Summary
The difficult global sugar market situation and rapid transition from a large projected deficit to a significant surplus is likely to put pressure on EU sugar prices, which have to date held up well. There are concerns the UK duty free sugar quota of 260,000 tonnes could see EU/UK sugar trade restricted, with this driving EU27 sugar exports off the UK market and intensifying competition on the EU market. This could also complicate the onward trade in ACP sugar and products containing ACP sugar between the UK and the EU. Disturbances on European sugar markets look likely in 2021, including for ACP Fairtrade sugar, where exporters may need to review their routes to market and refining partners. Alternatively, special onward trade arrangements may need to be negotiated as part of wider efforts to avert disruption of ACP triangular supply chains. This can be seen as an urgent policy priority. Meanwhile ACP sugar exporting companies will need to explore their sugar marketing options for 2021, in the light of a variety of scenarios for the UK’s departure from the EU customs union and single market. Read more “EU Sugar Market Still Attractive but Brexit Related Complications Likely in 2021”
Category: Pacific
Craft Chocolate Sector Bears Initial Brunt of the Effects of Covid-19 in the Cocoa Sector
Summary
The craft chocolate market component has been most severely affected by the demand effects of the Covid-19 pandemic, with supply side issues linked to quality and certification also being faced. Providing public sector support to strengthening partnership relationships between fine cocoa producers and craft chocolate companies to enhance the resilience of marketing infrastructure, could provide an important means of assistance to the recovery of this sub-sector. Issues linked to the distribution of price premiums generated by the trend to single origin chocolate products also need to be addressed, to ensure producers of fine cocoa share in the extra income generated by this new trend. Read more “Craft Chocolate Sector Bears Initial Brunt of the Effects of Covid-19 in the Cocoa Sector”
Could Leaked Requirements for Movement of Goods to Northern Ireland Provide Basis for Special Arrangements for ACP Triangular Supply Chains
Summary
Proposals for consolidated electronic document requirements for the movement of goods from the mainland UK to Northern Ireland could provide a basis for special arrangements to facilitate the continued smooth functioning of ACP triangular supply chains. Additional arrangements to remove the need for phytosanitary checks on ACP goods entering the UK market via EU27 countries would however be required. While there is seen as being no political objection in the UK to averting disruption of trade with developing countries which enters the UK market via EU27 member states, there is not currently the ‘band width’ in UK government services to deal with this issue, given Covid-19 related demands and the fraught state of UK/EU negotiations. There is therefore a need for the most directly affected ACP governments to launch a political initiative for the establishment of special arrangements to ensure the continued smooth functioning of ACP triangular supply chains. Such an initiative would need to reach out to both the UK and EU authorities to make sure suitable arrangements are in place along the whole of the supply chain. Read more “Could Leaked Requirements for Movement of Goods to Northern Ireland Provide Basis for Special Arrangements for ACP Triangular Supply Chains”
EU Moves Swiftly to Redeploy Existing Funds to Meet Immediate Crisis and Long-Term Structural Needs
Summary
The EU has moved swiftly to unlock Covid-19 blocked development expenditures for redeployment to meeting immediate health crisis and longer term structural economic needs. To date the EU framework for effectively supporting a recovery in trade and production in ACP countries is still under development, with ACP farmers organisations and agri-food sector associations urgently needing to initiate a dialogue with the local EU delegate to assist in defining the approach to be adopted by the EU locally in supporting the restoration of production and trade in the face of the ongoing Covid-19 pandemic. There is a need to ensure EU action in support of economic recovery focuses on the specific needs of farmers and agri-food sector enterprises, given the potentially serious food and livelihood security issues raised by the ongoing pandemic. Read more “EU Moves Swiftly to Redeploy Existing Funds to Meet Immediate Crisis and Long-Term Structural Needs”
Future UK Only MFN Tariff Schedule Announced
Summary
After much speculation, the MFN tariffs on most agricultural and food products of greatest export intertest to ACP countries have been retained largely unchanged by the UK government. This will bring considerable relief to ACP banana, sugar, canned tuna, and value-added cocoa product exporters, where fears of the adoption of a ‘zero production-zero tariff’ approach had arisen. Across a range of other areas, relatively minor tariff reductions are unlikely to carry serious trade implications for ACP agri-food product exporters. The only area of uncertainty arises from the removal of the EU entry price system currently applied to a range of products and its replacement by simpler ad valorem import duties. It is unclear what the commercial impact of this change will be on individual ACP exporters of specific products. Read more “Future UK Only MFN Tariff Schedule Announced”
Growing Calls for an Extension of the EU-UK Transitional Period in the face of COVID-19 Economic Disruptions
Summary
The UK freight industry and British Chambers of Commerce have explicitly called for an extension of the transition period in E/UK relations, while the UK food and drinks industry has called for concerted action to avoid further trade disruptions which would compound the adverse economic effects of the Covids-19 pandemic. UK private sector bodies maintain neither business not the UK border services are prepared to implement customs and other border controls on trade with the EU from the 1st January 2021, given the disruptions to preparations which the Covid-19 pandemic has generated. While these difficulties are recognised and there is a dawning awareness in the UK government of the need to avoid a no-deal exit from the EU customs union, it appears no one in the UK government knows how politically to avoid this outcome. Against this background ACP businesses will need to start making preparation for a no-deal UK departure from the EU customs union and single market on 1st January 2021. Read more “Growing Calls for an Extension of the EU-UK Transitional Period in the face of COVID-19 Economic Disruptions”
UK to Strike Out on Bold New Trade Policy but Will Africa and the Caribbean Take the Hit?
Summary
The UK has formally announced the launch of an on-line public consultation on its future MFN tariff regime. This consultation appears limited to UK stakeholders and largely ignores the UK’s trade and development commitments enshrined in a host of preferential trade arrangements the UK has sought to ‘roll over’. The value of these ‘rolled-over’ trade arrangements would be profoundly undermined by any move towards the kind of zero UK MFN tariff regime which the Secretary of State appears to be championing. Some €1.5 billion in African and Caribbean exports, mainly from Commonwealth countries would be adversely affected, with 8 countries seeing over 70% of their current direct exports to the UK adversely affected and a further 7 countries likely to see between 46% and 69% of their direct exports to the UK adversely affected. With no formal structure for dialogue with the UK government operative, there is a need for special initiatives from African and Caribbean governments to place their concerns around the current UK MFN tariff review on the table for consideration by the UK government. Read more “UK to Strike Out on Bold New Trade Policy but Will Africa and the Caribbean Take the Hit?”
EU Sugar Sector Restructuring Seeing Stabilisation of EU Production Import and Export Trends Which Pose Challenges for Some ACP Sugar Exporters
Summary
EU sugar production is stabilising but on a gradual upward trend to 2030, in the context of declining human consumption of sugar in the EU. This will see reduced EU sugar imports and increased EU sugar exports with the EU being a growing net sugar exporter from 2024. EU corporate adjustment to the post quota market realities continues apace, with factor closures in efficient beet sugar production zones as processing operations are consolidated to maximise cost reductions. Maximisation of utilisation of installed capacity efforts place beet co-refiners in a more competitive position than traditional raw cane sugar refiners, with some ACP exporters still needing to rethink their marketing strategies in light of the evolving EU27 market realities. Some ACP sugar exporters however are constrained in their marketing options by existing patterns of corporate ownership. Responding effectively to evolving EU market realities and the UK’s future sugar sector MFN tariff policy will be critical to the commercial viability of existing patterns of ACP sugar exports to the EU27 and UK market respectively. Read more “EU Sugar Sector Restructuring Seeing Stabilisation of EU Production Import and Export Trends Which Pose Challenges for Some ACP Sugar Exporters”
EU Organic Import Control Implementing Regulation Highlights Potential for Brexit Related Trade Administration Based Disruption of ACP Exports
Summary
Changes in the administration of the Certificate of Organic Inspection (COI) in the EU’s TRACES computerised trade facilitation system, aimed at strengthening traceability along organic supply chains have given rise to problems which could see some imports of organic products from ACP countries diverted back onto the general market, at substantial commercial cost to the ACP exporters concerned. The potential problem however has been swiftly identified and existing dialogue structures have been used to raise with the EC the specific concerns of ACP organic exporters. The EC has swiftly proposed modifications to the TRACES reporting scheme, with ACP exporters now being invited to clarify whether this solution addresses the administrative problem which had arisen. This issue in the organic sector highlights the vital importance of ensuring the smooth functioning of trade administration arrangements to ACP suppliers of short shelf life products. It raises serious concerns over the absence of any formal institutionalised mechanisms for ACP trade dialogue with the UK, should problems in trade administration documentation arise within the process of the UK’s departure from the EU customs union and single market. Read more “EU Organic Import Control Implementing Regulation Highlights Potential for Brexit Related Trade Administration Based Disruption of ACP Exports”
Conservative Party Election Victory Mean Full Speed Ahead with Brexit and Raises The Threat of Loss of ACP Tariff Preference as a Result of Post-Brexit UK MFN Tariff Choices
Summary
The Conservative Party’s election victory which has delivered a 80 seat majority means Parliamentary approval of the Withdrawal Agreement can now go ahead and the UK can leave the EU on 31st January 2020. The UK will however remain part of the EU customs union and single market until at least 1st January 2021. The size of the majority means the influence of the ERG hard Brexit group of Conservative MPs will be reduced. This will give Prime Minister Johnson more space to extend UK membership of the EU customs union and single market if the conclusion of a comprehensive free trade area agreement by 1st January 2021 proves unrealistic. In this context the major issue facing ACP exporters in the first half of 2020 will be the impact of the scheduled UK-Only MFN tariff review on the value of rolled over ACP tariff references, with bananas, preserved tuna, fresh beans and certain value added cocoa products looking vulnerable to a loss of value of rolled over preferences (current ACP direct exports to the UK valued at €936 million). This need to be seen in a context where the UK government has already made the decision to set UK-only MFN tariffs for all other fruit, vegetables and cut flowers at zero (current ACP direct exports to the UK valued at €449 million). The trade effects for these products could be even greater given the volume of exports to the UK which takes place along triangular supply chains focussed on the landing of cargoes in the Netherlands and Belgium prior to onward shipment. The commercial impact of this process of preference erosion will however needs to be assessed on a product by product basis in light of the functioning of individual ACP supply chains and current patterns of UK imports and the tariffs actually levied on this current trade. Read more “Conservative Party Election Victory Mean Full Speed Ahead with Brexit and Raises The Threat of Loss of ACP Tariff Preference as a Result of Post-Brexit UK MFN Tariff Choices”