On 22 February 2018 ACT Alliance convened Seminar on the Implications of Brexit in the agro-food sector for ACP countries and for the forthcoming ACP-EU Post-Cotonou negotiations. A series of twelve 2 page summary notes were produced for the seminar covering both substantive issues arising within the Brexit process and the current state of play in the Brexit process. Note 2 provided an exploration of the vulnerability of ACP Members to a loss of preferential access to the UK market.
Levels of Dependence
For analytical purposes four levels of ACP export dependence on the UK market in trade with the EU have been identified:
- ‘Below Average Dependence’ (below 18% dependence on the UK)
- ‘Above Average Dependence’ (18% to 30% dependence on the UK);
- ‘High Dependence’ (30% to 55% dependence on the UK);
- ‘Exceptionally High Dependence’ (above 55% dependence on the UK).
Country Level Dependence
At the country level the following ACP countries have fallen into the three main categories of concern (‘Above Average Dependence’, ‘High Dependence’, ‘Exceptionally High Dependence’), during at least 1 of the 3 preceding years.
ACP Countries: % of total exports to the EU destined for the UK market (2015-17)
| Exceptionally High Dependence
(+ 55% dependence on UK market) |
High Dependence
( 30% to 55% dependence on UK market) |
Above Average Dependence
(18% & 30% dependence on UK market) |
||||||||||
| 2015 | 2016 | 2017 | 2015 | 2016 | 2017 | 2015 | 2016 | 2017 | ||||
| St Lucia | 77.9% | 76.0% | 60.5% | Fiji | 44.9% | 45.6% | 31.9% | Kenya | 27.7% | 29.1% | 28.0% | |
| Belize | 73.8% | 50.9% | 42.0% | South Africa | 26.6% | 38.1% | 31.7% | Mauritius | 21.5% | 22.1% | 21.5% | |
| Seychelles | 33.5% | 27.2% | 23.9% | Dom Rep. | 21.9% | 21.7% | 17.2% | |||||
| Guyana | 34.3% | 16.4% | 25.1% | Dominica | 28.7% | 3.8% | 18.6% | |||||
| Jamaica | 33.0% | 26.6% | 28.2% | Swaziland | 10.4% | 28.3% | 11.0% | |||||
| Gambia | 29.9% | 31.1% | 26.5% | Solomon Islands | 26.4% | 19.9% | 5.5% | |||||
| PNG | 18.9% | 17.6% | 13.4% | |||||||||
Sector Level Dependence: Illustrative Examples
However in addition to applying this classification at the level of overall trade dependence on the UK market it can also be applied for individual products exported to the EU from individual ACP member states. Here the picture can be quite different.
ACP Sugar Sector Dependence on the UK Market 2016 – 2017 (tonnes)
| 2016 | 2017 | |||||||
| UK | EU | % share UK of EU | UK | EU | % share UK of EU | |||
| Belize | 77,861 | 121,376 | 64.1% | 28,731 | 137,959 | 20.8% | ||
| Guyana | 51,428 | 101,722 | 50.6% | 96,484 | 114,408 | 84.3% | ||
| Jamaica | 24,139 | 24,139 | 100% | 19,281 | 19,281 | 100% | ||
| Barbados | 476 | 476 | 100% | 575 | 575 | 100% | ||
| Fiji | 65,434 | 131,694 | 49.7% | 67,200 | 184,205 | 36.5% | ||
| Swaziland | 58,679 | 229,276 | 25.5% | 5,200 | 138,094 | 3.8% | ||
| Malawi | 9,126 | 54,370 | 16.8% | 5,427 | 38,392 | 14.1% | ||
| Mauritius | 53,810 | 368,088 | 14.6% | 38,098 | 324,660 | 11.7% | ||
| Mozambique | 7,240 | 162,122 | 4.5% | 0 | 68,416 | 0% | ||
Thus while overall Jamaica has only an ‘above average’ to ‘high dependence’ on the UK market in the sugar sector it has an ‘Exceptionally High Dependence’ on the UK market.
Main Namibian Exports Affected by Loss of Preferential Access by BREXIT (2016 and 2017 €)
| 2016 | 2017 | |||||
| EU | UK | UK % EU | EU | UK | UK % EU | |
| Table Grapes (08061010) | 50,291,049 | 16,906,373 | 33.6% | 50,243,881 | 18,513,413 | 36.8% |
| Bovine meat fresh and chilled (0201) | 29,903,646 | 18,435,077 | 61.6% | 23,069,631 | 11,846,620 | 51.4% |
| Bovine meat frozen (0202) | 14,434,376 | 1,598,540 | 11.1% | 8,879,508 | 665,950 | 7.5% |
| Total value Namibian exports | 1,091,651,021 | 46,276,858 | 4.2% | 1,305,015,461 | 43,256,881 | 3.3% |
Source: EC market access data base:
http://madb.europa.eu/madb/datasetPreviewFormATpubli.htm?datacat_id=AT&from=publi
Similarly while Namibia has a below average dependence on the UK market (under 5% of its exports to the EU) but has an ‘High Dependence on the UK market for its Grape exports and in certain years an Exceptionally High Dependence for its fresh and chilled beef exports.
Products with a ‘High Dependence’ or ‘Exceptionally High Dependence’ could potentially face the greatest market repositioning challenges in the face of any loss of current duty free-quota free access to the UK market.
State of Play in Re-Consolidating ACP DFQF Access to the UK Market
Initial Approach ‘Grandfathering’
The initial UK proposal was to simply ‘roll over’ or ‘grandfather’ existing reciprocal preferences, but it became clear this would face opposition from WTO members, who will insist the UK be treated the same as any other 3rd country once it is no longer a member of the EU.
‘Cut and Paste’ Approach
The UK government has now opted for a ‘cut and paste’ approach to refitting existing EU trade agreements into ‘UK-Only’ reciprocal trade agreements.
While this is straight forward for the bulk of the text in some areas it is technically complex, with major issues arising linked to the rules of origin to be applied under stand-alone UK trade agreements, the future of TRQs, and the financing of EPA related trade adjustment programmes.
It is also administratively challenging given the number of EU trade agreements to be refitted and the human capacity constraint in the UK DI
It could also be politically challenging requiring both EU ‘authorisation’ and acceptance by WTO members.
Current EU Position in EC Guidelines
Paragraph 15 of the EU Council guidelines states during the transition the UK ‘should remain bound by the obligations stemming from the agreements concluded by the Union’.
Paragraph 16 states during the transition the UK ‘may not become bound by international agreements entered into in its own capacity in the fields of competence of Union law’, unless ‘authorised’ by the EU.
Presenting the guidelines Michel Barnier maintained ensuring the UK remained bound by these pre-existing obligations should be agreed ‘in the Article 50 Agreement’ and be part of the binding Withdrawal Agreement. The EC sees this as crucial, to ‘the good functioning of the Single Market and the Customs Union’.
Michel Barnier also noted the EU ‘cannot ensure in the Article 50 Agreement that the UK keeps the benefits from these international agreements’ since the EU’s ‘partners around the world may have their own views on this’ with this extending beyond the trade agreement signatories.
Currently the UK government insists both UK rights and obligations should be respected, with this de facto ‘grandfathering’ existing UK trade preferences.
Implications
Respecting during the transition solely the trade obligations the UK entered into while an EU member would require the UK solely to extend current EPA market access rights unilaterally on a non-reciprocal basis.
This could be modelled on EU Council regulation 1528/2007, which over 10 years of application has never been challenged in the WTO.