Summary
Failure to ensure a basis for continued DFQF access for Ghanaian banana exports to the UK market could result in the loss of supply agreements as a result of the inclusion of ‘delivered duty paid’ requirements in current UK super market tendering arrangements. The UK government urgently needs to decide upon the basis for providing continued DFQF for Ghanaian exports on an interim basis, while the regional complications around concluding regional West African reciprocal trade agreements, arising from the Nigerian governments reluctance to sign on to such agreement, are resolved. Speedily setting in place the regulatory measures required to ensure continued DFQF access for Ghanaian banana exports can be seen as vital to ensuring successful tenders are made for the current banana supply contracts being placed by UK supermarkets.
In the face of the insistence by UK customers on including ‘delivered duty paid’ provisions in supply tenders and contracts, Ghanaian banana exporters have called on the government of Ghana to urgently conclude ‘a rollover of the EPA agreement with the UK before October’. (1).
In the absence of such a Ghana-UK agreement banana exporters fear they will be compelled to bear the costs of the UK’s ‘no-deal’ Brexit €114/tonne MFN banana tariff announced in March 2019 (1). This will inevitably occur if neither a UK-Ghana Continuity Agreement is concluded nor an alternative temporary arrangement for continued Ghanaian duty free-quota free (DFQF) access to the UK market is set in place.
The managing director of Golden Exotics, Benedict Rich while expressing confidence the government of Ghana was no doubt ‘working behind the scenes to get things done’, highlighted how the application of this standard MFN duty would translate into a net loss on export sales on the UK market for Golden Exotics (1).
Given the UK market accounts for around 55% of the company’s banana sales to the EU, the loss of current DFQF access to the UK market would require the launch of an urgent effort to find alternative markets for the company’s banana exports elsewhere in the EU. Since this cannot be achieved overnight this could lead to enforced job losses among the 3,000 direct and indirect employees working on the company’s 2,000 hectare banana farm.
The importance of ensuring the continuation of current duty free-quota free access to the UK market under any ’no-deal’ Brexit scenario was therefore stressed.
| Comment and Analysis The position of the government of Ghana is complicated by the regional situation in regard to the West Africa-EU EPA. This regional agreement has not yet been concluded, given the unwillingness of the Nigerian government to sign on to the agreement in its present form. There are concerns that were the government of Ghana to sign on to a bilateral ‘Continuity Agreement’ with the UK this could further complicate the West African intra-regional trade integration process, through its implications for the integrity of ECOWAS Common External Tariff.In this context it should be noted that while the government of Ghana signed bilaterally an EPA with the EU in July 2016 and subsequently ratified it in August 2016 (shortly before the EU’s deadline for the lapsing of the interim EPA market access arrangement established under MAR 1528/2007), the implementation of these tariff elimination commitments is still pending. Discussions remain on-going on the updating of the implementation schedule for Ghana’s market access commitments which were enshrined in the initial 2007 agreement.The EC takes the view that once this process is completed the government of Ghana will commence with the implementation of its tariff reduction commitments on imports from the EU, which cover some 80% of all current EU exports to Ghana.The critical point to note is that the implementation of the Ghanaian governments tariff elimination commitments in trade with the EU are still pending. This is important since the UK government’s primary concern is to avoid any tariff disadvantages for UK exporters vis a vis their EU27 competitors as a result of the UK’s departure from EU negotiated reciprocal preferential trade agreements. This is why the UK government wants to replicate in full the preferential tariff treatment accorded EU27 exporters. In this context the current impasse in the Continuity Agreement negotiation which leads to the inclusion of ‘delivered duty paid’ provisions in supply tenders and contracts being placed by UK supermarkets, could potentially be addressed by the inclusion in the UK-Ghana Continuity Agreement of a provision which makes the implementation of Ghana’s reciprocal tariff commitments conditional on the resolution of the West African regional trade integration complication. However given UK government concerns in regard to maintaining equality of tariff treatment with EU27 suppliers, this would require the government of Ghana to adopt a similar conditional approach to the implementation of its tariff elimination commitments under the Ghana-EU EPA. If the UK government were to receive such assurances of equality of treatment compared to EU27 suppliers, then the UK government may well be receptive to the inclusion of the proposed conditional clause in the text of or in an annex to the proposed Ghana-UK Continuity Agreement. This would then need to be given practical expression by the UK government establishing unilateral market access measures which allows continued granting of DFQF access to Ghanaian exports on an interim basis, while the West African regional trade complication is addressed. This would be compatible with the UK governments’ expressed commitment to supporting African regional trade integration through the consolidation of regional trade integration schemes in the framework of the wider the African Continental FTA. There is a precedent for this conditional conclusion of reciprocal preferential trade agreements which are then implemented unilaterally by one party on an interim basis pending the resolution of outstanding issues. This conditional approach was used by the EU in the case of Namibia, which from 2008 until August 2016 continued to enjoy full duty free-quota free access to the EU market while outstanding issues of concern set out in an annex to the EU-SADC EPA Group trade agreement were satisfactorily resolved. This approach could be operationalised through the insertion of a provision in the UK Ghanaian agreement which stipulates the reciprocal tariff elimination commitments entered into by the government of Ghana will only enter into effect once the issue of the compatibility of such measures with the tariff schedule agreed in an ECOWAS framework has been resolved or once the government of Ghana commences the implementation of tariff elimination commitments on imports from the EU27 set out in the Ghana-EU bilaterally concluded EPA, which ever event occurs first. This would then need to be paralleled by the adoption by the UK government of a unilateral market access measure which allows Ghanaian exports continued duty free-quota free access on an interim basis. Reaching an agreement on how continued duty free-quota free access for Ghanaian banana exporters is to be ensured under a ‘no-deal’ Brexit is now a matter of some urgency, since failure to address this issue could see Ghanaian exporters losing out on tenders to supply UK supermarkets in 2020. This would be a direct result of the uncertainty in regard to the profitability of continued trade, in a context where the duties to be applied from 1st November 2019 remain unknown. This approach could be adopted not only with Ghana but also in the UK’s trade relations with Cote d’Ivoire which faces similar West African regional complications and in the UK’s trade relations with Kenya which faces even more acute constraints in the context of the East African Customs Union, given the ongoing impasse around the EAC-EU EPA. In regard to Kenya it should be noted the EU is already de facto applying a unilateral market access measures, which preserves Kenyan duty free-quota free access to the EU market despite the none implementation of the reciprocal tariff liberalisation commitments set out in the EAC-EU EPA. The interim measure which has been set in place by the EU effectively subordinates the pursuit of tariff elimination on imports from the EU to the interests of continued regional trade integration in the East African Community. This gives concrete expression the nominal EU policy commitment to supporting African trade integration. This approach could also potentially be applied in a modified form in the context of Cameroon’s ongoing efforts to reconsolidate its existing duty free-quota free access to the UK market under a ‘no-deal’ Brexit scenario, in the context of the impasse in Central African trade negotiations with the EU. |
Sources:
(1) Joy Business news, ‘UK signals tariffs on Ghanaian goods after Brexit’, 13 August 2019
http://derigglets.com/2019/08/13/uk-signals-tariffs-on-ghanaian-goods-after-brexit/