Summary
The proposed sugar quota under the UK-Australia FTA is initially equivalent to 17% of total UK import from outside the EU in 2019, rising to 47% after 8 years. Its impact on total ACP sugar exports to the UK will be determined by the future volume of EU27 sugar exports to the UK; the future evolution of UK sugar demand; and the future of the temporary UK ATQ of 260,000 tonnes which was introduced for one year from 1 January 2021. If the ATQ is retained, EU sales remain at ½ 2020 volumes and UK sugar consumption shrinks in line with projections, the situation of most ACP exporters on the UK market will be precarious. However, the vulnerability of individual ACP exporters to the evolving UK sugar sector trade policy varies greatly, with in depth, country specific analysis being required to determine which ACP sugar exporters are most vulnerable to the UK’s evolving sugar sector trade policy. Read more “Brexit set to extend marginalisation of traditional ACP suppliers on the UK sugar market”
Category: Pacific
Wider Trade Dimensions of EU Due Diligence Regulations: Where Does the Interest of the ACP Lie?
Summary
President Macron is throwing his weight behind efforts to establish regulatory ‘mirror clauses’ in EU trade agreements to combat ‘environmental and social dumping’. However, despite strong European Parliament support, there is no consensus among EU member states governments on the scope and practicality of such a ‘mirror clause’ approach. ACP exporters and governments need to define where their interests lie within these EU regulatory discussions, so as to be able to protect and promote ACP producer interests within these policy debates. Read more “Wider Trade Dimensions of EU Due Diligence Regulations: Where Does the Interest of the ACP Lie?”
Circumvention of the LID Highlights the Need for an Ambitious and Effective EU Human Rights and Environmental Due Diligence Regulation
Summary
The EC’s much heralded human rights and environmental due diligence regulation looks set to be limited to establishing a common minimum standard, which businesses will be required to adhere to, with an enabling environment being created aimed at incentivising companies to address the negative impacts of their activities. In the face of corporate lobbying Tony’s Chocolonely has broken ranks demanding the EC establish an ambitious minimum standard. This would appear essential, given current corporate efforts to side-step the overall cocoa procurement cost implications of the Living Income Differential initiative, by reducing other components of cocoa bean payments made in Ghana and Cote d’Ivoire. A clear Organisation of African, Caribbean and Pacific (OACP) States and African Union position in support of an ambitious and rigorously enforced corporate minimum standard for living wage, human rights and environmental protection commitments would appear to be required. Read more “Circumvention of the LID Highlights the Need for an Ambitious and Effective EU Human Rights and Environmental Due Diligence Regulation”
Demand for Cane Sugar Likely to Come Under Further Pressure Now Based on Climate Concerns
Summary
Environmental and sustainability concerns over sugar production alongside growing health concerns over levels of sugar consumption are likely to reduce overall demand for ACP cane sugar in both the UK and EU in the coming years. This will come on top of the new rules of origin/MFN tariff complications facing ACP cane sugar exporters, as a result of the Brexit process and the radical changes in EU sugar market conditions which have been underway since 2005. ACP sugar producers will need to factor these trends into their global sugar marketing strategies if existing patterns of production are to be sustained. Read more “Demand for Cane Sugar Likely to Come Under Further Pressure Now Based on Climate Concerns”
The UK Trade and Business Commission Offers Opportunities for Highlighting ACP Triangular Supply Chain Concerns
Summary
A UK Trade and Business Commission consisting of cross-party Parliamentary and business representation has been launched. The aim is to review the UK’s new trade agreements and offer evidence-based recommendation for improvements which could facilitate frictionless trade. Given the Commission’s focus on food supply chains and the new rules of origin and SPS complications which have arisen since 1 January 2021, this initiative could offer an opportunity to raise the profile of ACP agri-food sector trade concerns linked to the Brexit process and advance practical solutions for the renewal of frictionless trade along ACP triangular supply chains used to serve markets in both the UK and EU. Read more “The UK Trade and Business Commission Offers Opportunities for Highlighting ACP Triangular Supply Chain Concerns”
The Implications of the EUs More Assertive Trade Policy: The EU Trade Policy Review Part 2
Summary
The EC is proposing a ‘more assertive’ trade policy, emphasising the need for partner countries to fully live up to commitments entered into under trade agreements their governments have signed on to. There are concerns the more assertive promotion of EU trade and economic interests will dominate other EU trade policy objectives. The EC’s ‘Open Strategic Autonomy’ concept seeks to reconcile the EU’s ‘managed trade’ import regime applied in sensitive agri-food sector, with the need for more open markets for EU exporters. There is a contradiction at the heart of EU agri-food sector trade policy, with the EC seeking to deny ACP EPA signatories the right to use trade policy tools to regulate imports in trade with the EU which the EC itself routinely uses to manage imports from other major agri-food sector competitors. This contradiction is likely to come to the fore in the coming years as the EC seeks to operationalise its ‘more assertive’ trade policy. This will be especially the case if the application of full UK border controls on goods crossing from the EU, generate the kinds of agri-food sector disruptions which have affected UK exporters since 1 January 2021. This could then see surges in EU exports to ACP markets for livestock products such as poultry meat and milk powders. Read more “The Implications of the EUs More Assertive Trade Policy: The EU Trade Policy Review Part 2”
UK Parliamentary Report Reviews Operational Shortcomings of EU/UK TCA and Highlights Rules of Origin Problems Faced by ACP Re-Exports
Summary
While the House of Lords European Union Committee highlights the substantive unresolved issues under the EU/UK TCA, the focus is on the impact on UK businesses. While the impact on developing countries is referred to, this analysis is underdeveloped. A significant number of ACP supply chains are being affected. The new rules of origin complication is a particular area of concern, with ACP exporters being caught up in this new trade challenge. The affected ACP exports range from fresh horticulture, floriculture, and fisheries products, through the onward trade in ACP semi-processed products to ACP sugar exports. A solution to the rules of origin complication at the EU/UK level is unlikely. There is however scope for a solution for ACP exports shipped to the UK via the EU through the kind of UK pragmatic unilateral action which the Committee has called for and which the UK government is nominally open to. Coordinated action by ACP governments and business bodies to secure such unilateral pragmatic UK solutions in trade with the UK would appear urgent, given the scale of total ACP exports potentially facing export market losses. Read more “UK Parliamentary Report Reviews Operational Shortcomings of EU/UK TCA and Highlights Rules of Origin Problems Faced by ACP Re-Exports”
Overview of the EC Trade Policy Review and the Impact of EU Behind Border Concerns The EU Trade Policy Review Part 1
Summary
The EC sets out 3 core trade policy objectives: Supporting the recovery and fundamental transformation of the EU economy in line with its green and digital objectives’; ‘Increasing the EU’s capacity to pursue its interests and enforce its rights, including autonomously where needed’; ‘Shaping global rules for a more sustainable and fairer globalisation. Difficult operational choices will be faced in reconciling these three objectives, with this revolving around the question of who pays for the costs of more sustainable and socially responsible production processes, which at the same time delivers decent and more sustainable livelihoods for developing country producers? Care will need to be taken in ensuring the pursuit of EU interests and enforcement of EU rights does not become the dominant pillar of the EU’s new trade policy. Read more “Overview of the EC Trade Policy Review and the Impact of EU Behind Border Concerns The EU Trade Policy Review Part 1”
EU Sugar Projections to 2030 Suggest Less Room on EU27 Market for ACP Sugar Exports
Summary
Expanding EU sugar production and contracting EU sugar consumption up to 2030 will see EU sugar imports decline (by -300,000 tonnes) and EU sugar exports expand (+700,000 tonnes) compared to 2020. This will increase competition for ACP sugar exports on the EU27 market, in a context where heightened health consciousness and active campaigning is seeing pressure to reduce ‘hidden sugars’ in food and drink products. Further pressures to move away from the use of cane sugar in high sugar content food and drink products will arise from the rules of origin agreed under the EU/UK trade agreement. ACP sugar exporters will need to better understand the market components their exports serve and how they will be impacted by evolving trends. The pressures on ACP sugar exporters could be eased by policy interventions designed to secure automatic cumulation under rules of origin where duty free/quota free access is enjoyed to both the EU and UK markets. Read more “EU Sugar Projections to 2030 Suggest Less Room on EU27 Market for ACP Sugar Exports”
What Does the New EU UK Trade Agreement Mean for ACP Sugar Exporters?
Summary
The new EU/UK trade agreement includes new rules of origin requirements, which in the absence of ‘diagonal cumulation’ arrangements, could pose problems for some ACP raw sugar sector supply chains, including those serving food and drink manufacturing industries. Given the absence of ‘diagonal cumulation’ provisions in the EU/UK trade agreement a significant restructuring of the affected supply chains will be needed, in a context where demand for ACP sugar is shrinking. This could result in all but the largest and most efficient ACP sugar exporters being driven off UK and even some E27 markets. There is potentially some scope for addressing the problems created by the absence of EU/UK ‘diagonal cumulation’ arrangements through the inclusion of specific provisions in enhanced ‘rolled over’ UK trade agreements and even existing EU agreements, should the EU come around to considering such arrangements. However, this will require a sustained lobbying effort on the part of the governments of the affected ACP countries and allies in other sectors facing similar ‘diagonal cumulation’ constraints on the functioning of triangular supply chains. Read more “What Does the New EU UK Trade Agreement Mean for ACP Sugar Exporters?”