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: Sugar
The reduction of EU sugar prices and scheduled abolition of EU sugar production quotas have and will continue to transform the market conditions faced by ACP sugar exporters to the EU. Under the impact of EU sugar sector reforms prices on sugar markets served by ACP sugar exporters are likely to be increasingly volatile. In addition the consolidation and internationalisation of European sugar companies which EU reforms have given rise to are having important effects on patterns of ACP-EU sugar trade. Intensified competition on EU sugar markets is bringing into question the financial sustainability of the full-time raw cane sugar refiners who traditionally refined ACP raw sugar exports. The final stages of EU sugar sector reforms will carry particularly profound consequences for smallholder sugar cane farmers in ACP countries. Close attention will ned to be paid to strengthen the regulatory framework for the functioning of ACP-EU sugar supply chains. This will need to include the development of new revenue sharing formulas which allow independent sugar cane growers to gain a share of revenues from the new products increasingly manufactured from sugar cane.
The challenges faced in ACP-EU sugar sector relations will be further complicated by the impending departure of the UK from the EU.
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Recent Trends in ACP Sugar Exports to the EU27 Show Continued Decline, with Brexit Exacerbating This Pre-Existing Trend
Summary
While EU sugar production is well down on the five-year average, the position of traditional ACP sugar exporters on the EU27 market is worsening. The reduction of traditional ACP sugar supplies has been larger than the reduction in total EU27 imports, with the share of EU27 import declining. This is linked to the emergence of new non-traditional suppliers who take advantage of recently granted duty-free access arrangements. Given the high dependence of traditional ACP sugar exporters on the UK market, the UK’s withdrawal from the EU sugar market equation will compound this trend. New EU/UK rules of origin are also likely to see EU manufacturers of high sugar content products turning their ack on imported sugar in favour of domestic EU27 beet production where both EU27 and UK markets are being served. At the ACP level this may in part be partially offset by reduced UK sugar exports to the EU market. Overall, the long-term prospects for all but the most competitively priced traditional ACP sugar suppliers look grim, unless the focus is on specialty sugar markets. This could lead to smaller but more sustainable levels of sugar exports, by those ACP sugar producers who adopt such strategic market repositioning strategies. Read more “Recent Trends in ACP Sugar Exports to the EU27 Show Continued Decline, with Brexit Exacerbating This Pre-Existing Trend”
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?”
How Will EU Sustainability and Livelihood Due Diligence Regulations Interface with Private Sector Sustainability Initiatives?
Summary
In response to growing consumer pressure and pending regulatory initiatives, FMCG companies are updating their policies and seeking out innovative solutions to enhance the effectiveness of efforts to halt deforestation, promote sustainable farming practices, enhance livelihoods opportunities, and improve working conditions. This is an ambitious agenda which will need to get to grips with the twin questions related to: who bears the costs of the required innovations and how will this affect the distribution of revenues to different actors in the supply chain. To date the necessary search for technical solutions has seen these core questions set to one side. However, as mandatory ‘due diligence’ requirements come ever closer, it is increasingly important that these twin questions are systematically addressed. Read more “How Will EU Sustainability and Livelihood Due Diligence Regulations Interface with Private Sector Sustainability Initiatives?”
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”
Can Evolving EU UK Technical Discussions on Northern Ireland Trade Issues Help Ease Triangular Supply Chain Challenges?
Summary
EU/UK technical discussions on solutions which could facilitate agri-food sector trade between the mainland UK and Northern Ireland, within the framework of the mutually agreed Northern Ireland protocol, could offer hope for solutions to the wider challenges now faced along ACP triangular supply chains. However, any progress on these technical issues would leave unaddressed the issue of the MFN tariffs now levied on ACP exports to final markets where the shipment arrangements require these goods to cross and EU/UK border outside of customs supervision. This issue needs to be addressed unilaterally by the UK through the adoption of practical trade documentation requirements if the commitments to continuity in market access for ACP exports is to be fully upheld. Parallel unilateral action is also required from the EU. Read more “Can Evolving EU UK Technical Discussions on Northern Ireland Trade Issues Help Ease Triangular Supply Chain Challenges?”
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”
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”
COLEACP Updated Brexit Impact Assessment Posted
Summary
The comprehensive nature of COLEACP’s Brexit assessment makes it a useful starting point for all ACP agri-food exporters in their efforts to get to grips with the new trade challenges thrown up by the culmination of the Brexit process. Its analysis of the short-term transitional and long-term structural challenges faced, also raises policy issues which now need to be addressed if disruptions to ACP supply chains which cross the new EU/UK customs and regulatory border are to be minimised. This sets an agenda for concerted ACP action, drawing in stakeholders from the multiplicity of sectors adversely affected by the new trade realities faced. While in the horticulture sector these issues primarily affect ACP exporters using triangular supply chains, in other sectors ACP exporters directly serving EU and UK markets could also be affected. This is particularly the case where imports are used in manufactured food and drink products and where the use of domestically produced alternatives (of either EU or UK origin) could avert any rules of origin complications (e.g., in the use of imported sugar in food and drink products destined for export). Read more “COLEACP Updated Brexit Impact Assessment Posted”
Future Caribbean Trade Relations with the UK: Summary of Areas of Concern
Summary
The new EU/UK rules of origin requirements for the cross-border movement of goods could prove disruptive of certain Caribbean rum, horticulture, sugar and potentially rice supply chains. At the business level this will require a rethinking of routes to markets. At the policy level it will require a sustained engagement to secure a right of automatic cumulation for all Caribbean products enjoying duty-free/quota-free access to both the EU and UK markets, when traded across an EU/UK border. Only such a policy innovation would remove the rules of origin complications which threatened to make commercially non-viable the current Caribbean exports which are routed via the EU to the UK market or via the UK to EU markets. Read more “Future Caribbean Trade Relations with the UK: Summary of Areas of Concern”