Dramatic Changes Ahead in the EU Sugar Market

Summary
The EU sugar sector is entering a new period in its development with the abolition of sugar production quotas: boosting production at the same time as domestic consumption is contracting; lowering average prices; and doubling exports at the same time as imports are halved. This will impact not only on domestic EU markets but also international markets, given the growing global orientation of EU sugar companies and the increased price competitiveness of EU sugar production. This will transform the market context facing ACP sugar exporters as well as the competitive position of ACP producers on regional markets. This will make the continued use of non-tariff trade policy measures a critical policy issue.  This adverse market situation will be compounded by the market effects of Brexit, a policy development not yet factored into EC projections given the uncertainty surrounding the final EU27/UK post Brexit trade arrangements. Read more “Dramatic Changes Ahead in the EU Sugar Market”

EU Pacific EPA Trade Committee Meet, but with no discussion of the impact of BREXIT

Summary

While the meeting dealt with market access obligations, this focused on the obligations of  Pacific signatories towards the EU.  There was no discussion of the implications of the UK’s withdrawal from the EU on the value of the market access enjoyed by Pacific signatories to the EU under the EPA. With the prospects for a ‘hard BREXIT’ increasing, getting to grips with the implications for the value of EPA market access for Pacific EPA signatories in the absence of the UK would appear to be some important issue for discussion at the next Pacific-EU EPA Trade Committee meeting. Read more “EU Pacific EPA Trade Committee Meet, but with no discussion of the impact of BREXIT”

Global Market Context Far From Favourable in the Context of the End of EU Sugar Production Quotas

Summary

Projected global sugar price trends are unlikely to support EU sugar prices in the post quota abolition period. Caribbean and pacific ACP sugar exporters will be potentially the most vulnerable to EU price declines over the 2017/18 season. This situation could then be compounded by the sugar market effects of the UK’s withdrawal from the EU, currently scheduled for 30th March 2019.  These effects however may be deferred following Prime Minister May’s acceptance that during the implementation period (transitional period) UK/EU27 trade would need to take place within ‘the existing structure of EU rules and regulations’.

Nevertheless there remain profound policy uncertainties around UK sugar market developments which make any projections of likely developments hazardous. Against this background over the coming years ACP sugar exporters will need to closely monitor developments in the Brexit negotiations and the evolution of UK’s autonomous trade policies as they impact on the sugar sector, in order to identify and exploit any market opportunities which might emerge. Read more “Global Market Context Far From Favourable in the Context of the End of EU Sugar Production Quotas”

UK Area Under Sugar Beet Set to Surge

 

Summary

A major expansion of the area under sugar beet in the UK (+ 1/3) is planned in 2017/18, with potentially a further major expansion by 2020 if current investment plans of Al Khaleej International to re-establish sugar beet processing in Yorkshire are approved. While a failure to conclude a UK-EU27 trade agreement could open up new export opportunities for ACP sugar suppliers to the UK, this would be strongly influenced by future UK sugar sector tariff policy. If tariffs remain unchanged the source of ACP sugar imported into the UK could shift from the Caribbean and Pacific suppliers to lower cost Southern African suppliers. UK government policy statements suggest Southern African LDC sugar exporters would enjoy the most secure commitment to continued duty free-quota free access for sugar exports to the UK market post Brexit, providing them with an inside track in pending negotiations over supply agreements for 2019. Read more “UK Area Under Sugar Beet Set to Surge”

Pacific sustainable palm oil supply chains could face disruption from Brexit

Summary

A market positioning strategy has been adopted by Pacific island palm oil producers focused on the supply of fully traceable sustainably certified palm oil through a dedicated facility in the UK which then serves the whole of the EU28 market for fully traceable sustainable palm oil. Any failure to conclude an UK-EU27 trade agreement by 30 March 2019 could see a re-imposition of tariffs by the EU27 on Pacific palm oil processed in the UK. This could disrupt the functioning of existing Pacific palm oil supply chains and compound the challenges being faced by Pacific palm oil suppliers as a result of environmental and health campaigns in the EU against the use of palm oil in food products. Read more “Pacific sustainable palm oil supply chains could face disruption from Brexit”

UK government commits to extending EBA access for LDCs post Brexit

Summary

The UK has committed to extending in the immediate post-Brexit period the non-reciprocal duty free access granted LDCs under the EU’s current EBA initiative. However action was expected given the long standing UK support for duty free-quota free (DFQF) access for LDCs. The issue has always been whether current DFQF access enjoyed by ACP non-LDCs would be extended from 30th March 2019. This issue remains unclear, with the UK government solely making a commitment to explore options for maintaining existing trade arrangements. Read more “UK government commits to extending EBA access for LDCs post Brexit”

Need to restore differentiation in trade rules in support of structural transformation in Africa

Summary
Trade Minister Davies reflections on South Africa’s experience of trade liberalisation, which, with hindsight it is held, moved too rapidly for the countries capacity to adjust, potentially holds important lessons for ACP countries as they move towards the implementation of the EPAs concluded with the EU. It suggests ACP governments need to work together to ensure EPAs are interpreted and applied in a flexible and differentiated fashion, which places centre stage the structural economic transformation needs of ACP countries. This will need to be a central component of the forthcoming ACP-EU post-Cotonou negotiations, as well as on-going ACP Ministerial discussion on EPA implementation. Read more “Need to restore differentiation in trade rules in support of structural transformation in Africa”

UK NGOs call for new gold standard UK unilateral preferential trade arrangement

Summary
UK NGOs are critical of proposals to transpose current EU reciprocal trade arrangements into bilateral UK trade deals with ACP countries. UK NGOs favour a new ‘gold standard’ of unilateral non-reciprocal trade preferences which extends beyond current such arrangements. However it is difficult to see how such non-reciprocal trade arrangements can be reconciled with the UK governments’ over-riding preoccupation with maintaining and expanding access for UK exporters to non-EU markets via bilateral UK free trade agreements Read more “UK NGOs call for new gold standard UK unilateral preferential trade arrangement”

What are the implications for ACP sugar producers of Tate & Lyle Sugars expectations on UK sugar sector policy post-Brexit?

Summary
Tate & Lyle Sugars continues to put pressure on the UK government to use Brexit to level the playing field between beet processors and cane sugar refiners,  by removing import duties on raw cane sugar. The adoption of such a UK sugar trade policy would carry serious consequences for ACP sugar exporters to the UK market, undermining their competitive position as suppliers to the UK market and driving many out of the UK market. Trilateral customs cooperation arrangements could however be put in place, on a transitional basis, to minimise disruption of current supply chains which serve EU27 markets through the UK, not only in the sugar sector but beyond. Read more “What are the implications for ACP sugar producers of Tate & Lyle Sugars expectations on UK sugar sector policy post-Brexit?”

What are the implications for the ACP of the UK’s formal application to leave the EU and the EU27s initial response?

 

Summary
The European Council has indicated it expects the UK to honour its international commitments entered into while the UK was part of the EU. However, it is unclear whether this also applies to the long standing preferential access enjoyed by ACP countries to the UK market under EU agreements dating back 42 years. The UK favours ‘grandfathering’ reciprocal preferences from day 1 of BREXIT, but this is likely to face challenges from WTO members.

The EU27s openness to ‘transitional arrangements’ could help ACP governments in lobbying for temporary arrangements which avoid any loss of ACP preferences on the UK market from 30 March 2019. It also offers scope for dialogue on avoiding disruption of ACP agro-food sector supply chains operating through the UK into EU27 markets (and visa-a-versa).

The agro-food sector is likely to be a particularly difficult area of UK/EU27 negotiations, with implications for ACP exporters which may need to be addressed both bilaterally (between the ACP and UK and between the ACP and EU27) and on a trilateral basis (ACP/UK/EU27). Read more “What are the implications for the ACP of the UK’s formal application to leave the EU and the EU27s initial response?”