Summary
Belize has one of the highest levels of dependence on the UK market in its trade with the EU of any ACP country (73%). Belize’s agricultural exports would all face significant MFN duties if current duty free-quota free (DFQF) access were lost and no alternative equivalent regime were set in place. What is more, Belize’s agricultural exports to the UK are highly vulnerable to preference erosion, given currently expressed UK trade and agricultural policy orientations for a post- Brexit Britain. Only in the citrus sector could Brexit bring benefits, but only if unnecessary SPS controls were abandoned and current full cost recovery initiatives for SPS inspections are reviewed.
As with other ACP countries Belize is vulnerable to the loss of current duty free-quota free (DFQF) access to the UK market as a result of the UK’s departure from the EU. This is particularly serious for Belize given just five agricultural products and two fisheries products accounted for 88% of exports to the EU28 in 2015, with 73% of these exports destined for the UK market (see table for details).
The five main products exported to the UK market (cane sugar, bananas, fruit and nuts, fruit juice and crustaceans) accounted for fully 98.4% of Belize’s exports to the UK in 2015. All of these exports would potentially attract high MFN duties if existing DFQF access were lost.
Trade with the UK in the three most important of these product groups, sugar, bananas, and crustaceans accounted for 100% 73% and 99.5% respectively of total Belizean exports of these product categories to the EU28 in 2015.
Exports of Belize to the EU28 are thus not only heavily dependent on the UK market but also heavily dependent on existing trade preferences enshrined in the EU-CARIFORIM EPA, the provisions of which will lapse in trade with the UK from the date of the departure of the UK from the EU (possibly as early as March 2019).
Main Belize Exports Affected by Loss of Preferential Access By BREXIT (2015 €)
| Re-imposed Duty | EU | UK | UK % EU | |
| Sugar Cane solid form (1701) | CXL duty: €98.00/tonne
MFN duty: €339/tonne |
52,245,825 | 52,245,825 | 100% |
| Citrus fruit (0805) | 3.2% -16%
MIP: €703/t (12-25 August) |
26,793 | – | 0% |
| Bananas (0803) | MFN €1,270/t (08039010)
MFN: 16% duty (08039090) |
66,049,880 | 47,947,199 | 72.6% |
| Prepared citrus (200830) | TRQs: some TRQs 20%
MFN: 16% duty to 25.6% |
799,624 | 0 | 0 |
| Nut mixtures (200819) | MFN: 7%-12% | 1,289 | 1,289 | 100% |
| Fruit Juice (2009) | 33.60 % + 20.60 EUR / 100 kg | 6,241,066 | 95,195 | 1.5% |
| Frozen fish (0303) | 15.0% | 5,790,811 | – | 0 |
| Crustaceans (0306) | 6%- 12.5% – 20.% | 10,198,291 | 10,194,870 | 99.5% |
| % share total exports to EU | 88.0% | 72.7% | ||
| % share total exports to UK | 98.4% | |||
| Total value exports to EU | 151,933,265 | 112,302,658 | 73.9% |
Source: EC market access data base: http://madb.europa.eu/madb/statistical_form.htm
This dependence on the UK market in trade with the EU28, makes maintaining existing preferential access to the UK market from day 1 of the UK’s formal departure from the EU an issue of considerable importance to Belize.
However, as is the case with all ACP/LDC countries which currently benefit from preferential access to the UK market under EU28 trade arrangements, securing for Belizean exports an immediate extension of current market access arrangements is only one dimension of the Brexit challenge. The second dimension relates to the likely future value of any retained preferential access to the UK market, given the UK government’s far more liberal trade orientation (2) and past criticism of the EU common agricultural policy. Potentially, policy changes under independent UK trade and agricultural policies could severely undermine the value of traditional tariff preferences enjoyed by Belize.
Agricultural exports most vulnerable to preference erosion are likely to be those products where the UK has no domestic production, but where the EU28 maintained high tariffs to protect agricultural producers in other EU member states. In the case of Belize, this is most likely to affect exports of bananas and citrus fruit.
In 2015 banana exports to the UK represented some 42.7% of total Belizean exports to the UK and 31.6% of total exports to the EU28 . In terms of citrus exports, while in 2015 there were no citrus exports to the UK, in the past the UK has been the principal destination for Belizean citrus exports to the EU28.
Belize exports of citrus fruit to the EU28 and UK 2002 -2015 (tonnes)
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| EU | 6,493 | 5,108 | 7,913 | 7,208 | 7,245 | 1,141 | 329 | 873 | 1,196 | 921 | 331 | 280 | 1 | 41 |
| UK | 6,131 | 5,108 | 7,913 | 7,127 | 6,891 | 1,099 | 281 | 833 | 976 | 880 | 280 | 260 | 1 | 0 |
| UK % | 94% | 100% | 100% | 99% | 95% | 96% | 85% | 95% | 82% | 96% | 85% | 93% | 100% | 0% |
Source: EC, Market Access Data Base (EU member state: EUR28; Partner country: Belize; Product Code: 0805)
http://madb.europa.eu/madb/statistical_form.htm
In addition it should be noted that in the run-up to the Brexit referendum, there was strong domestic pressure in the UK for the removal of the €98/tonne CXL duty on sugar imports from non ACP/LDC suppliers. This issue was seen as so important to Tate & Lyle Sugars that it called on its employees to vote in favour of Brexit as the only means of securing the removal of the CXL duty. (3)
Tate & Lyle Sugars is maintaining this pressure on the UK government for the early removal of the €98/tonne CXL duty on sugar imports. This would impact on fully 46.5% of the value of Belize’s exports to the UK in 2015 and the equivalent of fully 34.4% of Belize’s total exports to the EU28 in 2015.
Sources:
(1) EC, Market Access Data Base (EU member state: EUR28; Partner country: Belize; Product Code: 0805)
http://madb.europa.eu/madb/statistical_form.htm
(2) Prime Ministers’ Office, UK Government, ‘The government’s negotiating objectives for exiting the EU: PM speech’, 17 January 2017
https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech
(3) BBC, ‘EU referendum: Tate & Lyle Sugars joins campaign to leave EU’, 22 June 2016
http://www.bbc.com/news/business-36593528
| Comment and Analysis Belize is potentially one of the ACP countries most seriously affected by Brexit, with this potentially requiring targeted assistance to market adjustments and new policy initiatives to strengthen the functioning of ACP-EU supply chains to the benefit of banana and sugar cane producers. Should current duty free-quota free access be allowed to lapse from the date of the UK’s formal departure from the EU, or the UK authorities move swiftly post Brexit to liberalise products where current preferences are significant, this could adversely impact on 2/3rds of Belize’s current exports to the EU28. In terms of the market repositioning which may be required, it should be noted that the scope for diversifying beyond the UK market varies greatly between these various product categories. In 2014, for example, the UK market accounted for just over 58% of Belize’s exports of sugar to the EU, with exports to Italy accounting for 35,000 tonnes compared to the 61,000 tonnes exported to the UK. Previously Belize has also exported significant tonnages of sugar to Portugal (17,462 tonnes in 2012). This suggests there may be scope for exporting sugar beyond the UK market. However, this will be critically determined by the policy adopted by American Sugar Refiners, in the light of the market consequences of the implementation of the final round of EU sugar sector reforms (scheduled for October 2017) and the future trade arrangements set in place for trade in sugar products between the UK and EU27 countries following the UKs’ departure from the EU. For bananas this could be one of the first products scheduled for broader trade liberalisation given the absence of any UK domestic production. The pace at which any erosion of the value of retained tariff preferences occurs, will however depend on the extent to which the UK authorities decide to hold back on unilateral tariff reductions, so as to strengthen their hand in negotiations with other non-ACP third country suppliers (e.g. India, Central American and Andean Pact countries). On the positive side, the exit of the UK from the EU could create new opportunities in the citrus sector, particularly should the UK SPS control regime for citrus imports be modified in the light of the absence of any domestic citrus production in the UK. However any benefits derived from such a UK policy decisions would be minimal unless the existing UK policy of moving to full cost recovery for SPS inspections of all imports were reviewed. Between 2012 and 2014 this cost recovery policy saw UK SPS inspection charges on imports increase around 236%. This may have been a factor in the termination of Belizean citrus exports to the UK. However, as in the case of bananas, the absence of any domestic UK production means the citrus sector is likely to be one of the areas where the UK moves swiftly towards dismantling inherited tariff protection, either unilaterally or as part of new free trade area agreements. The development of UK thinking in terms of the modalities for the dismantling of ‘inherited’ tariff protection in areas where the UK has no domestic production, will need to be closely monitored in order to enable Belizean exporters to successfully undertake any market re-positioning which may be required, in the face of UK policy changes. Since fully 2/3 of Belizean exports to the EU could be affected by accelerated processes of preference erosion as a consequence of Brexit, this raises serious questions about the future value to Belize of existing EPA preferences in their trade with EU27 member states. |
| Key words: BREXIT, Belize, Bananas Area for Posting: BREXIT, Caribbean EPA, Sugar, Horticulture |