Summary
Difficult production conditions in parts of the EU along with continued high export volumes saw EU SMP stocks substantially run down, with the hope being the remaining stocks would be disposed on in 2019. The EC believes EU dairy producers will be well positioned to serve growing world dairy markets, with the expectation being the EC could ‘could supply close to 35 % of the increase in global demand’. The EC expects these exports to increasingly consist of value added dairy products, with EU generated pressures on milk-to-dairy supply chains in ACP countries linked to exports of low prices SMPs being gradually reduced. The EC believes growing consumer demand could see milk production in Africa grow almost five times faster than in the previous decade. However these projections do not factor in the possible Brexit related disruptions of EU27/UK dairy trade flows which could carry ‘catastrophic repercussions’. These ‘catastrophic repercussions’ could include a major resurgence of EU exports of low priced SMPs which could once again disrupt efforts to develop local milk-to-dairy supply chains in Africa seeking to exploit growing consumer demand for dairy products. Read more “Brexit Overshadows EU Dairy Sector with Potentially Important Knock-on Effects on ACP Dairy Sectors”
Category: Eastern African
First Post Production Quota Year Shows Dramatic Changes on the EU Sugar Market
Summary
The 2017/18 marketing year saw a dramatic fall in imports from EPA/EBA suppliers of some 58% compare to the 2016/17 season. This extended the trend in declining ACP sugar exports which has been underway since the 2013/14 marketing year. This situation on the EU market is unlikely to improve, with the impact of Brexit potentially making the EU27 market situation more difficult for ACP sugar exporters. However opportunities for ACP exporters on the UK market could emerge under a ‘no-deal’ Brexit scenario, if ACP EPA signatory governments can secure a continuation of current duty free-quota free access to the UK market form 30th March 2019. This situation however will be complicated by the likely lobbying by Tate & Lyle Sugars for an expansion of its access to world market priced sugar for refining. Further complications arise from the growing volume of EU white sugar exports to African markets, which, given population and per capita sugar consumption trends, are themselves increasingly attractive to African sugar producers. ACP sugar producers and exporters will need to develop more sophisticate marketing strategies to deal with an increasingly complex set of changing market parameters. Read more “First Post Production Quota Year Shows Dramatic Changes on the EU Sugar Market”
State of Play in the EU/UK Brexit Negotiations: Update 4 February 2019
Summary
The last epamonitoring.net article dealing with the process of EU/UK withdrawal negotiations covered the EU’s approval of the UK/EU Withdrawal Agreement (26th November 2018) and the subsequent deferment of the UK parliamentary vote on approving the Withdrawal Agreement. From mid-December until mid-February the UK Parliamentary process for ratifying the mutually agreed EU/UK Withdrawal Agreement has been stalled. This article provides an update of developments since the December 2018 UK governments’ decision to defer the Parliamentary vote on the Withdrawal Agreement until 2019 and the potential implications for ACP exporters serving the UK market of the ongoing uncertainty. Read more “State of Play in the EU/UK Brexit Negotiations: Update 4 February 2019”
UK Signs Continuity Agreement with ESA Governments
Summary
The UK’s ambition to ‘rolled over’ EU reciprocal trade agreements into ‘UK only’ trade agreements has been given practical expression with the conclusion of the first 2 ‘Continuity Agreements’, with Chile and the ESA EPA Group respectively. Additional agreements are planned in the coming weeks with CARIFORUM, Fiji, PNG and the SADC EPA group. However it is unclear whether such trade agreements can be concluded with Kenya, Ghana, Ivory Coast and Cameroon. Failure to conclude a Continuity Agreement would see exporters in these countries facing standard MFN or GSP import tariffs. These Continuity Agreements appear to leave a range of important issues unresolved ranging from: the trade documentation to be utilised from day 1 of Brexit; the future value of duty free quota free access to the UK market in the post Brexit context; the disruptive impact of a non-deal Brexit on triangular supply chains and most fundamentally the rules of origin to be applied under ‘UK-Only’ trade deals once the UK is no longer part of the single EU customs territory. It is unclear whether these ‘Continuity Agreements’ are simply a mechanism to secure ACP duty free-quota free access to the UK market under a ‘no-deal’ scenario or a crafty attempt to side step comprehensively addressing the rules of origin constraint on UK exporters under ‘UK-Only’ trade deals which will arise from leaving the customs territory of the EU. In this context it would appear more appropriate for the UK government to unilaterally extend existing terms and conditions of access to the UK market which ACP EPA signatories enjoy, so as to allow time for a more thorough going negotiation of bilateral UK-only trade agreements which are WTO compatible, operationally applicable and development friendly. Read more “UK Signs Continuity Agreement with ESA Governments”
Part 2 Country Specific Trends in EU Agri-food Sector Trade with ESA EPA Countries
Summary
The value of EU agri-food exports to Mauritius grew 53% between 2013 and 2017 while the value of EU agri-food imports from Mauritius fell 26%, with this largely attributable to the impact of EU sugar sector reforms. A ‘no deal’ Brexit however could present opportunities for Mauritian refined sugar exporters. In contrast the value of Malagasy agri-food exports to the EU grew 164%, while the value of imports from the EU grew 44%. This is attributable to the fragile political and economic stability attained since 2013. Zimbabwe’s agri-food sector trade flows have been impacted by the sustained political and economic crisis, with volatile export values and no change in the value of imports from the EU for the period as a whole. The value of agri-food exports from the Comoros has increased almost 60% since 2013, with strong growth in the unit value of earnings of both vanilla and essential oils. EU agri-food exports to the Comoros have grown faster than overall exports, at double the rate, with a strong increase in the value of EU poultry meat exports and an even larger increase in the volume. There has also been a strong increase in EU beef exports to Comoros. The Seychelles has no agro-food sector export trade with the EU, while the value of agri-food imports from the EU rose 61% between 2013 and 2017. Dairy products led the way in this trade expansion, with EU poultry meat exports also getting under way during this period. Brexit related issues arise for Zimbabwe in the resurgent cut flower trade given the dominant role the Dutch flower auction houses play in this trade and the potential for Brexit related disruption of triangular supply chains. Initiatives will be needed to ‘Brexit-proof’ these supply chains. For Seychelles and Madagascar Brexit related rules of origin issues in the fisheries sector will also need to be addressed under a ‘no-deal’ outcome to the current Brexit negotiations, with this potentially opening up investment and export trade opportunities in relations with the UK. Read more “Part 2 Country Specific Trends in EU Agri-food Sector Trade with ESA EPA Countries”
Part 1 Overall Trends in EU Trade with ESA EPA Countries
Summary
The EU-ESA EPA is not a single agreement but a collection of five individual yet similar agreements covering a population of some 45.5 million. For 4 countries these agreement have been in place since 2012 while the 5th is scheduled to enter into force shortly. These agreements fall far short of the ambitious regional EPA, embracing up to 18 countries with a population of 541 million, which the EC initially sought. This has split the larger ESA region into 3 distinct groups in terms of trade relations with the EU, thereby complicating intra-regional trade integration efforts. Since the signing of the EPAs EU agri-food exports to ESA EPA signatories have grown strongly (+48%), despite there being no growth in direct EU exports to Zimbabwe. The growth in the value of EU agri-food imports from ESA4 countries was been slower at only +27%. This growth was attributable to the 164% growth in the value of imports from Madagascar which now dominates the ESA4 agri-food export trade to the EU. EU agricultural reforms and the multiplication of EU trade agreements with non-ACP countries are serving to reduce the value of traditional agri-food sector trade preferences, particularly for Mauritius and Zimbabwe. The Brexit process further complicates the situation, although a ‘no-deal’ Brexit could potentially open up new opportunities on the UK market for Mauritian refined sugar exports. Other important issues faced relate to the impact of the new EU plant health regulations on horticulture and floriculture exports and the impact of the expansion of EU agri-food exports on opportunities for the structural development of local agri-food sectors serving national and regional markets. ESA EPA signatories face differing challenges and opportunities as a result of current trends in EU agri-food exports to ESA EPA signatories and the wider Eastern and Southern African region. How EPA provisions are implemented in practice in the future, in the face of Brexit related commercial pressures, will have an important bearing on the future evolution of EU-ESA trade, as well as the scope for the development of intra-regional trade in the Eastern and Southern African region. Read more “Part 1 Overall Trends in EU Trade with ESA EPA Countries”
Impact of EU FTAs in the Agri-Food Sector
Summary
EU FTAs are of growing importance to the growth of EU agri-food sector exports, with the EU using a variety of policy tools to increasingly open up overseas markets to EU exports. However the EU’s use of trade policy tools to protect EU producers is in distinct contrast to the policy prescriptions the EU seeks to enshrine in its trade agreements with ACP countries when it comes to the use of traditional agri-food sector trade policy tools aimed at managing trade liberalisation processes in sensitive sectors. The structure of EU EPAs does little to address the fundamental structural imbalance in EU-ACP agri-food sector relations. Fundamental policy coherence issues need to be addressed across the broad ambit of EU-ACP agri-food sector relations if the structural imbalance is to be addressed. The challenges faced in this regard are only likely to be exacerbated by recent EU agricultural policy changes and the Brexit process. Read more “Impact of EU FTAs in the Agri-Food Sector”
Implementation of EU-ACP Economic Partnership Agreements: The State of Play in 2017 in Perspective
Summary
While EPA negotiations commenced with all ACP countries in 2002 by the end of 2017 only 28 of 79 ACP governments had signed and ratified EPAs in place. Negotiations to complete regional EPAs in the EAC and West Africa remain stalled by the reluctance of key governments to accede to a regional EPA, with this generating tension within regional integration initiatives. While tariff reduction and elimination commitments vary across agreements in terms of scope and the timetables for implementation, provisions restricting the utilisation of non-tariff trade policy tools are common to all agreement and are likely to have the same effects if rigorously interpreted and applied, despite variations in wording. EU agro-food exporters see the application of non-tariff measures as more important than tariffs in holding back further expansion of EU exports. This is likely to become a growing area of contention in EU-ACP trade relations, since to date the EC has ‘soft peddled’ on this issue in an efforts to complete regional EPA negotiation processes in Africa. Meanwhile the value of ACP preferential access for agro-food exports is being undermined by new EU trade FTA agreement. These effects are likely to further compounded by the Brexit process. ACP efforts to place their structural economic development objectives at the heart of the future ACP-EU Partnership Agreement are being resisted by the EC, with this reflecting and underlying tension between EU agro-food sector export interests and ACP structural development objective sin the agro-food sector. Read more “Implementation of EU-ACP Economic Partnership Agreements: The State of Play in 2017 in Perspective”
Tighter Regulation and Improving Knowledge Among Input Suppliers Could be Key to Maintaining Kenyan Access to EU Horticulture Markets
Summary
The EU import ban on Kenyan exports of sugar snap and mange tout pea varieties has been lifted after 5 years. EFSA pesticide compliance analysis reveals the inclusion of new residue categories can lead to lower compliance levels in the following reporting period, as farm practices take time to adjust. The ‘time lag’ in revising pesticide application practices is most noticeable on imports form non-EU/non-EEA countries. This suggests a strengthening of regulatory requirements for pesticide traders and importers and the establishment of structured dialogues between government, importers, rural traders and farmers could play a role in ensuring EU markets remain open to all Kenyan horticultural exports. Read more “Tighter Regulation and Improving Knowledge Among Input Suppliers Could be Key to Maintaining Kenyan Access to EU Horticulture Markets”
UK Dependence on the EU for ‘Dark’ Meat Exports Potential Source of Concern
Summary
The UK poultry sector is dependent on exports of ‘dark meat’ to maximise its revenues. Currently 70% of these exports go to EU27 markets. This trade will become increasingly difficult under a ‘no-deal’ Brexit scenario if the EU applies both standard MFN tariffs and its rigorous 3rd country import controls on UK poultry meat. The application of such rigorous controls is made more likely by the probable shortage of veterinarians in the UK post Brexit to carry out the inspections and certification required for imports into the EU to take place. Attaining compliance with standard EU poultry meat import requirements or finding internal markets UK markets for poultry ‘dark meat’ if likely to take some time. This could leave UK exporters seeking alternative overseas markets for their ‘dark meat’ exports from 30th March 2019, in a context where ACP markets already take 42.2% of overall UK extra-EU poultry meat exports. Both African and Caribbean governments who wish to support local poultry sector development will need to consider carefully how they are to manage this likely development. Read more “UK Dependence on the EU for ‘Dark’ Meat Exports Potential Source of Concern”