Summary
While even under an EU/UK FTA mutual trade in agri-food products will be adversely affected, under a no-deal outcome these effects would be far more severe. Thus, under an FTA it is estimated UK food exports to the EU would fall 22.5%, while under a no-deal outcome the decline would be 63.2%. The corresponding figures for EU food exports to the UK are 22.6% and 61.7% respectively under an FTA or no-deal scenario. This would have substantial market and wider trade consequences. The knock on effects of the outcome of the EU/UK negotiations will be felt in 5 main areas:
o The effects on ACP triangular supply chains serving the UK via the EU.
o The effects on ACP triangular supply chains serving the EU via the UK.
o A possible further revision of the UK’s MFN tariff schedule under a no-deal outcome.
o New opportunities for increased direct exports to the UK market.
o The diversion of displaced EU/UK exports to targeted ACP market.
ACP agri-food sector enterprises and governments will need to make preparations for dealing with the trade and market consequences which will arise under both an EU/UK FTA and more seriously, the growing prospect of anon-deal outcome to the ongoing negotiations. Read more “Report Spells Out Impact of Brexit Scenarios for Food and Beverage Supply Chains”
Category: Horticulture
Implementation of New EC Organic Products Regulation Postponed but Unresolved Brexit Issue Threatens Commercial Gains of ACP Organic Production
Summary
The deferment of the implementation of EU’s new organic regulation offers a precedent for addressing the commercial losses ACP organic exporters face if there is no EU/UK organic equivalence agreement in place by 1st January 2021. The lapsing of EU/UK mutual recognition of organic certification on 3rd country products should be deferred until the end of the Covid-19 pandemic plus 9 months, given the travel restrictions and social distancing requirements which complicate the securing of UK or EU27 specific organic certification at the present time. This would avert needless commercial losses for ACP organic exporters and encourage the continued growth in ACP organic exports, which are wholly consistent with both EU and UK sustainability objectives. Read more “Implementation of New EC Organic Products Regulation Postponed but Unresolved Brexit Issue Threatens Commercial Gains of ACP Organic Production”
Government of Kenya Looking for Way Out of UK-EAC Continuity Agreement Negotiations Impasse
Summary
Press reports indicate the Government of Kenya is to conclude a bilateral trade agreement with the UK, with other EAC members joining later. This is seen as being based on the concept of ‘variable geometry’, an approach which had been endorsed by the EAC Heads of State in both February 2018 and February 2019.. However, the concept of ‘variable geometry’ has never been utilised in regard to the application of different tariffs within a customs union, since a customs union by definition is based on the application of a Common External Tariff by all members of the customs union. The only way for a Kenya-UK trade agreement to be concluded without undermining the integrity of the EAC customs union Common External Tariff would be if the implementation of reciprocal commitments were deferred until all EAC members agreed to come on board with a common programme of tariff reduction. This would be consistent with the current application of the EU-EAC EPA, where the implementation of reciprocal tariff reduction commitments has not yet been activated, given the reluctance of certain EAC members to come on board. An additional option available to avert a loss of Kenya’s duty-free access to the UK market would be the reactivation of the Transitional Protection Mechanism initially proposed in October 2019, but which was overtaken by events before the need for its’ implementation arose. On this basis, it needs to be recognised any loss of duty-free access for Kenyan exports would be a political choice of the UK government and not an unexpected by-product of the Brexit process. Read more “Government of Kenya Looking for Way Out of UK-EAC Continuity Agreement Negotiations Impasse”
Road Haulage Issues Likely to be Critical Bottleneck Along ACP Triangular Supply Chains from 1st January 2021
Summary
The scale of the road transportation disruptions along EU/UK supply routes as a result of the UK’s departure from the EU customs union and single market and the consequent creation of border controls are increasingly becoming apparent. The main impact will be unaffected by the outcome of the ongoing EU/UK negotiations. Against this background ACP exporters currently using triangular supply chains may have little choice but to move over to direct exports to final destination markets or the abandonment of markets in the UK, mainland EU or the Republic of Ireland currently served along triangular supply chains. Read more “Road Haulage Issues Likely to be Critical Bottleneck Along ACP Triangular Supply Chains from 1st January 2021”
UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market
Summary
The UK governments’ decision to breach substantive provisions of the Northern Ireland Protocol to the jointly agreed Withdrawal Agreement threatens to make ratification of any EU/UK agreement which may still be concluded extremely difficult. It increases the prospect of an acrimonious no-deal UK departure from the EU customs union and single market at the end of 2020. While the scope exists for policy measures to minimise the negative impact of a no deal UK departure on ACP exports, the window of opportunity for taking these necessary measures is rapidly closing. The absence of appropriate policy intervention will leave ACP exporters alone in facing the cost increasing challenges of a no-deal UK departure will generate. Not all current ACP exporters will be able to adjust to these new commercial realities, with all but the largest and best prepared ACP exporters being squeezed out of UK and some EU27 markets. Read more “UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market”
Cut Flowers Sector Concerns Over Proposed UK Border Controls Highlighted
Summary
The adverse effects of shortcoming in the UK’s approach to establishing border controls on goods entering from the territory of the EU on the cut flower trade has been highlighted. Information essential to the future conduct of this trade is still not available. Shortcomings in the design of administrative requirements and a general lack of business preparedness have also been highlighted. What is more, multiple freight issues arising from the creation of the new UK/EU border are also likely to severely impact the cut flower sector, with these posing particular problems for the triangular supply chains ACP exporters’ work through. Solutions to facilitate the continued smooth functioning of cut flower triangular supply chains are urgently needed. The outlines of such solutions are now emerging. They need to be actively pushed for by the concerned ACP governments and exporters, in association with Dutch cut flower industry in a context where there is limited ‘band-width’ in the UK and EC for dealing with triangular supply chain issues. Read more “Cut Flowers Sector Concerns Over Proposed UK Border Controls Highlighted”
Tariff Treatment and Logistical Cost Uncertainties Generated by Stalled EU/UK Trade Negotiations Raises Problems in ACP Supply Contract Negotiations for Exports to the UK Market in 2021
Summary
ACP supply contract negotiations for the delivery of products to the UK market along triangular supply chains are being complicated by the absence of an agreed framework for future EU/UK trade relations and the associated uncertainty around the level of new administrative and logistical costs the new border arrangements will generate. ACP exporters need to try to accommodate estimates of these increased costs into their tender offers for supply contracts currently under negotiation with UK supermarkets. If not, costly surprises could arise if supermarkets insist on current Delivered Duty Paid contract stipulations; which commonly involve all costs linked to the import process being carried by the foreign supplier. For direct ACP exports to the UK market, the prospect of a no-deal UK exit leading to a further revision of the UK’s MFN tariff regime, alongside uncertainty around the basis for the implementation of the UK’s new 260,000 tonne duty free quota for raw sugar imports, is overhanging contract negotiations for products such as bananas and sugar. Read more “Tariff Treatment and Logistical Cost Uncertainties Generated by Stalled EU/UK Trade Negotiations Raises Problems in ACP Supply Contract Negotiations for Exports to the UK Market in 2021”
Structural Price Pressures on UK Banana Market See Winfresh-UK Placed into Administration
Summary
It is unclear what the implications will be for St Lucian banana exports of Winfresh-UK being placed in administration. While efforts are underway to draw Fyffes into a greater role in the marketing of St. Lucian bananas in the UK, it is unclear whether the inclusion of St. Lucian bananas would add value to Fyffes product portfolio, given the uncertainties surrounding the future of the UK banana market. While in May 2020 the UK proposed to retain in place existing MFN tariffs on banana imports beyond 1st January 2021, the UK food price inflation effects of a no-deal UK departure from the EU customs union could see a further revision of the UK MFN tariff schedule, with a move over to the ‘zero production- zero MFN tariff’ approach long advocated by the global trade liberalisation wing of the Conservative Party. St. Lucian and other ACP Bananas exporters would be highly vulnerable to such a policy shift, with this uncertainty making it extremely difficult to plot a way forward for St. Lucian banana exports as supply contract negotiations for 2021 get underway. Read more “Structural Price Pressures on UK Banana Market See Winfresh-UK Placed into Administration”
Continued Lack of Progress Sees Mounting Levels of Frustration on the EU Side and Increased Prospects of a No-Deal UK Departure from the EU Customs Union and Single Market
Summary
EC negotiators are showing growing frustration at the lack of progress in EU/UK trade negotiations. The EU is looking for the UK to move beyond initial ‘red lines’, while the UK is looking for recognition of its sovereign right to determine its trade regulatory framework. Analysts suggest current positions risk lead to a ‘no-deal’ outcome by default. The urgency of ACP exporters assessing the real world implications of the UK’s departure from the EU customs union, with or without a deal, cannot be overstated. Similarly, the urgent need for ACP governments to launch a political initiative to ensure the implications for ACP exporters of the pending changes are acknowledged and addressed cannot be over stated. Read more “Continued Lack of Progress Sees Mounting Levels of Frustration on the EU Side and Increased Prospects of a No-Deal UK Departure from the EU Customs Union and Single Market”
Implications for ACP Exporters of Further Reductions of Import Tariffs on Ecuadorian Bananas
Summary
At the beginning of 2020 Ecuador secured the benefits of the tariff reductions included in the EU-Andean Pact FTA. Ecuadorian exporters believe this will further stimulate banana exports to the EU, in a context where Ecuador already accounts for 1 in 4 bananas imported to the EU. It is unclear what the impact of the Covid-19 pandemic will be on Ecuador’s banana export trade to the EU. The Ecuadorian experience highlights the importance of the tariffs applied to banana imports on trade flows. In this context two issues arise for African banana exporters, namely: the future MFN tariffs the UK plans to apply to banana imports after it has left the EU customs union and whether the UK will unilaterally roll over existing duty free access for Ghanaian, Cameroonian and Ivorian banana exports, given the Covid-19 interruptions of ongoing negotiations on ‘UK-only’ Continuity Agreements which were intended to replace the EU trade agreement which will lapse once the UK leaves the EU customs union. African banana exporters have actively made their economic development concerns known to the UK government. It remains to be seen just how the UK government will respond to these concerns. Read more “Implications for ACP Exporters of Further Reductions of Import Tariffs on Ecuadorian Bananas”