Summary
Ecuador, Colombia and Peru are set to sign a Continuity Agreements with the UK, thereby ensuring continued reduced duty access to the UK market for their banana exporters. These Andean Pact countries accounted for 43.6% of UK banana imports and alongside the Continuity Agreement concluded with CARIFORUM countries ensures a continuation of current terms and conditions for banana imports which, in 2017 accounted for almost 64% of total UK banana extra-EU imports. This increases pressure on Ghana, Cameroon and Cote d’Ivoire to speedily conclude Continuity Agreements with the UK in the event of a no-deal Brexit. Any imposition of UK MFN tariffs would undermine the commercial position of African banana exporters, de facto amounting to a 15.4% import tax on bananas from the main African exporting countries.
Press reports indicate that Ecuador, Colombia and Peru are set to become the latest countries to conclude a Continuity Agreement with the UK. This agreement will roll-over as far as possible the existing tariff preferences enjoyed by these countries to the UK market under EU concluded free trade area agreements. According to Ecuador’s Minister of Foreign Trade, Pablo Campana the ‘signing of a multi-party trade agreement between Ecuador, Colombia, Peru and the UK would take place in Lima on Friday’, 12th April 2019, the eve of the UK’s currently scheduled withdrawal from the EU.
UK Goods trade Covered by EU Trade Agreements Where UK is Seeking Continuity Agreements
| Country | UK Goods Exports £m | % total UK | UK Good Imports | % |
| Colombia | 459 | 0.1% | 473 | 0.1% |
| Ecuador | 79 | 0.0% | 162 | 0.0% |
| Peru | 135 | 0.0% | 340 | 0.1% |
| Total | 47,194 | 13.9% | 69,667 |
Through the Continuity Agreement the existing tariff of €75 per tonne will be maintained and will avert a reversion to the standard MFN rate of €114 stipulated by the British government in its no-deal Brexit temporary MFN schedule announced in March 2019 (see companion epamonitoring.net article, ‘The UK’s Proposed New MFN Tariff Regime: Protects ACP Interests in the Short Term But…..’, 14th March 2019).
According to Minister Campana the signing of the Continuity Agreement will mean ‘Ecuadorean producers… will not suffer at all’ as a result of the UK’s withdrawal from the EU under a no-deal scenario.
In 2017 Ecuador, Colombia and Peru accounted for 43.6% of UK banana imports, while Caribbean exporters covered by the rolled over UK-Caribbean Continuity Agreement accounted for a further 20.1% of imports (see companion epamonitoring.net article ‘UK Signs Continuity Agreement with Caribbean ACP Countries’, 28 March 2019).
Preferential trade in bananas which accounted for 63.7% of total UK extra-EU banana imports in 2017 are now covered by Continuity Agreements. However currently UK banana imports from African ACP countries and Central American countries which accounted for 12.8% and 22.6% respectively of UK banana imports in 2017, are not yet covered by rolled over UK Continuity Agreements.
UK Imports of Extra-EU Bananas by Origin 2017
| Country | Value € | Volume Tonnes | % Share Volume | |
| 687,278,533 | 1,081,812 | |||
| 1. | Colombia | 206,178,097 | 324,154 | 30.0% |
| 2. | Costa Rica | 106,582,197 | 187,409 | 17.3% |
| 3. | Dominican Republic | 115,872,481 | 160,076 | 14.4% |
| 4. | Ecuador | 69,576,144 | 145,054 | 13.4% |
| 5. | Ivory Coast | 50,553,335 | 68,453 | 6.3% |
| 6. | Belize | 9,346,001 | 53,176 | 4.9% |
| 7. | Cameroon | 27,029,669 | 36,093 | 3.3% |
| 8. | Panama | 18,618,871 | 35,465 | 3.2% |
| 9. | Ghana | 26,008,222 | 35,327 | 3.2% |
| 10. | Guatemala | 5,066,974 | 9,092 | 0.8% |
| 11. | Mexico | 6,210,747 | 8,632 | 0.8% |
| 12. | St Lucia | 5,833,061 | 8,309 | 0.8% |
| 13. | Nicaragua | 3,440,422 | 4,691 | 0.4% |
| 14. | Peru | 2,116,902 | 2,452 | 0.2% |
| 15. | Honduras | 768,597 | 1,179 | 0.1% |
| 16. | Uganda | 1,857,558 | 953 | 0.1% |
| 17. | Philippines | 1,334,932 | 715 | 0.1% |
| 18. | Brazil | 331,346 | 458 | 0.04% |
| Other ACP (6) | 45,817 | 22 | 0.002% | |
| Other Non-ACP (6) | 506,072 | 102 | 0.009% |
Source: EC; Market Access Data Base http://madb.europa.eu/madb/statistical_form.htm
Notes: Other ACP: Dominica, Jamaica, Kenya, Nigeria, Rwanda, Tanzania.
Other Non-ACP: India, China, Sri Lanka, Taiwan, Thailand, Vietnam
| Comment and Analysis If the UK leaves the EU without a withdrawal agreement and African and Central American countries have not concluded Continuity Agreements with the UK by this time then existing tariff preferences would fall away and the UK’s no-deal Brexit rolled over MFN tariff for bananas of €114/tonne would be applied. This would see import duties on African ACP banana exports to the UK currently covered by EU economic partnership agreements increasing from zero to €114/tonne and the import tariff on bananas from Central American supplies currently covered by the EU-Central American free trade area agreements increase from €75/tonne to €114/tonne (2). This would be likely to carry serious commercial consequences for banana exporters in Ivory Coast, Cameroon, and Ghana, since this would represent a tariff of between 15.2% and 15.4% of the current recorded unit value of banana exports to the UK. The Impact of the €114/tonne MFN Tariff on African Banana Exports
Banana exporters in Ghana are likely to be most seriously affected given the UK market accounts for 50% of their total exports to the EU market (compared to 21.7% and 13.4% respectively for Cameroon and Cote d’Ivoire). What is more there is an additional complication. Currently it is unclear whether the UK Continuity Agreement continues to maintain tariff rate quota restrictions on imports from Ecuador, Colombia and Peru. If existing TRQ restrictions are simply removed by the UK, then Ecuador, Colombia and Peru will be able to export unlimited volumes of bananas to the UK market at the lower rate of €75/tonne, further increasing competition for African banana exporters. What is more under a no-deal Brexit scenario the existing TRQ restricted exports to the EU28 market would be concentrated on EU27 markets. This would result in an increase in competitive pressures on EU27 banana markets served by ACP banana exporters such as Cameroon and Cote d’Ivoire and Ghana (in 2017 EU27 markets took 78.3% 86.6% and 50% of Cameroonian, Ivorian and Ghanaian banana exports to the EU28). The situation is however unclear. Informally UK trade officials take the view that it should be possible to conclude a Continuity Agreement with Cote d’Ivoire before 12th April, since a text has been finalised. Ghanaian officials meanwhile are informally assuring concerned banana exporters that a mechanism for the maintenance of duty free-quota free access to the UK market will be in place in the case of a no-deal Brexit. The situation in regard to Cameroon is less clear. Overhanging the issue of when to sign Continuity Agreements with the UK and under what conditions, is the ongoing uncertainty as to when the UK will formally leave the EU and the existing customs union arrangement and hence when the existing trade agreements to which the UK is a party will lapse. There remain ongoing concerns about the future value of preferential access to the UK market. There is a desire to see these issues addressed as part of any Continuity Agreement negotiations. However there remain concerns that the ‘best should not become the enemy of the good’ The fear exists that by pushing to address important non-tariff issues in future trade with the UK a situation could arise where this could jeopardise the reconsolidation of current duty free-quota free access under a no-deal Brexit outcome to the current UK/EU27 negotiations. A development which almost overnight could destroy the existing African banana export trade into the UK. |
Sources:
(1) fruitnet.com, ‘Banana suppliers act to avoid UK tariff hike’, 5 April 2019
http://www.fruitnet.com/eurofruit/article/178382/banana-suppliers-act-to-avoid-uk-tariff-hike
(2) fruitnet.com, ‘Big doubts over UK’s no-deal banana duty’, 15 March 2019
http://www.fruitnet.com/eurofruit/article/178192/big-doubts-over-uks-no-deal-banana-duty