Category: Caribbean

UK to Strike Out on Bold New Trade Policy but Will Africa and the Caribbean Take the Hit?

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Summary
The UK has formally announced the launch of an on-line public consultation on its future MFN tariff regime.  This consultation appears limited to UK stakeholders and largely ignores the UK’s trade and development commitments enshrined in a host of preferential trade arrangements the UK has sought to ‘roll over’. The value of these ‘rolled-over’ trade arrangements would be profoundly undermined by any move towards the kind of zero UK MFN tariff regime which the Secretary of State appears to be championing. Some €1.5 billion in African and Caribbean exports, mainly from Commonwealth countries would be adversely affected, with 8 countries seeing over 70% of their current direct exports to the UK adversely affected and a further 7 countries likely to see between 46% and 69% of their direct exports to the UK adversely affected. With no formal structure for dialogue with the UK government operative, there is a need for special initiatives from African and Caribbean governments to place their concerns around the current UK MFN tariff review on the table for consideration by the UK government. Read more “UK to Strike Out on Bold New Trade Policy but Will Africa and the Caribbean Take the Hit?”

Opening Salvoes Setting Out UK ‘Redlines’ in UK/EU Negotiations Pose Challenges for ACP Triangular Supply Chains

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Summary
The UK governments rejection of binding commitments on regulatory alignment with the EU and insistence on preparing for full border controls if a comprehensive FTA with the EU cannot be agreed and in place by 1st January 2021 is causing concern in business circles. The British Ports Authorities has described this new policy approach as likely to create a situation which looks ‘a bit like a no-deal’. This could seriously disrupt the functioning of ACP supply chains which serve UK markets for short shelf life horticulture and floriculture products via initial ports of landing in EU27 member states. Special arrangements for the handling of this onward trade are required if a range of ACP exporters of short shelf life horticulture and floriculture products are not to be driven out of the UK market.  These special arrangements need to be agreed in a matter of weeks if private sector operators are to make the necessary investments in ensuring the continued smooth flow of ACP goods to the UK market along these triangular supply chains from 1st January 2021. Read more “Opening Salvoes Setting Out UK ‘Redlines’ in UK/EU Negotiations Pose Challenges for ACP Triangular Supply Chains”

EU Sugar Sector Restructuring Seeing Stabilisation of EU Production Import and Export Trends Which Pose Challenges for Some ACP Sugar Exporters

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Summary
EU sugar production is stabilising but on a gradual upward trend to 2030, in the context of declining human consumption of sugar in the EU.  This will see reduced EU sugar imports and increased EU sugar exports with the EU being a growing net sugar exporter from 2024. EU corporate adjustment to the post quota market realities continues apace, with factor closures in efficient beet sugar production zones as processing operations are consolidated to maximise cost reductions. Maximisation of utilisation of installed capacity efforts place beet co-refiners in a more competitive position than traditional raw cane sugar refiners, with some ACP exporters still needing to rethink their marketing strategies in light of the evolving EU27 market realities. Some ACP sugar exporters however are constrained in their marketing options by existing patterns of corporate ownership. Responding effectively to evolving EU market realities and the UK’s future sugar sector MFN tariff policy will be critical to the commercial viability of existing patterns of ACP sugar exports to the EU27 and UK market respectively. Read more “EU Sugar Sector Restructuring Seeing Stabilisation of EU Production Import and Export Trends Which Pose Challenges for Some ACP Sugar Exporters”

EU Organic Import Control Implementing Regulation Highlights Potential for Brexit Related Trade Administration Based Disruption of ACP Exports

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Summary
Changes in the administration of the Certificate of Organic Inspection (COI) in the EU’s TRACES computerised trade facilitation system, aimed at strengthening traceability along organic supply chains have given rise to problems which could see some imports of organic products from ACP countries diverted back onto the general market, at substantial commercial cost to the ACP exporters concerned. The potential problem however has been swiftly identified and existing dialogue structures have been used to raise with the EC the specific concerns of ACP organic exporters. The EC has swiftly proposed modifications to the TRACES reporting scheme, with ACP exporters now being invited to clarify whether this solution addresses the administrative problem which had arisen. This issue in the organic sector highlights the vital importance of ensuring the smooth functioning of trade administration arrangements to ACP suppliers of short shelf life products. It raises serious concerns over the absence of any formal institutionalised mechanisms for ACP trade dialogue with the UK, should problems in trade administration documentation arise within the process of the UK’s departure from the EU customs union and single market. Read more “EU Organic Import Control Implementing Regulation Highlights Potential for Brexit Related Trade Administration Based Disruption of ACP Exports”

The UKs Commitment to Regulatory Divergence Could Complicate Functioning of ACP Triangular Supply Chain Exports to the UK Market

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Summary
Recent statements by the UK government committing it to regulatory divergence from the EU once it has left the EU customs union is causing concerns in the UK food and drink sector that this will sound the death knell of frictionless trade with the EU. While it remains unclear to what extent the desire not to be governed by EU defined rules will translate it actual regulatory divergence, serious issues arise for ACP exporters of short shelf life agri-food products who serve the UK market along supply chains which pass through EU27 member states. This is leading to calls for the UK and EU authorities to:

  • waive any need for customs checks for good transiting EU27 member states where duty free-quota free access if enjoyed to both the UK and EU27 markets under parallel ‘rolled-over’ trade arrangements;
  • waive any need for UK phytosanitary checks on the basis of an EU commitment to the continued conduct of phytosanitary checks on imports destined for the UK market;
  • the communication of these commitments to concerned supply chain stakeholders and supporting the establishment of logistical and administrative arrangements to ensure the continued smooth flow of short shelf life products along triangular supply chains.

Read more “The UKs Commitment to Regulatory Divergence Could Complicate Functioning of ACP Triangular Supply Chain Exports to the UK Market”

Addressing the Needs of ACP Triangular Supply Chains Within the Forthcoming EU/UK Trade Negotiations

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Addressing the Needs of ACP Triangular Supply Chains Within the Forthcoming EU/UK Trade Negotiations

Summary

Given the UK governments commitment to leaving the EU custom union and single market by 1st January 2021 and the time constraint this places on establishing a successor trade agreement, the EU takes the view only a ‘light’ EU/UK trade arrangement can be in place by 1st January 2021. It is essential such a ‘light’ trade arrangement addresses the specific policy and administrative issues which will arise along ACP triangular supply chains as a result of the UK formally leaving the EU customs union and single market on 1st January 2021. For this to occur a specific commitment will need to be included in the EC’s negotiating mandate, to be finalised by February 2020, to addressing triangular supply chains issue. This is a particularly important issue for cut flower, fruit and vegetable exporters in Eastern Africa, whose principal supply routes to UK markets lie through initial ports of landing in the Netherlands and Belgium. A political initiative towards the President of the European Commission will be required from the governments of concerned ACP exporting countries if arrangements to ensure the continued smooth flow of short shelf life cut flowers, fruit and vegetable products to the UK market along triangular supply chains is to be assured. Read more “Addressing the Needs of ACP Triangular Supply Chains Within the Forthcoming EU/UK Trade Negotiations”

Conservative Party Election Victory Mean Full Speed Ahead with Brexit and Raises The Threat of Loss of ACP Tariff Preference as a Result of Post-Brexit UK MFN Tariff Choices

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Summary
The Conservative Party’s election victory which has delivered a 80 seat majority means Parliamentary approval of the Withdrawal Agreement can now go ahead and the UK can leave the EU on 31st January 2020. The UK will however remain part of the EU customs union and single market until at least 1st January 2021. The size of the majority means the influence of the ERG hard Brexit group of Conservative MPs will be reduced. This will give Prime Minister Johnson more space to extend UK membership of the EU customs union and single market if the conclusion of a comprehensive free trade area agreement by 1st January 2021 proves unrealistic. In this context the major issue facing ACP exporters in the first half of 2020 will be the impact of the scheduled UK-Only MFN tariff review on the value of rolled over ACP tariff references, with bananas, preserved tuna, fresh beans and certain value added cocoa products looking vulnerable to a loss of value of rolled over preferences (current ACP direct exports to the UK valued at €936 million). This need to be seen in a context where the UK government has already made the decision to set UK-only MFN tariffs for all other fruit, vegetables and cut flowers at zero (current ACP direct exports to the UK valued at €449 million). The trade effects for these products could be even greater given the volume of exports to the UK which takes place along triangular supply chains focussed on the landing of cargoes in the Netherlands and Belgium prior to onward shipment. The commercial impact of this process of preference erosion will however needs to be assessed on a product by product basis in light of the functioning of individual ACP supply chains and current patterns of UK imports and the tariffs actually levied on this current trade. Read more “Conservative Party Election Victory Mean Full Speed Ahead with Brexit and Raises The Threat of Loss of ACP Tariff Preference as a Result of Post-Brexit UK MFN Tariff Choices”

Rising EU SMP Prices and New Mechanism for Monitoring FFMP Exports Could Lay the Basis for Easing Competitive Pressures on ACP Milk Producers

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Summary
Given the trade in milk powders is the principal area through which EU dairy sector developments impact on ACP dairy sector development, the increase in EU SMP prices which has followed on from the elimination of EU SMP intervention stocks should offer some relieve to African milk producers. This being noted no immediate benefits will be felt given the 30% increase in EU SMP exports from January to July 2019. The situation is further complicated by the level of EU exports of fat filled milk powders to sub-Saharan Africa, which is likely to continue to expand for the foreseeable future. Monitoring this trade should be simpler in future given the creation of a consolidated tariff heading for this product (19019050). The revised EU27/UK Withdrawal Agreement along with the UK’s post Brexit MFN tariffs for dairy products could reduce the adverse trade effects of any ‘No-Deal’ Brexit which could still emerge from 1st January 2021. What this could mean for EU-ACP dairy sector trade flows will however require detailed product by product analysis, with the key consideration being the extent to which disruptions of existing EU27 dairy exports to the UK result in increased EU production and stocks of SMP. Read more “Rising EU SMP Prices and New Mechanism for Monitoring FFMP Exports Could Lay the Basis for Easing Competitive Pressures on ACP Milk Producers”

Non-Tariff Costs For ACP Exporters Will Need to Be Addressed under a ‘No-Deal’ or ‘Hard’ Brexit

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Summary
According to UNCTAD trade costs linked to NTM are now higher than tariffs, with a need for cooperation and greater use of IT solutions to minimise such cost while meeting key public policy objectives. The non-tariff issues arising for ACP exporters within the process of the UK’s withdrawal from the EU, particularly under a ‘No-Deal’ Brexit scenario need to be fully addressed is substantial new costs are not to be generated for ACP agro-food exporters. Key areas where clear UK and EU policy commitments are needed include:  removing the need for customs checks where DFQF access is enjoyed to the EU and UK markets; allowing continued use of trade facilitating IT systems until alternatives are in place; continuing with phytosanitary checks in the EU for goods destined for the UK; -establishing mechanisms for a review of ‘UK-Only’ phytosanitary controls in Continuity Agreements concluded with the UK. Read more “Non-Tariff Costs For ACP Exporters Will Need to Be Addressed under a ‘No-Deal’ or ‘Hard’ Brexit”

No-Deal Brexit Could Adversely Impact Cocoa Prices but Open Up opportunities for Increased Value Added Cocoa product Exports to the UK

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Summary
Given the role the London Cocoa Future market plays in setting the benchmark for cocoa prices, through its impact on the value of the £ a ‘No-Deal’ Brexit could have a significant impact on cocoa prices. With growing investment in local cocoa value added processing for the domestic market in countries such as Ghana, the application of the UK’s currently proposed post-Brexit unilateral MFN tariff schedule could create new market opportunities for the export of not fatted cocoa paste and cocoa butter to the UK market. However, given the existing ownership structure of value added cocoa processing activities, there may be a reluctance to plan for an expansion of local value added processing to serve the UK market since this would directly compete with similar facilities in the Netherlands and Belgium which are part of the same corporate family. Read more “No-Deal Brexit Could Adversely Impact Cocoa Prices but Open Up opportunities for Increased Value Added Cocoa product Exports to the UK”