Summary
The ACP Secretary General has taken up suggestions for a 2 stage approach to future ACP-UK trade relations, with the transitional unilateral extension of current market access conditions being seen as essential in avoiding ‘a disruptive cliff edge’ in ACP exports to the UK. The inaugural meeting of Commonwealth Trade Ministers offers an opportunity to secure UK commitments in this regard.
ACP trade concerns around Brexit will need to be addressed independently of the state of UK-EU27 negotiations. However there are both UK and EU27 dimensions to the trade effects of Brexit on ACP food and agriculture sectors which will need to be addressed. This includes joint ACP-EU28 initiatives to avert any WTO challenge to necessary transitional market access arrangements.
The creation of a joint ACP-DIT working group could offer a vehicle for ensuring ACP interests are not lost sight of in the face of the multitude of pressing trade priorities facing the UK authorities.
On the 19th February the Ramphal Institute launched a research report entitled ‘After Brexit: Securing ACP Economic Interests’. At the launch the ACP Secretary General P. I. Gomes described the report as an excellent base line study on the issues facing the ACP. The report includes a review of:
- the process and context of the UK’s departure from the EU, including an exploration of options for future UK-EU27 relations;
- what it means for future ACP-UK trade relations;
- what it means of future ACP development cooperation with the UK and the EU27; and
- a possible way forward for the ACP in each of the important areas where ACP members will be affected by Brexit.
The study highlights, region by region, country by country the vulnerability of ACP members to trade disruption, if alternative trade arrangements are not set in place by the UK authorities to replace the current EU28 trade arrangements which will legally lapse once the UK is no longer part of the EU (primarily the EBA and the EPAs). While it can reasonably be expected the UK will extend unilaterally the market access scheme currently in place for least developed countries, the situation of non-least developed ACP countries with a high dependence on the UK market in their trade with the EU is less certain.
In his keynote address ACP Secretary General Gomes stressed the importance of avoiding what UK Prime Minister May had described (in a domestic UK-EU27 context) as ‘a disruptive cliff edge’ in trade relations. Secretary General Gomes highlighted the importance of avoiding such ‘a disruptive cliff edge’ in trade relations between ACP countries and the UK.
He highlighted the ‘stark situation’ facing ACP members, noting how ‘some Caribbean countries depend on the UK market for 75% of their exports to the EU (Belize and St Lucia), while in individual sectors others are exclusively dependent on the UK market (Guyana’s sugar exports)’. He highlighted how across Africa and the Pacific, from South Africa, Kenya and Ghana to Fiji and Papua New Guinea, ‘any disruption of current access to the UK market could cost tens of millions of ACP nationals their livelihoods’.
He noted that while ‘it is Commonwealth ACP countries which potentially have the most to lose from any disruption of the existing basis for access to the UK market … non-Commonwealth ACP members will also be affected’. The Secretary General therefore concluded all ACP countries have ‘common interests … in making sure alternative trade arrangements are set in place for all ACP members from day 1 of the UK’s formal departure from the EU’.
Secretary General Gomes described the situation created by the UK’s decision to leave the EU as ‘both uncertain and dynamic’, with this requiring ‘close monitoring of developments and the elaboration of nuanced and flexible political responses, designed to ensure our fundamental interests as ACP members are protected’. He stressed how ‘a Global Britain will need to build on its existing network of trade and development cooperation rights and obligations’.
In this context he specifically argued ‘quite independent of what takes place in the UK-EU27 discourse, there will be a need to discuss with the UK authorities how to ensure continuity in developing countries current market access arrangements to UK markets and more specifically how to preserve the existing preferential access enjoyed by ACP exporters to the UK market from day 1 of the UK’s formal departure from the EU’.
ACP Secretary General Gomes expressed the view this would probably require ‘the adoption of what is suggested as a two stage approach’, involving ‘the unilateral extension of existing market access conditions by the UK to all ACP members, on a transitional basis while new alternative long term trade arrangements are set in place, and subsequently the negotiation of a ‘new long term framework, with, as South Africa’s Trade and Industry Minister Rob Davies has implied, the easiest way being through re-fitting the existing EPAs’.
Presentations and discussions at the launch of the report highlighted how the ACP Group will not only need to discuss the trade implications of Brexit with the UK authorities but also the EU27. However it noted the considerable scope for EU-EU27 negotiations going seriously wrong and hence the importance of keeping the discussions related to addressing ACP concerns around Brexit separate from the formal process of UK-EU27 negotiations.
The important of ACP governments working together with the UK and EU27 authorities in securing the acquiescence of WTO members to any transitional trade arrangements established to prevent disruption of current ACP access to the UK market was also highlighted. In this regard the importance of distinguishing between the WTO compatibility and WTO acceptability (i.e. preventing any formal challenge) of such transitional arrangements was stressed.
In summarising the discussions and identifying a way forward a number of important points were highlighted, namely:
- the need to address ACP trade concerns independently of the state of UK-EU27 negotiations on the Brexit settlement and subsequent UK-EU27 trade arrangements
- the need for close cooperation between ACP Missions to the EU and ACP Embassies in the UK, in addressing the implications of Brexit for the ACP in the trade, development cooperation and political spheres
- the need to prioritise securing a firm UK government commitment to maintaining existing conditions of ACP access to the UK market, from day 1 of Brexit, with this being seen as key political challenge for Commonwealth ACP High Commissioners;
- the importance of establishing a long term framework for trade with the UK, which builds on the EPA market access arrangement already in place for the UK market in ways which directly benefit ACP exporters;
- the need to address the EU27 dimensions of ACP Brexit related trade and development cooperation concerns,
- the importance of concerted action now by individual ACP governments, pending the establishment of a more formal coordinated ACP approach;
- the need for a clear strategy on how underlying ACP objectives are to be achieved.
In the discussions and summing up, 4 specific immediate initiatives designed to protect ACP trade interests were identified.
Firstly, ensuring the inclusion on the agenda of the inaugural meeting of Commonwealth Trade Ministers (10 March 2017) of an item on how to ensure continuity in ACP countries current access arrangements to UK markets. With the emphasis being placed on the need for an early firm commitment from the UK authorities to this objective in order to avoid any disruption of investment and production planning, particularly in the agricultural sector.
Secondly, the need for active and close collaboration between ACP High Commissioners and Ambassadors in London and Brussels in elaborating and moving forward initiatives on ACP Brexit related trade concerns.
Thirdly the need for concerted lobbying by ACP High Commissioners and Ambassadors in London for an early UK Parliamentary debate on how to ensure continuity in developing countries current market access arrangements to UK markets in the immediate post-Brexit period.
Fourthly, the need to take on board and respond to current UK Department of International Trade policy approaches involving the establishment of joint working groups to discuss future bilateral trade relations with the UK (10 such bilateral joint working groups having already been set up with priority partners for the UK).
It was also recognised there is a need to establish a technical analysis capacity and political monitoring mechanism, in order to enable ACP governments and the ACP Group as a whole to stay proactive in promoting the attainment of core trade policy objectives, given the uncertainties around future UK policy frameworks.
Source:
Ramphal Institute, ‘After Brexit…Securing ACP Economic Interests’
http://www.ramphalinstitute.org/brexit-and-third-countries.html#/
Video of Book Launch
https://www.youtube.com/watch?v=1mg3zrVR3kg
Timings:
Statement by ACP Secretary General Gomes (from 45 minutes, 37 seconds to 1 hour 13 minutes 20 seconds);
Statement by Dr Lorand Bartels, Trade Lawyer Cambridge University (from 34 minutes 25 seconds to 43 minutes 38 seconds);
Statement on the Way Forward for the ACP by Dr Paul Goodison(from 2 hours 16 minutes 50 seconds to 2 hours 33 minutes 50 seconds)
Statement by Dr Hailemichael Aberra Afework, Ambassador of Ethiopia, representing the President of the ACP Council of Ministers (from 15 minutes 16 seconds to 24 minutes 10 seconds)
Statement by Professor Kusha Haraksingh, Chairman CARICOM Competition Commission (from 25 minutes 33 seconds to 33 minutes 24 seconds)
Question and answer session (1 hour 20 minutes 25 seconds to 2 hours, 16 minutes and 49 seconds)
Welcome and Introductory statements (from 0 to 15 minutes16 seconds)
| Comment and Analysis The UK authorities have more scope for effective unilateral action to avoid ‘a disruptive cliff edge’ in UK-ACP trade relations than in their dealings with the EU27 member states. An early commitment to both ensuring ‘continuity’ of current market access arrangements for 79 ACP countries and establishing a ‘road map’ for future long term relations would represent an important concrete expression of the UK governments’ commitment to pursuing a ‘Global Britain’ trade policy. A 2 stage approach to future ACP-UK trade relations is necessary for a number of reasons. ACP countries have enjoyed progressively expanded preferential access to the UK market since 1975 under successive ACP-EU trade arrangements. Within the EU the UK was always in the forefront of efforts to expand the scope of ACP preferential access to EU markets. These preferences, particularly the granting of duty free-quota free access for most ACP countries since 2008, have had an important bearing on patterns of investment and growth in exports of food and agricultural products. This has given rise to a situation where 19 middle income Commonwealth ACP countries (and 1 non-Commonwealth middle income ACP country) have developed a higher than average dependence on the UK market in their trade with the EU. Preferential market access has been particularly important for a range of both small and vulnerable middle income ACP Commonwealth countries (such as Belize, St Lucia) and larger middle income ACP Commonwealth countries which face acute challenges related to employment creation and poverty alleviation (e.g. Kenya and South Africa). In this context allowing current market access arrangements to lapse by de fault on day 1 of the UK’s formal departure from the EU would be economically disruptive. This needs to be seen in the context of the hard reality whereby the UK cannot enter into new trade agreements with third countries while they remain a part of the EU. Such new agreements can only enter into effect from the date of the UK’s formal departure from the EU. While the UK authorities can begin discussions on new independent trade agreements with third countries while still part of the EU, human resource capacity constraints in the UK administration will severely limit the ability of the UK authorities to conduct multiple parallel processes of trade negotiations. This can be seen as the second major factor suggesting a need for a 2 stage approach in order to avoid ‘a disruptive cliff edge’ in ACP-UK trade relations. It needs to be recognised that while the UK has set up separate Departments for Exiting the EU and International Trade, the Department for Exiting the EU will primarily be dealing with the institutional ‘divorce’ settlement, which will revolve around the UK’s ongoing inherited financial obligations. This will be a politically difficult process of negotiations on both the UK and within the EU27. While the UK wants to link the negotiations around exiting the EU and future UK-EU27 trade arrangements, EU27 governments are likely to want to keep the two processes more or less separate. This is likely to see personnel in the Department of International Trade drawn increasingly into difficult trade negotiations with the European Commission (acting on behalf of EU27 governments). The UK’s current contradictory position on the issue of future UK-EU27 trade relations will not help in this context (see companion article ‘Planned hard BREXIT raises stakes for ACP’). In this process, as the ACP Secretary General pointed out at the Ramphal Institute book launch; ‘there is a danger that ACP interests could be lost sight of’. This leads on to the third major factor suggesting a need for a 2 stage approach, namely the policy uncertainty over the future direction of UK trade and agricultural policies. For many ACP countries, this policy uncertainty raises serious issues related to the value of any future reciprocal preferential trade arrangement with the UK. This policy uncertainty makes immediate detailed negotiations of a long term trade framework with the UK an extremely haphazard affair for many ACP governments. It is this context which led ACP Secretary Gomes to take up the suggestion of a 2 staged approach to future UK-ACP trade relations during his presentation at the Ramphal Institute book launch. While Secretary General Gomes acknowledged Trade Minister Rob Davies suggestion that re-fitting the existing EPAs could offer the easiest way to rapidly establish a new long term framework, he also alluded to the need for a number of ‘EPA+’ elements. These EPA + elements include such issues as · establishing improved rules of origin which open up new export opportunities for small resource poor ACP countries (e.g. for Caribbean and Pacific island fisheries exports); · the discussion of trilateral customs cooperation (ACP country/UK/EU27) to facilitate the continuation of existing supply chains serving both UK and EU27 markets via the UK or an EU27 member state, (at least for a transitional period); · establishing cost effective UK SPS/Food safety controls, which do not systematically discriminate against small scale exporters; · the establishment of programmes of measures to addresses processes of preference erosion which are likely to arise from the adoption of new unilateral UK trade and agricultural policies, including through the establishment of targeted ‘aid for trade’ support to facilitate necessary market adjustments; · providing assistance in addressing issues related to strengthening the functioning of ACP-UK supply chain (e.g. in the banana and sugar sector where particular challenges are faced) through the extension UK Groceries Code to ACP-UK supply chains. Secretary General Gomes also spoke of how the departure of the UK from the EU would fundamentally transform the value of current trade arrangements with the EU for a number of ACP countries (see ‘The challenges of Brexit: The illustrative case of Belize’). This is one important dimension of the EU27 aspects of the trade consequences of Brexit. Other important EU27 dimensions include: · ensuring effective cooperation in the WTO to avert any challenge to transitional arrangements extending current access to the UK market from day 1 of the UK’s departure from the EU (the UK government appears to be concerned to avoid any disputes in the WTO which could potentially complicate the establishment of new trade arrangements with more commercially interesting non-ACP trade partners); · promoting trilateral cooperation (ACP/EU27/UK) around SPS risk assessments for ACP suppliers serving both UK and EU27 markets, to minimise additional costs which could arise from a divergence of UK and EU27 standards (given the differing interests of ACP countries around this issue, this will require detailed discussions within the ACP); · the establishment of trade adjustment support programmes, to assist with marketing adjustments for ACP exporters with a high dependence on the UK market in their trade with the EU28; · flexibility in EPA implementation in the worst affected countries where serious market and even production restructuring challenges are likely to be faced; · enhancing policy collaboration in addressing new issues, such as strengthening the functioning of ACP-EU27 supply chains to the benefit of primary producers. Of these areas, probably the area of most immediate significance will be the elaboration of joint strategies to ensure transitional arrangements for access to the UK market are not challenged in the WTO. |
| Key words: BREXIT Area for Posting: BREXIT, EPA General, SADC EPA, West African EPA, Central African EPA, Eastern Africa EPA, Caribbean EPA, Pacific EPA |