Summary
Following a lack of progress in EU/UK discussion on the implementation of the Northern Ireland Protocol, the UK government has tabled a position paper proposing what amounts to a fundamental re-writing of the mutually agreed Protocol. This would bring into question the continued participation of Northern Ireland in the EU customs union and single market as agreed in the Protocol. The EU continues to insist solution must be found within the framework of the agreed Protocol. Prime Minister Johnson’s willingness to suspend the Protocol, so the UK can act unilaterally subject to joint decision making under the Protocol, if acted upon, could result in a serious deterioration in EU/UK trade relations as early as October 2021. This could then be the final nail in the coffin of ACP triangular supply chains. Even if such action is temporarily averted in October, the UK proposals leave unaddressed issues related to the future regulatory regime applicable to ACP products onward traded from GB to Northern Ireland. This in turn will make it more difficult to set in place solutions to the issues disrupting the functioning of wider ACP triangular supply chains (both ACP-to-UK-to EU and ACP-to-EU-to-UK) Read more “UK Government Seeking Fundamental Renegotiation of the Northern Ireland Protocol”
Category: Caribbean
Growth Continues in EU27 Imports in Organic Products Where ACP Producers Have an Export Interest
Summary
ACP organic exporters have sustained strong growth in volumes to the EU market in 2020 despite a slight reduction in overall EU organic imports. In some organic product areas (rice and sugar) opportunities appear to exist which ACP producers have yet to exploit. Given the growing EU policy focus on the environmental sustainability of patterns of agri-food imports to the EU, exploring expansion into organic production in these areas could prove worthwhile. However, three headwinds are faced in continuing the expansion of ACP organic exports to the EU: the scheduled reforms to the EU’s organic product regime; the new trade administration complications for ACP organic exports to the UK, resulting from the UK’s departure from EU electronic systems for the management of imports of organic products; and the likely divergence of EU and UK organic certification requirements. Close attention will need to be paid to this issue by ACP organic exporters if existing growth in the volume of ACP organic exports to the Europe are to be sustained. Read more “Growth Continues in EU27 Imports in Organic Products Where ACP Producers Have an Export Interest”
Brexit set to extend marginalisation of traditional ACP suppliers on the UK sugar market
Summary
The proposed sugar quota under the UK-Australia FTA is initially equivalent to 17% of total UK import from outside the EU in 2019, rising to 47% after 8 years. Its impact on total ACP sugar exports to the UK will be determined by the future volume of EU27 sugar exports to the UK; the future evolution of UK sugar demand; and the future of the temporary UK ATQ of 260,000 tonnes which was introduced for one year from 1 January 2021. If the ATQ is retained, EU sales remain at ½ 2020 volumes and UK sugar consumption shrinks in line with projections, the situation of most ACP exporters on the UK market will be precarious. However, the vulnerability of individual ACP exporters to the evolving UK sugar sector trade policy varies greatly, with in depth, country specific analysis being required to determine which ACP sugar exporters are most vulnerable to the UK’s evolving sugar sector trade policy. Read more “Brexit set to extend marginalisation of traditional ACP suppliers on the UK sugar market”
Recent Trends in ACP Sugar Exports to the EU27 Show Continued Decline, with Brexit Exacerbating This Pre-Existing Trend
Summary
While EU sugar production is well down on the five-year average, the position of traditional ACP sugar exporters on the EU27 market is worsening. The reduction of traditional ACP sugar supplies has been larger than the reduction in total EU27 imports, with the share of EU27 import declining. This is linked to the emergence of new non-traditional suppliers who take advantage of recently granted duty-free access arrangements. Given the high dependence of traditional ACP sugar exporters on the UK market, the UK’s withdrawal from the EU sugar market equation will compound this trend. New EU/UK rules of origin are also likely to see EU manufacturers of high sugar content products turning their ack on imported sugar in favour of domestic EU27 beet production where both EU27 and UK markets are being served. At the ACP level this may in part be partially offset by reduced UK sugar exports to the EU market. Overall, the long-term prospects for all but the most competitively priced traditional ACP sugar suppliers look grim, unless the focus is on specialty sugar markets. This could lead to smaller but more sustainable levels of sugar exports, by those ACP sugar producers who adopt such strategic market repositioning strategies. Read more “Recent Trends in ACP Sugar Exports to the EU27 Show Continued Decline, with Brexit Exacerbating This Pre-Existing Trend”
Effects of Rules of Origin Complications for ACP Exports Shipped to UK Via EU Being Increasingly Felt
Summary
For products shipped across an EU/UK border since January 2021, the end of the 6-month grace period for the submission of documentation required to validate self-certified originating status claims (on which duty-free access is based) has started. Failure to validate initial claims will potentially see UK MFN tariffs imposed. This poses problems for ACP products shipped to the UK via the EU, where invalid originating status claims were initially made. For these products extending the grace period for document submission will not help. What is required is the introduction of simplified procedures for the verification of initial ‘originating status’ of ACP products re-exported (e.g., through HMRC recognising country specific phytosanitary certificates as valid documentary proof of origin for duty free access claims). Such reforms need to be urgently introduced if the commercial viability of a wide range of ACP triangular supply chains are not to be fundamentally undermined. Read more “Effects of Rules of Origin Complications for ACP Exports Shipped to UK Via EU Being Increasingly Felt”
Wider Trade Dimensions of EU Due Diligence Regulations: Where Does the Interest of the ACP Lie?
Summary
President Macron is throwing his weight behind efforts to establish regulatory ‘mirror clauses’ in EU trade agreements to combat ‘environmental and social dumping’. However, despite strong European Parliament support, there is no consensus among EU member states governments on the scope and practicality of such a ‘mirror clause’ approach. ACP exporters and governments need to define where their interests lie within these EU regulatory discussions, so as to be able to protect and promote ACP producer interests within these policy debates. Read more “Wider Trade Dimensions of EU Due Diligence Regulations: Where Does the Interest of the ACP Lie?”
Circumvention of the LID Highlights the Need for an Ambitious and Effective EU Human Rights and Environmental Due Diligence Regulation
Summary
The EC’s much heralded human rights and environmental due diligence regulation looks set to be limited to establishing a common minimum standard, which businesses will be required to adhere to, with an enabling environment being created aimed at incentivising companies to address the negative impacts of their activities. In the face of corporate lobbying Tony’s Chocolonely has broken ranks demanding the EC establish an ambitious minimum standard. This would appear essential, given current corporate efforts to side-step the overall cocoa procurement cost implications of the Living Income Differential initiative, by reducing other components of cocoa bean payments made in Ghana and Cote d’Ivoire. A clear Organisation of African, Caribbean and Pacific (OACP) States and African Union position in support of an ambitious and rigorously enforced corporate minimum standard for living wage, human rights and environmental protection commitments would appear to be required. Read more “Circumvention of the LID Highlights the Need for an Ambitious and Effective EU Human Rights and Environmental Due Diligence Regulation”
Brexit Begins to Seriously Impact of Re-Exports of ACP Products to Ireland via the UK
Summary
The border controls arising from the basis of the UK’s departure from the EU customs union and single market is profoundly disrupting the re-export of ACP fresh products to Ireland. While larger ACP exporters are able to adjust their routes to Irish markets to side-step the new border complications, smaller ACP exporters are simply losing orders. There are simple policy solutions which could be adopted to address the rules of origin/MFN tariff and phytosanitary complications now faced. Adopting such solutions is not only important in its own right but would offer a model for addressing the far more extensive disruptions to re-exports of ACP products to the UK which are likely to arise as full UK full border controls on good crossing from the EU are rolled out in 2022. Read more “Brexit Begins to Seriously Impact of Re-Exports of ACP Products to Ireland via the UK”
Lack of UK IT Systems for Organic Imports Poses Challenges for ACP Fresh Produce Exporters
Summary
The UK’s reversion to paper based organic product documentation is generating additional costs and value losses for ACP organic exporters. This takes the form of increased internal administrative costs and value losses resulting from misplaced or delayed documentation. These problems are particularly severe for small volume exports of mixed organic products. Bulk exports of single organic products are less severely affected, since additional costs are lower and there is less risk of document loss. Political relations between the EU and UK around Brexit related trade issues would appear to be such as to rule out any arrangements which might allow a temporary restoration of UK access to EU IT systems used for trade in organic products until such time as UK systems are fully in place. Read more “Lack of UK IT Systems for Organic Imports Poses Challenges for ACP Fresh Produce Exporters”
Brexit Costs Are Leading to a Restructuring of UK to EU Supply Chains
Summary
Brexit related cost increases are beginning give rise to a restructuring of supply chains to avoid crossing the UK/EU border. While analysis to date focusses on the impact on the UK livestock products sector, serious disruptions to ACP triangular supply chains for the delivery of fruit and vegetables to EU markets via the UK area also being impacted. This is in part a result of the phytosanitary certification and phytosanitary import control requirements not faced by re-exported ACP products. There is a need to take practical steps to address these phytosanitary related challenges, so as to avoid undermining export opportunities for a range of smaller ACP agri-food exporters. These exporters faced particular challenges because of the ‘thin’ nature of the EU/UK trade agreement, which has left important phytosanitary issues unaddressed. Read more “Brexit Costs Are Leading to a Restructuring of UK to EU Supply Chains”