Summary
While Namibia has a very low overall dependence on the UK market in its trade with the EU it has an exceptionally high dependence on the UK market for exports of bovine meat fresh and chilled (0201) and a high dependence for exports of table grapes (08061010). If existing duty free-quota free (DFQF) access to the UK market were lost for these products, then the commercial viability of exports of bovine meat fresh and chilled (0201) would be undermined and the profitability of exports of table grapes (08061010) would be reduced. Any loss of existing duty free-quota free access to the UK market could well require an adjustment to current marketing arrangements for beef exports which are based in the UK.
In 2015 61% of the value of Namibia’s exports to the EU were in base metals, precious metals and chemical products (radioactive elements) on which import duties levied are zero regardless of the trade regime applied. Almost all of these exports went to EU27 member states.
Of Namibia’s fisheries products where new tariffs would be applied on exports to the UK if ‘inherited’ EU MFN duties were imposed following the UK’s departure from the EU, a mere 0.2% go to the UK market. These products, which accounted for 26.6% of the value of Namibia’s exports to the EU28 would be largely unaffected by Brexit.
Agricultural products accounted for 11% Namibia’s exports to the EU, with agricultural exports to the UK accounting for just 4.1% of total Namibian exports to the EU28. However, for Namibian exports of fresh and chilled beef and table grapes there is a far higher dependence on the UK market, with the UK taking 65.1% of fresh and chilled beef exports to the EU28 and 29.5% of table grapes exports in 2015 (classified as an exceptionally high dependence and high dependence respectively).
For these two categories of exports to the UK (and frozen beef exports), unless alternative, equivalent bilateral market access arrangements are set in place by the UK authorities significant additional import duties would be faced, if the UK applied ‘inherited’ EU MFN duties on this trade (see table).
In the case of table grapes the re-imposition of ‘inherited’ MFN duties would be likely to undermine the profitability of exports to the UK, while in the case of chilled and frozen beef the duties applied would be likely to make exports to the UK commercially non-viable.
Overall any re-imposition of inherited EU MFN duties would adversely impact on fully 81% of Namibia’s current exports to the UK market.
Main Namibian Exports Affected by Loss of Preferential Access by BREXIT (2015 €)
| Re-imposed Duty | EU | UK | UK % EU | |
| Table Grapes (08061010) | 11.5% | 50,140,363 | 14,805,037 | 29.5% |
| Bovine meat fresh and chilled (0201) | 12.80 % + 212.20 EUR / 100 kg | 38,516,339 | 25,061,592 | 65.1% |
| Bovine meat frozen (0202) | 12.80 % + 141.40 EUR / 100 kg | 25,061,592 | 2,191,043 | 8.7% |
| Total value Namibian exports | 1,033,817,029 | 51,933,445 | 5.0% |
Source: EC market access data base:
http://madb.europa.eu/madb/datasetPreviewFormATpubli.htm?datacat_id=AT&from=publi
However, as is the case with all ACP/LDC countries which currently benefit from preferential access to the UK market under EU trade arrangements, securing 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 this preferential access given the past UK governments criticisms of the EU’s common agricultural policy and the UK’s governments far more liberal trade orientation.
Changes under independent UK trade and agricultural policies could potentially undermine the value of traditional tariff preferences. Agricultural exports most vulnerable to preference erosion are likely to be those products where the UK has no domestic production, but where the EU maintained high tariffs to protect agricultural producers in other EU member states. In the case of Namibia this would be likely to affect exports of table grapes, a product category where there is no significant UK domestic production.
The pace at which any erosion of the value of retained tariff preferences occurs will depend on the extent to which the UK authorities decide to hold back on unilateral tariff reductions so as to strengthen their hand in negotiation with other non-ACP third country suppliers (e.g. India). This is an area of policy development which will need to be closely monitored in order to enable Namibian exporters to successfully undertake any market repositioning which may be required in the face of UK policy changes.
Sources:
EC market access data base:
http://madb.europa.eu/madb/datasetPreviewFormATpubli.htm?datacat_id=AT&from=publi
| Comments and Analysis
For Namibia, the trade effects of Brexit are likely to be more manageable than for many ACP countries. Nevertheless ensuring current DFQF to the UK market from day 1 of the UKs’ formal departure from the EU is retained, would appear an important priority for Namibian beef and table grape exporters. This will require concerted action in an ACP framework to lobby the UK authorities to set in place, on a unilateral basis, transitional market access arrangements which extend current preferential access enjoyed under the SADC-EU EPA (and other similar regional trade arrangements across the ACP). Such transitional arrangement are likely to be necessary since the UK cannot legally enter into bilateral trade agreements with third parties while still a member of the EU. In addition, in the light of the large number of trade agreement negotiations which the UK government will need to embark on to replace existing EU trade agreements and set in place new bilateral trade agreements, serious human resource constraints will be faced in the newly created UK Department of International Trade. This could delay the negotiation of new bilateral reciprocal UK trade agreements for a considerable amount of time, for all but the most important of the UK’s trade partners. Unilateral transitional trade arrangements are therefore likely to prove essential, while the process of re-fitting the existing trade agreement which covers Namibian exports to the UK is undertaken (see companion article ‘South Africa looking for predictable EPA based trade arrangement to boost trade with UK’). Any such ‘refitting’ of the existing EU trade agreement into a bilateral agreement with the UK will need to include a range of ‘EPA+’ elements, designed to improve market access for Namibian exports to the UK. This will need to address issues such as: · the rules of origin to be applied to Namibian fisheries exports; · the re-design of SPS control measures to reduce the systematic discrimination · the restructuring of cost recovery programmes for UK SPS inspections to remove the · the provision of ‘aid for trade’ support to assist with market adjustments in the face This issue of the erosion of the value of retained trade preferences arising from the introduction of new UK trade and agricultural policies, in the medium to long term, may require Namibian exporters to undertake targeted marketing adjustments. Given current policy uncertainties over the future basis of access for Namibian exports to the UK market from day 1 of the UK’s departure from the EU, Namibian beef and table grape exporters may in the coming months need to start thinking about the market adjustments which may be required. In the case of Namibia the market adjustments which may be required would appear more manageable than for many other ACP countries. For example, the tonnages involved in Namibia’s fresh and chilled beef trade into the UK are relatively small (3,829 tonnes), particularly when compared to the overall size of the EU market for quality differentiated beef (estimated at around 900,000 tonnes in EU27 countries). The volume of Namibian fresh and chilled beef exports to the UK which could be affected by Brexit is equivalent to a mere 0.4% of consumption of quality differentiated beef in the EU27. This potentially leaves considerable scope for the reorientation of marketing efforts to EU27 markets in the most vulnerable category of Namibian exports to the UK, should the current duty free-quota free access to the UK market not be extended from day 1 of the UK’s formal departure from the EU. The adoption of a proactive approach involving contingency planning for a possible loss of current preferential access to the UK market, alongside a careful monitoring of the evolving discussions around the UK’s trade policy towards ACP developing countries which have a long history of preferential access to the UK market dating back to 1975, would ensure Namibian exporters are not caught out by any Brexit related policy developments. The situation of Namibia is indicative of the kind of assessments and preparations which should be undertaken by ACP countries with a low overall trade dependence but high sector specific dependence on the UK market in their trade with the EU28. |
| Key words: BREXIT, Namibia, beef, table grapes Area for Posting: BREXIT, Southern Africa, Horticulture |