns valuation (an area considered in general more complex than the tariff classification and origin), the WTO Members are “encouraged” to provide for advance rulings”.

Unpacking the draft rules for Binding Valuation Information (BVI) decisions

The EU currently maintains and enforces a rigorous customs valuation system, set out in Chapter 3 of Title III of the UCC, which is based on the principles of Article VII of the General Agreement on Tariffs and Trade (hereinafter, GATT), as further implemented in the WTO’s Customs Valuation Agreement. Article VII of the GATT requires WTO Members to primarily base the customs value on the transaction value of imported goods, which is the price actually paid or payable for the goods when sold for export to the country of importation, plus certain adjustments of costs and charges. If the transaction value cannot be used, other secondary valuation methods, such as the transaction value of identical or similar goods, would be applied. It is key that importers accurately determine and declare the value of their imported goods, which is then subject to verification by EU Member States’ customs authorities.

The draft Delegated Regulation foresees to introduce a new Article 18a to the text of Delegated Regulation (EU) 2015/2446, which would lay down the legal and operational framework for BVI decisions. Under Article 18a(1), customs authorities would be required, upon request, to “take decisions relating to binding valuation information”, outlining the appropriate method or criteria to be used and how that method or those criteria should be applied in determining the customs value of goods in specific situations. An application would have to be rejected if a BVI decision had already been issued to the applicant with respect to identical goods and circumstances, or if the application is not aligned with the intended use of the BVI decision. On the basis of Article 18a(4), the holder of a BVI decision, intending to utilise it for “a particular customs procedure”, would “be able to prove that the goods in question and the circumstances determining the customs value correspond in every respect to the circumstances described in the decision”. Similar to BTI and BOI decisions, and pursuant to Article 20(1) of Delegated Regulation (EU) 2015/2446, as amended by the draft Delegated Regulation, applicants would have no right to be heard when an application is rejected and BVI decisions would remain valid for three years from the date of effect.

Article 1(5) of the draft Delegated Regulation foresees to introduce a new Article 20a into Delegated Regulation (EU) 2015/2446, which would provide for the “management” of BVI decisions, in a similar manner as for BTI and BOI decisions, with respect to the invalidation, annulment, and revocation of BVI decisions, with varying implications for the holders. For example, pursuant to Article 20a of the draft Delegated Regulation, a BVI decision would be invalidated before its expiration if it were to become non-compliant with new EU legislation or if it were to become incompatible with WTO rules on customs valuation. Additionally, a BVI decision would be revoked for any of four reasons: 1) If it contradicts EU customs legislation, 2) If the conditions for taking the decision “were not or are no longer fulfilled”; 3) At the holder’s request; or 4) In case of incompatibility with a judgment of the Court of Justice of the EU. If a BVI decision is invalidated or revoked, the holder can still use it for binding contracts made before the invalidation or revocation, but only for six months. To utilise that benefit, the holder must apply to the customs authority within 30 days of the revocation or invalidation, specifying the quantities and EU Member States “in which goods will be cleared under the period of extended use”. Notably, that benefit is not available to a holder whose BVI decision is annulled for having provided inaccurate or incomplete information during the application process.

Finally, certain aspects of the draft Delegated Regulation concern Binding Origin Information decisions, particularly as it concerns integrating BOI and BVI decisions into the EU’s information technology management system for binding information decisions, which currently only covers BTI decisions. The new rules would apply from 1 December 2027, which is a notable delay from the date of 1 December 2025 that was originally planned in the earlier draft.

Leveraging binding decisions on customs valuation: Opportunities and considerations

It is essential that EU Member States’ customs authorities uniformly apply the EU customs rules. According to the stakeholder feedback to the earlier draft Delegated Regulation, that appears to not always be the case in the EU, especially for customs valuations involving “peculiar and complex commercial situations”. In general terms, stakeholders found that the implementing rules on BVI decisions would provide greater legal certainty in determining the customs value of goods and in the uniform interpretation of the rules across the EU.

In the US, where a system of granting binding advance rulings on customs valuation information has long been established, the US Customs and Border Protection (CBP), noted in a 2020 publication, inter alia, that advance rulings “play a critical role in importers’ business planning” and that importers can, for example, use the ruling to determine the price to pay foreign suppliers and the resell price and also “benefit from faster cargo processing and reduced delays at the port”. On the downside, the US CBP noted, inter alia, that one of the challenges for both customs authorities and importers lies in the fluctuating nature of the value of identical merchandise for each importation, due to factors like “contractual terms, currency fluctuations, shipping or insurance costs, and the amount of required additions or deductions”. For that reason, an advance ruling that provides binding valuation information on a single shipment has limited utility for another shipment, unlike an advance ruling on the classification of a good, “which definitively instructs the importer on how to classify a particular product”. When considering filing an application for a BVI decision in the future, EU businesses should, therefore, anticipate these advantages and potential challenges.

Taking advantage of the new rules

A binding decision on information relating to the customs treatment of imports or exports can be highly beneficial to importers and exporters, regardless of whether it concerns the tariff classification, origin, or valuation. If the Council of EU and the European Parliament do not object to the Commission’s draft Delegated Regulation within two months, the Delegated Regulation will enter into force twenty days after its publication in the Official Journal of the EU and will apply from 1 December 2027. As applications for binding decisions on the customs treatment may be complex and time-consuming, interested businesses should seek expert assistance to effectively and successfully navigate the process once the new rules are in place.

 

The UK intends to prohibit the import of commodities linked to “illegal” deforestation

Rules prohibiting the sale of specific commodities associated with deforestation, as first introduced under the EU’s Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation (i.e., the Deforestation-Free Products Regulation), appear to be spreading to other jurisdictions. On 9 December 2023, the UK Government published a statement, confirming its intention to introduce secondary regulation (often referred to as Deforestation Due Diligence legislation) under the UK’s Environment Act of 2021, which would prohibit the use of certain “forest risk commodities” that have been illegally produced in UK supply chains. On 4 January 2024, the UK Parliament’s Environmental Audit Committee published a report discussing, inter alia, the UK’s contribution to global deforestation, shortcomings of the UK Deforestation Due Diligence legislation, and a comparison with the EU’s Deforestation-Free Products Regulation. The article discusses the UK’s proposed Deforestation Due Diligence legislation, compares it with key elements of the EU’s Deforestation-Free Products Regulation, and reviews the implications for businesses.

Eliminating deforestation driven by the production and trade in forest risk commodities

Deforestation is considered one of the major drivers of climate change, contributing to approximately 11% of total greenhouse gas emissions. According to the UK Parliament’s Environmental Audit Committee report, around “90% of deforestation is driven by land-use change to agriculture for the production of forest-risk commodities including cattle, soy, palm oil, cocoa, rubber and coffee”. The report states that the “UK is the 15th largest contributor to tropical deforestation in global terms”.

The EU’s Deforestation-Free Products Regulation, which will start applying from 30 December 2024, is the first legislation of its kind designed to reduce deforestation caused by the consumption and trade in certain commodities. Under the Regulation, operators or traders are prohibited to place certain commodities on the EU market or export them from the EU unless the relevant commodities and derived products are: 1) “Deforestation-free”, namely have been produced on land that has not been subject to deforestation or forest degradation after 31 December 2020; 2) Legal, namely have been produced in accordance with the relevant legislation of the country of production; and 3) Covered by a due diligence statement. Following in the footsteps of the EU, on 1 December 2023, members of the US Congress introduced a Bill that would prohibit the import of commodities linked to illegal deforestation and, on 9 December 2023, the UK Government further detailed its plan to adopt similar legislation under Schedule 17 of the Environment Act of 2021.

Schedule 17 of the UK’s Environmental Act of 2021

The Environment Act of 2021 is the UK’s legal framework on environmental protection, adopted following the UK’s withdrawal from the EU. Schedule 17 of the Environment Act of 2021 introduces rules on the use of forest-risk commodities in commercial activities and provides for: 1) A prohibition for businesses to use illegally-produced forest risk commodities, including raw and derived products; 2) A requirement for businesses to establish due diligence systems for each regulated commodity; and 3) A requirement for businesses to annually report their due diligence exercise and publish parts of the reports. Secondary regulation is still required to implement and operationalise the provisions contained in Schedule 17. From December 2021 to March 2022, the UK Government had opened a public consultation on the details of the proposed due diligence system, and later published a summary of responses and the government response.

Initial details on the implementing rules

The final text of the upcoming Deforestation Due Diligence legislation to implement Schedule 17 is not yet available, but, on 9 December 2023, the UK Government published a statement providing further details. According to the statement, the forthcoming rules would focus on the forest risk commodities identified as “key drivers of deforestation”, namely cattle products (excluding dairy), cocoa, palm oil, and soy, as well as “any product derived from them”. More specifically, the rules would prohibit businesses with a global annual turnover of over GBP 50 million, and that use more than 500 metric tonnes of the aforementioned commodities in a year, from using such commodities, if they have been produced ‘illegally’. In the context of Schedule 17 of the Environment Act of 2021, “illegal” refers to commodities, and any derived product, that have been produced in contravention with the “relevant local law” concerning land ownership, land use, and other matters relating to land, as “specified in regulations made by the Secretary of State” in the country “where the source organism was grown, raised or cultivated”.

With respect to the sanctions for violations of the forthcoming rules, the UK’s Secretary of State for Environment, Food and Rural Affairs, Steve Barclay, noted that the implementing legislation would provide for “a wide array of sanctions”. Notably, the UK Government has set “sufficiently high-value penalties to be applied for the most serious breaches” and would introduce guidelines for the issuance of sanctions orders to “ensure fair and proportionate enforcement action”. Secretary Barclay further states that the UK Government would provide for “a grace period to enable businesses to prepare following the regulation being made”.

A different approach

While the UK Deforestation Due Diligence legislation and the EU’s Deforestation-Free Products Regulation pursue similar objectives, several notable differences can be observed. With respect to the scope of the commodities, both regulations cover palm oil, cattle products, cocoa, and soy, but the EU’s Deforestation-Free Products Regulation also includes timber, rubber, and coffee within its initial scope. In its report, the UK Parliament’s Environmental Audit Committee suggested that the UK’s due diligence system include “all forest risk commodities associated with a material UK deforestation footprint (soy, palm oil, cocoa, maize, beef and leather, rubber and coffee)”. Regarding the scope of businesses, the UK Deforestation Due Diligence legislation would exclude small and medium-sized enterprises with a global annual turnover below GBP 50 million, while the EU’s Deforestation-Free Products Regulation also applies to EU micro and small enterprises (MSMEs), with the only caveat that MSMEs will enjoy a longer adaptation period and benefit from other specific provisions, such as an exemption from certain due diligence obligations).

Importantly, as currently envisaged, the UK’s Deforestation Due Diligence legislation would only prohibit the use of commodities produced “illegally”. The EU’s Deforestation-Free Products Regulation goes beyond this ‘legality’ requirement and requires businesses to assess and confirm that the covered products are “deforestation-free”. The European Commission’s Impact Assessment for the Deforestation-Free Products Regulation notes that this approach was deemed “the right decision” to achieve the desired objective, noting that “a sizable part of ongoing deforestation is legal according to the laws of the country of production”. Notably, the legality-based approach being pursued by the UK has already been subject to criticism ahead of the publication of the implementing rules. The UK Parliament’s report states that 90% of respondents to the UK Government’s consultation had argued that the legislation “should be extended so that it would be illegal for UK businesses to use any key commodities related to deforestation in their supply chains”. The UK Parliament also recommends that the UK Government amend Schedule 17 of the Environment Act of 2021 “to prohibit UK businesses from trading or using commodities linked to deforestation activity [...] whether or not the activity is permitted by local legislation”.

Referring to Schedule 17 of the Environment Act of 2021, the “relevant local laws” specified under the forthcoming Deforestation Due Diligence legislation would likely concern only those governing land ownership and land use. On the other hand, the “relevant legislation of the country of production” under the EU’s Deforestation-Free Products Regulation concerns a broader number of areas, including rules on land use rights; environmental protection and forest-related rules; labour rights protected under international law; the principle of “free, prior and informed consent”; as well as tax, anti-corruption, trade and Customs regulations. With respect to human rights considerations, the UK Parliament’s Environmental Audit Committee report notes that the Deforestation Due Diligence legislation would not “place an explicit duty on companies to conduct due diligence on human rights within their supply chains”, but would require companies to “comply with any human rights requirement included in land use or land ownership laws”.

Sustainability requirements for agricultural products and WTO rules

In the context of international trade, sustainability requirements adopted to pursue certain environmental objectives, such as addressing deforestation, can lead to restrictions on trade and affect the rights of WTO Members. With respect to trade in goods, the General Agreement on Tariffs and Trade 1994’s (GATT 1994) principle of non-discrimination prohibits WTO Members from discriminating between “like products” from different WTO Members and between domestic and “like” foreign products. Sustainability requirements based on criteria linked to processes and production methods (PPMs), such as emissions control in the manufacturing processes, have often “raised complexities” in the context of the WTO, specifically in the determination of “like products”, as such methods are not always visible in and related to the final product. In case sustainability requirements are found to be inconsistent with certain provisions of the GATT 1994, WTO Members may attempt to justify their actions on the basis of Article XX of the GATT 1994, notably relying on Article XX(b) on measures necessary to protect human, animal or plant life or health and/or Article XX(g) on measures relating to the conservation of exhaustible natural resources made effective in conjunction with restrictions on domestic production or consumption.

To date, WTO dispute settlement panels have yet to decide on any case concerning the adherence to ‘legality’ requirements for agricultural or forestry products to be allowed for importation or prohibited, restricted, or subject to costly due diligence obligations. However, especially in light of the limited effectiveness of the current WTO dispute settlement mechanism, the solution to the clash between importing countries’ environmental and sustainability policies with the exporting countries’ pleas not to be subject to what they often perceive as discrimination or protectionism should be found in the bilateral, plurilateral, or multilateral negotiation of dedicated mechanisms and schemes. These instruments exist, but the political willingness to hold genuine dialogues and technical negotiations appears to be in short supply.

Awaiting implementation

The UK’s forthcoming Deforestation Due Diligence legislation reflects the increasing global pursuit of eliminating deforestation driven by the production and consumption of certain forest-risk commodities. The UK Parliament’s report recommends the Government to publish the Deforestation Due Diligence legislation “as a matter of urgency” and to “publish a clear timetable for drafts to be laid”. The UK Government will now review and take into consideration the report by the Parliament’s Environmental Audit Committee and give its answers within two months, namely by March 2024. While awaiting the draft text for the Deforestation Due Diligence legislation, businesses should closely follow the related developments and start adjusting their practices, including reviewing their supply chains and establishing due diligence systems, so that their products not be potentially excluded or restricted from the UK market once the new rules are in place.

 

The European Parliament adopts a Resolution recommending that the rights to use fish-related denominations be reserved for fishery or aquaculture products

On 18 January 2024, the European Parliament (hereinafter, Parliament) adopted a Resolution on the implementation of the Common Market Organisation (CMO) Regulation in fisheries and aquaculture – Regulation (EU) 1379/2013. Notably, the Parliament recommends that the right to use fish-related denominations be reserved for fishery or aquaculture products of animal origin only and calls on the European Commission (hereinafter, Commission) to revise the existing EU legislation on labelling of “plant-based products that imitate fish and aquaculture products” with the aim to “ensure that consumers are given accurate and precise information that avoids any misunderstandings and maintains equal opportunities in the EU market”. The article provides an overview of the Parliament’s Resolution and of the existing EU rules for the naming of fishery and aquaculture products, as well as of animal products more general.

The European Parliament’s Resolution

On 29 November 2023, the Parliament’s Committee on Fisheries held a public hearing on Improving the Labelling Legislation of Vegetarian and Vegan Imitations of Fish Products. At the hearing, Nestlé’s Sensational VUNA (i.e., vegan tuna) was referenced as an example of plant-based fish-like food, which is increasingly popular in Europe.

The January 2024 Resolution on the implementation of the CMO Regulation in fisheries and aquaculture was adopted under the rules for the Parliament’s own-initiative reports. It addresses a number of topics that are relevant in the context of Regulation (EU) No 1379/2013 of the European Parliament and of the Council on the common organisation of the markets in fishery and aquaculture products (the Common Organisation of agricultural Markets (hereinafter, CMO) Regulation), including consumer information regarding the naming of fishery and aquaculture products and plant-based alternatives.

The naming of fishery and aquaculture products and plant-based alternatives

In Paragraph 19 of the Resolution, the Parliament “agrees that for the CMO to fully achieve its objectives, the competent authorities must ensure that consumers are informed” and underline the importance of “understanding the information on labels, while avoiding misinforming consumers and ensuring alignment with EU food systems”. The Parliament believes that, for “consumers to be able to make informed choices, they should receive clear and comprehensive information on the products sold on the EU market”. In Paragraph 24 of the Resolution, the Parliament recalls that “labelling must provide an accurate description of fishery and non-fishery products, avoiding fraud and misleading advertising that is harmful to consumers and fishers, in particular when mentioning substitute products, as in many cases images are used that make consumers think certain products are fishery products when they are not”. In this context, the Parliament is “concerned that some products on the market, such as plant-based products, use terms exclusively used by fishery products even though they are not fishery products”. In Paragraph 25, the Parliament considers “that the trade name ‘fish’ or ‘fish species’ should be reserved for fishery or aquaculture products of animal origin on the single market” and “calls, in this regard, on the Commission to revise the existing legislation on the labelling and presentation of plant-based products that imitate fishery and aquaculture products in order to ensure that consumers are given accurate and precise information that avoids any misunderstandings and maintains equal opportunities in the EU market”.

The EU legal framework on naming fishery and aquaculture products

Article 35(1)a) of Regulation (EU) No 1379/2013 governs the ‘mandatory information of fishery and aquaculture products’ and states that, “Without prejudice to Regulation (EU) No 1169/2011, fishery and aquaculture products referred to in points (a), (b), (c) and (e) of Annex I to this Regulation [which concern fish, crustaceans and molluscs, seaweeds and other algae] which are marketed within the Union, irrespective of their origin or of their marketing method, may be offered for sale to the final consumer or to a mass caterer only if appropriate marking or labelling indicates: (a) the commercial designation of the species and its scientific name.” Article 37(1) of Regulation (EU) No 1379/2013 concerns ‘Commercial designations’ and states that, “For the purposes of Article 35(1), Member States shall draw up and publish a list of the commercial designations accepted in their territory, together with their scientific names (…)”.

Therefore, fishery and aquaculture products (i.e., fish, crustaceans and molluscs, seaweeds and other algae) may be offered for sale only if appropriate marking or labelling indicates the commercial designation of the species and its scientific name, while EU Member States are to draw up and publish a list of the commercial designations accepted in their territory, together with their scientific names. Regarding the specific cases of “tuna” and “sardines”, Council Regulation (EEC) No 1536/92 laying down common marketing standards for preserved tuna and bonito and Council Regulation (EEC) No 2136/89 laying down common marketing standards for preserved sardines regulate the marketing and use of trade descriptions of such products. Under these rules, the trade description “preserved tuna”, “preserved bonito”, and “preserved sardines” may not be used for plant-based products.

The general EU food labelling rules are set out in Regulation (EU) No. 1169/2011 on the provision of food information to consumers. Article 9(1)(a) of Regulation (EU) No. 1169/2011 on the ‘List of mandatory particulars’ provides that the indication of the name of the food is mandatory on a product’s labelling. Article 17(1) of Regulation (EU) No. 1169/2011 on ‘Name of the food’ provides that “The name of the food shall be its legal name. In the absence of such a name, the name of the food shall be its customary name, or, if there is no customary name or the customary name is not used, a descriptive name of the food shall be provided”. Article 2(1)(n) of Regulation (EU) No. 1169/2011 defines ‘legal name’ as the “name of a food prescribed in the Union provisions applicable to it or, in the absence of such Union provisions, the name provided for in the laws, regulations and administrative provisions applicable in the Member State in which the food is sold to the final consumer”.

Manufacturers of plant-based fish-like food must adhere to Article 7 of Regulation (EU) No. 1169/2011 on ‘Fair information practices’, which states that “Food information shall not be misleading, particularly: (a) as to the characteristics of the food and, in particular, as to its nature, identity, properties, composition, quantity, durability, country of origin or place of provenance, method of manufacture or production; (…) (d) by suggesting, by means of the appearance, the description or pictorial representations, the presence of a particular food or an ingredient, while in reality a component naturally present or an ingredient normally used in that food has been substituted with a different component or a different ingredient”. This existing regulatory framework must be applied and enforced in the case of plant-based seafood imitation products.

Certain vegetarian alternatives to fish products are developed and produced in order to match the ‘original’ as closely as possible in terms of shape, texture, taste, preparation, etc., which is why the use of terms used for fish may be commercially attractive. The vegetarian ‘character’ of the product is, in most cases, unmistakably clear and clarified by using words such as ‘vegetarian’ or ‘vegan’ in the product’s name. In addition, the plant ingredient is normally indicated in close proximity to the product name. It is the task of the food business operator to find an appropriate name for this ‘substitution food’, in accordance with the legal rules on the name of the food and on misleading information. Instances of misleading product names can be challenged on the basis of Article 7 of Regulation (EU) No. 1169/2011, which provides that food information shall not be misleading, “particularly, as to the characteristics of the food and, in particular, as to its nature, identity, composition”, and by suggesting, by means of the appearance, the description or pictorial representations, the presence of a particular food or an ingredient, while, in reality, it “has been substituted with a different component or a different ingredient”. Arguably, the legislation in place sufficiently regulates the labelling and presentation of plant-based fish-like products. In view of the existing rules on misleading names, the Parliament’s call for the prohibition of denominations associated with fish for plant-based food products does not appear needed and could be considered as a protectionist measure benefitting the fisheries sector.

The EU legal framework for “meaty” and dairy names for plant-based products

At the EU level, there has also been a debate on the use of “meaty” and dairy names for plant-based products. For plant-based dairy names, the debate was mostly settled on 14 June 2017, when the Court of Justice of the European Union (hereinafter, CJEU) handed down its judgment in Case C-422/16 TofuTown. The CJEU held that purely plant-based products, such as tofu or soya, cannot, in principle, be marketed with designations such as “milk”, “cream”, “butter”, “cheese” or “yoghurt”, which, under Regulation (EU) No 1308/2013 of the European Parliament and of the Council establishing a common organisation of the markets in agricultural products, are reserved for animal products. The CJEU observed, in particular, that the addition of descriptive or explanatory terms indicating the plant origin of the product concerned, and/or that the product does not contain animal products, cannot completely exclude the likelihood of confusion on the part of consumers. For meat products, with a few exceptions, there are no legal names, similar to those for dairy products. In 2020, Members of the Parliament had proposed  to reserve the use of meat-related terms and names such as “steak”, “sausage”, or “burger”, currently used for meat and meat cuts, “exclusively for products containing meat”. On 23 October 2020, the Parliament’s plenary rejected this (see, in this context, Trade Perspectives, Issue No. 6 of 27 March 2023 and Issue No. 14 of 18 July 2022).

The existing rules should be properly applied and enforced

The Parliament calls for the prohibition of denominations associated with fish for plant-based food products. Arguably, the existing provisions of Regulation (EU) No. 1169/2011 on the provision of food information to consumers appear to provide sufficient legal basis to protect consumers from being misled by denominations for plant-based fish alternatives, if those are also clearly denominated as ‘vegan’ or ‘vegetarian’. The existing rules should, however, be properly applied and enforced by EU Member States’ authorities.

 

Recently adopted EU legislation

Trade Law

 

Customs Law

 

Food Law

 

Ignacio Carreño, Joanna Christy, Tobias Dolle, Alya Mahira, Stella Nalwoga, and Paolo R. Vergano contributed to this issue.

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