Summary
Cameroon is the only Central African country to have an EPA with the EU in place, with this having been under provisional application since July 2014. This unilateral decision to conclude an EPA was taken to ensure continued duty free-quota free access for Cameroonian banana exports to the EU. According to the EC the implementation of the EU-Cameroon agreement ‘has now reached cruising speed’. Brexit related EU/UK trade disruptions in the poultry sector could see the EC looking to enforce EPA provisions on the prohibition of the use of quantitative restrictions on imports from the EU. This could adversely impact the Cameroonian poultry sector. A ‘no-deal’ Brexit could also end Cameroon’s duty free-quota free access to the UK market unless UK specific trade arrangements are set in pace and could increase competition on EU27 markets unless the issue of the future level of TRQ restricted access to EU27 markets is favourably addressed. Brexit could also disrupt EU27/UK cocoa product supply chains in ways which could create opportunities for increased levels of direct exports of value added cocoa products to the UK market, although this will require a careful review of opportunities in this regard by Cameroonian cocoa processing companies.
In the absence of a Central Africa regional EPA on 17 December 2007 Cameroon on its own concluded an Economic Partnership Agreement (EPA) with the EU, with this agreement being signed on 15th January 2009 and ‘ratified by the Parliament of Cameroon on 22 July 2014’. This saw the agreement provisionally enter into force on 4 August 2014.
Cameroon began the implementation of its reciprocal tariff reduction commitments set out in the agreement in August 2016 with a further round of tariff reductions in August 2017. According to the EC analysis the implementation of the EU-Cameroon agreement ‘has now reached cruising speed’ (1).
Cameroon Exports to the EU (€ million)
| 2014 | 2015 | 2016 | 2017 | Range % Change | |
| Total Exports to EU | 2,150 | 1,800 | 1,776 | 1,914 | -16.3% to +7.8% |
| Agro-food exports to the EU | 657 | 726 | 747 | 665 | +10.5% to -11% |
| % share agro-food products | 30.6% | 40.3% | 42.1% | 34.7% |
- Cameroonian Agro-Food Exports to the EU
As with other major cocoa exporting ACP countries, Cameroon’s agro-food sector export earnings show a marked volatility, linked to the volatility of global cocoa price. Between 2013 and 2016 cocoa revenues grew 40%, with overall agro-food export earnings increasing 34.8%, while from 2016 to 2017 cocoa earnings fell 13.1% with overall agro-food export earnings falling 11%. However as the EC highlights ‘exports of processed cocoa products have increased by 82% since 2010, to EUR 84 million in 2017’.
Cameroon Cocoa Product Exports EU (tonnes) and % change 2008 to 2017
| 2008 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | % change 08-2017 | ||
| Beans | 153,163 | 147,058 | 147,413 | 155,104 | 152,323 | 139,323 | 138,720, | -9.4% | |
| Paste | 5,637 | 7,086 | 9,180 | 8,820 | 8,211 | 7,227 | 10,868 | +92.8% | |
| Butter | 4,791 | 9,736 | 9,856 | 10,752 | 9,233 | 9,257 | 14,394 | +200.4% | |
| Powder | 37 | 50 | – | 322 | 1 | – | n.a. | ||
| Chocolate | 4 | 1 | 1 | – | 1 | 5 | +25.0% |
Source: EC, Market Access Data Base
Beyond cocoa between 2013 and 2017 exports of edible fruit increased 23.9% reflecting the expansion of Cameroonian banana exports to the EU over this period. This followed the replacement of the Banana Protocol by full duty free quota free access to the EU market under the EU-Cameroon Interim-EPA (with this access being formalised under MAR 1528/2007).
Indeed, between 2007 and 2016 Cameroonian banana export volumes to the EU increased almost 34% (2), before a setback in export volumes in 2017. This has been compounded in in 2018 by a deteriorating security situation in some banana production areas. From January to August only 197,007 tonnes of Cameroonian bananas were exported to the EU (3).
Cameroons’ banana exports to the EU 2013-2017
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | |
| EU28 | 221,848 | 279,562 | 249,660 | 243,021 | 237,418 | 214,505 | 250,373 | 257,135 | 278,290 | 297,114 | 270,348 |
Source: EC Market Access Data Base
However the impact of the interim-EPA in the banana sector needs to be seen in the broader context the EC’s acknowledgement that fully 75% of Cameroon’s exports to the EU would enter the EU market duty free on an MFN basis, with EPA tariff preferences being most significant for bananas, processed cocoa products and aluminium.
- EU Agro-Food Exports to Cameroon
In terms of EU agro-food exports to the Cameroon export values have stagnated or declined, in part linked to the oil price and hence revenues from Cameroon’s oil exports. However within this overall trend there have been some significant areas of growth in EU agro-food exports to Cameroon.
For example, EU sugar and sugar confectionery exports to Cameroon tripled between 2013 and 2017, coming to account for 7.9% of total EU agricultural exports in 2017, while preparations of cereals exports increased 60%, coming to account for 12% of total EU agricultural exports in 2017. Dairy product exports meanwhile increased over 23% in value terms despite the collapse in global milk powder prices over this period (2).
EU Exports to Cameroon (total, agro-food products and selected agro-food products) € million
| 2013 | 2014 | 2015 | 2016 | 2017 | % change | |
| Total Value EU Exports | 1,746 | 1,631 | 1,581 | 1,566 | 1,476 | -15.5% |
| EU agro-food exports | 295 | 298 | 301 | 276 | 267 | -9.5% |
| – Dairy product (04) | 26 | 27 | 29 | 23 | 32 | +23.1% |
| – Preps of cereals, flour starch (19) | 20 | 26 | 25 | 29 | 32 | +60.0% |
| – Sugars and sugar confectionery (17) | 7 | 10 | 8 | 17 | 21 | +300.0% |
| Share 3 categories in total EU exports (%) | 3.03% | 3.86% | 3.92% | 4.41% | 5.76% | +60.4% |
Source: EC Market Access Data Base and EU-agri-food trade with: Cameroon.
However these areas of growth in the value of EU agro-food exports do not appear to be linked to tariff reductions introduced under the EPA, which only started in August 2016 (covering 1,727 tariff lines) followed by a further round of reductions in August 2017 (covering 985 tariff lines). These tariff reductions mainly covered ‘basic necessities, industrial and agricultural inputs, machines, chemicals, vehicles and spare parts, computers, papers, consumer products for households’.
In the case of the increases in sugar and dairy product exports the increase in exports is linked more to internal EU agricultural policy changes, namely the abolition of both sugar and milk production quota restraints on EU production as part of the ongoing process of CAP reforms
Overall according to the EC the total value of goods imported into Cameroon making use of EPA tariff preferences from August to February 2018 amounted to only €150 million.
- Institutional Developments and Accompanying Measures
During 2017 the 3rd meeting of the Cameroon-EU EPA Committee took place amid ongoing concerns over the impact of the tariff dismantling process on government revenues in Cameroon. A study on this issue is now underway. Discussions also saw a further refining of Cameroon’s tariff elimination schedule. Discussions over improvement to the rules of origin protocol meanwhile remain ongoing (1).
The EC highlights how recent EC assistance to Cameroon has focused on ‘strengthening agricultural productivity and competitiveness’. According to the EC a €10 million programme to promote competitiveness of Cameroon’s economy has ‘facilitated the expansion of quality infrastructure, public private dialogue and enhanced productivity of Cameroon’s enterprises’. This project will be replaced in 2018 by a ‘DACC (Dispositif d’appui à la compétitivité du Cameroun), another EUR 10 million programme under the 11th European Development Fund’ which aims to ‘provide direct support to companies, start-ups and intermediary organizations and to improve the provision of business services’. In addition programmes linked to EPA implementation are under preparation as part of the regional 11th EDF envelop. This will include a monitoring mechanism to review the tax implications of EPA implementation and sustainable development dimensions (1).
In concluding its review the EC highlights how in 2017 Cameroon took ‘important steps in implementing its commitments, culminating in significant tariff cuts’. However the EC highlighted how while it was ‘too early to discern any impact on trade and investment flows in 2017, there was a clear increase in the number of import declarations in Cameroon, without major additional revenue losses’. The EC argues EPA implementation in Cameroon Implementation ‘will also be impacted by the ongoing domestic reforms and accompanying measures to be implemented from 2018’ (1).
According to the EC some other Central African governments are looking at whether to accede to the existing EU-Cameroon EPA, although the EC acknowledges ‘uncertainty remains as to the effective resumption of negotiations and the possibility of concluding an agreement’ at the central African regional level (1).
| Comment and Analysis
Based on the experience of the South Africa-EU tariff phase down process one would only expect the impact of tariff reductions for agricultural products to be felt at the end of the tariff phase down period. This is a result of the tendency to ‘back-load’ tariff reduction commitments for ‘sensitive’ agricultural products to the end of the tariff phase down period. Indeed, since very sensitive products tend to be excluded from tariff elimination commitments altogether, the most important aspect of the EPA in the coming years is likely to be the commitments included in the agreement on the elimination of non-tariff barriers to EU exports. These commitments encompass a ‘prohibition of quantitative restrictions’ on imports of products from the EU and the extension of all forms of preferential ‘national treatment’ to EU companies. This could potentially pose problems in the poultry sector, where restrictions on imports applied by the government of Cameroon has effectively protected domestic poultry producers from the upsurge in EU poultry meat exports to Central African markets which has been underway since access to the Russian market for EU poultry meat exports began to be restricted. EU Poultry Meat Exports to Central African Countries 2009-2016 (tonnes)
Source: EC, Market Access Data Base Compared to trends in EU exports of poultry meat to other central African countries, Cameroon has escaped the upsurge in EU exports to Africa, largely as a result of the government’s imposition of quantitative controls on imports of poultry meat, including from the EU. This could change if the EC comes under pressure from EU exporters to open up 3rd country markets in response to Brexit related disruptions of EU27/UK trade in poultry meat. This would be wholly consistent with the government of Cameroon’s commitment under Article 22 of its EPA prohibiting the use of quantitative restrictions on imports from the EU. However this would be wholly inconsistent with long standing trade policy measures aimed at nurturing the development of Cameroon’s domestic poultry meat industry.
However it should be noted how the while the EC believes its FTAs ‘provide for robust enforcement of the substantive commitments included in each Agreement’, it currently chooses to ‘assess the appropriateness of using legal enforcement on a case by case basis’, with no dispute settlement processes being initiated under EU FTAs in 2017. It remains to be seen whether this will continue to be the case in the face of the disruptions which would arise under a ‘no-deal’ Brexit outcome to the current negotiations. More generally Cameroon has a lower dependence on the UK market in its trade with the EU than for example, Ghana. Nevertheless in order for Cameroonian banana exports to the UK market to continue to enjoy duty free-quota free access to the UK market after the 29th March 2019, the government of Cameroon will need to choose between essentially two options: a) the launching in association with other ACP EPA signatories of a concerted campaign to persuade the UK government to unilaterally apply Article 129 of the concluded Withdrawal Agreement regardless of the state of play in the ratification process; b) the adoption of immediate steps to ensure the government of Cameroon is in a position to sign a ‘rolled over’ ‘interim-UK-only’ reciprocal trade agreement based on a revised EPA text by 29th March 2019. In addition under a ‘no-deal’ Brexit in the banana sector the Government of Cameroon will also need to take steps to secure assurances from the EC on the tight regulation of EU27 imports from $ banana suppliers under bilaterally negotiated TRQs which currently cover access to all EU28 markets. If no action is taken in this regard Cameroonian banana exporters are likely to face increased competition on EU27 markets from $ banana exporters who will direct the full EU TRQ allocations to EU27 markets in a context where in recent years the UK has accounted for just under 20% of total EU28 banana imports. Issues could also arise in the cocoa products sector under a ‘no-deal’ Brexit scenario which could disrupt cocoa product supply chains between Holland and Belgium and the UK. This could potentially give rise to new opportunities for value added cocoa product exports directly to the UK market. This issue however will need to be subject to more detailed assessment by Cameroonian cocoa product exporting companies. |
Sources:
(1) EC, ‘Individual reports and info sheets on implementation of EU Free Trade Agreements’, Commission Staff Working Documents, pp 241-245, SWD(2018) 454 final, 31 October 2018
http://trade.ec.europa.eu/doclib/docs/2018/october/tradoc_157473.PDF
(2) EC, Market Access Data Base
http://madb.europa.eu/madb/statistical_form.htm
(3) EC, ‘EU banana market’, 21 November 2018
https://ec.europa.eu/agriculture/sites/agriculture/files/fruit-and-vegetables/product-reports/bananas/reports/market-2018-11_en.pdf