Summary
Covid-19 pandemic related disruptions to EU and global dairy markets has led the European Milk Board (EMB) to call for the implementation of a production restricting Market Responsibility Programme, which it is argued should become a permanent feature of the EU diary sector policy tool kit. While the EC is likely to resist such call, favouring traditional intervention buying, ACP milk producers could usefully support the EMB proposal in order to avert future ‘dumping’ of low priced EU milk powder on ACP markets, to the detriment of local milk producers and national efforts to boost local milk production. Read more “Dairy Price Recovery Likely to be Reversed by Covid-19 Pandemic”
Category: Eastern African
Collapse of European Cut Flower Demand Threatens Immediate Future of Kenyan Cut Flower Sector
Summary
The Corvid-19 pandemic has caused economic disruptions which have crippled the Kenyan cut flower industry, which directly employs 200,000 people. Tens of thousands of workers are being sent home, with farms closing. Given the uncertainty over Kenya’s future duty free access to the UK market, many of these farms may not re-open, unless current uncertainties are urgently addressed. With all East African Community meetings cancelled, this will require unilateral action from the UK government to reinstate the proposed Transitional Protection Mechanism put forward in October 2019 or the adoption of a similar such mechanism. Read more “Collapse of European Cut Flower Demand Threatens Immediate Future of Kenyan Cut Flower Sector”
What Challenges Does Kenya Face in Ensuring Continuity in its Current Access to the UK Market?
Summary
With nearly 40% of Kenya’s direct exports to the UK currently benefitting from significant margins of tariff preferences, concerns have arisen around the UK’s current MFN tariff review and the future basis for Kenya’s continued duty-free access to the UK market after 1st January 2021. In addition, there are growing concerns about the future commercial viability of the use of triangular supply chains for the delivery of Kenyan short shelf life products to the UK market if no comprehensive EU/UK trade agreement is in place by 1st January 2021. Any future EU/UK trade agreement would need, as far as possible, to replicate the current frictionless trade, on which the operation of these triangular supply chains depends. This is looking increasingly unlikely. The Government of Kenya thus faces a triple challenge in ensuring a continuation of current patterns of exports to the UK market into 2021. Read more “What Challenges Does Kenya Face in Ensuring Continuity in its Current Access to the UK Market?”
The Link Between EU Agri Food Sector Protectionism and the Value of ACP Trade Preferences Highlighted
Summary
The WTO has once again highlighted the EU’s extensive use of tariffs and non-tariff measures to manage EU agri-food markets. Preferred ACP exporters benefit from these protectionist EU trade policies, with any movement away from these policies potentially see mainly ACP/LDC exporters losing out to the tune of €1.6 billion. The prospects of such losses are very real with regard to the UK market, where there is strong pressure under the current MFN tariff review to abandon MFN tariffs where the UK has no or only limited production interests to protect. Looking forward, within the EU, a long standing insistence on abolishing quantitative restrictions on imports from the EU under economic partnership agreements concluded with ACP countries, is being given new impetus with the creation a Chief Trade Enforcement Office, dedicated to making sure existing trade agreement commitments by 3rd countries are fully implemented. Such a course of action however sits uneasily with the EU’s own extensive use of quantitative restrictions in sensitive agri-food sectors. Read more “The Link Between EU Agri Food Sector Protectionism and the Value of ACP Trade Preferences Highlighted”
No Real Respite for African Milk Producers Given Projected Trends in EU Dairy Production and Exports
Summary
EU milk production will continue to expand in the coming decade adding 1 million tonnes per year up to 2030. The growth rate in global import demand for dairy products is however slowing down as self sufficiency rate sin some developing country regions improve. The EU will however remain the leading global diary exporter. The main area of concern for ACP countries is EU milk powder exports. Where sustained high levels of skimmed milk powder (SMP) exports will be maintained, though be it below the 2019 peak. Exports of fat filled milk powder (FFMP)will also continue to increase, reinforcing an import-based model of African dairy sector development. This will be reinforced by EC efforts to secure the removal of both tariffs and all non-tariff barriers to EU exports of dairy products to growing African markets. A more detailed analysis of the impact of these EU exports on local integrated African dairy sector development is needed, with this requiring better reporting on trends in EU export of FFMPs. A key question remains: how can the EU’s current short-term export maximization focus in dairy sector relations with Africa be reconciled with the longer term need to promote the structural development of Africa milk production and the locally integrated development of African dairy sectors? Read more “No Real Respite for African Milk Producers Given Projected Trends in EU Dairy Production and Exports”
UK to Strike Out on Bold New Trade Policy but Will Africa and the Caribbean Take the Hit?
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
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
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
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
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.