Summary
The announcement by the UK government of new inland Border Control Posts is seen as ‘extremely last minute’, with serious road freight disruptions along the main EU/UK Ro-Ro routes through Kent now seen as almost inevitable. The UK is seen as ‘dangerously ill-prepared’ for leaving the EU customs union and single market on 1st January 2020. As a consequence, significantly large increases in costs of moving goods through EU/UK border controls are likely. However, there are expanding freight options for delivery to UK East Coast and ‘inland’ ports which will side-step traffic congestion in Kent. ACP exporters using triangular supply chains need to adequately prepare for these changes and actively seek to “Brexit-Proof” their supply chains. ACP exporters directly serving the UK market will also need to take similar “Brexit-Proofing” initiatives, with successful companies potentially being able to capitalise on the rising food prices projected for the UK market in 2021. Read more “With No Deal Brexit Preparation Underway in UK and Serious Challenges Faced ACP Exporters Will Need to Look to “Brexit Proofing” Their Supply Chains”
Category: Eastern African
New Initiatives Around UK ‘Land Bridge’ Issue Opens Up Opportunities to Address ACP Triangular Supply Chain Challenges
Summary
Amid growing concerns over Ireland’s vulnerability to disruption of freight movements across the UK ‘land bridge’, the Irish government has indicated it is open to mobilising public support for direct ferry operation between the mainland EU and the Republic of Ireland. However, this will require faster and better planned freight ferry services in line with the needs of Irish businesses. From an ACP perspective two dimension of these discussions stand out: first the emergence of a greater range of options for cargo shipments direct to the Republic of Ireland, avoiding the UK ‘land bridge’; second the establishment by the EU of ‘green lane’ border clearance arrangement for Irish freight shipments using the UK ‘land bridge’ upon landing at mainland EU border control posts. If a similar ‘green lane’ approach were adopted by the UK to the handling of ACP cargoes delivered to the UK market via initial landings in the mainland EU, this could greatly facilitate the continued smooth functioning of ACP supply chains delivering short shelf life products to the UK market via the mainland EU. Such a solution would appear to be urgently needed, if future orders for delivery to the UK market in 2021 are not to be lost by ACP fresh produce exporters. Read more “New Initiatives Around UK ‘Land Bridge’ Issue Opens Up Opportunities to Address ACP Triangular Supply Chain Challenges”
Freight Pressures Remain on Kenyan Horticultural Exporters with Covid Clouds Still Loom Over the Sector
Summary
While a partial recovery in commercial flights is underway this is focussed on intra-European flights, with inter-continental flights excluding the EU, still less than 60% of their January levels. With East-West routes better able to bear rising freight costs, African exporters will face continued air freight challenges, particularly as air freight demand rises in the face of the rolling out of a global vaccination programme. Given the economic significance of the air freight export sector to the Kenyan economy, there is a need for the designation of East African focussed air freight services as a ‘strategic autonomy’ sector, with normal rules related to state supported lending being waived. There is also a need to systematically review Kenyan production and export patterns, to see which export products remain commercially viable at higher freight rates and which export products can be shifted to sea freight. This review will need to take into account the increased costs which will be faced in trading into the UK market via initial ports of landing in mainland EU countries. These new costs along triangular supply chains are now inevitable given the state of play in EU/UK trade negotiations, with the only uncertainty being the scale of these increased costs. This will be impacted by the basis on which the UK finally leaves the EU customs union and single market. Read more “Freight Pressures Remain on Kenyan Horticultural Exporters with Covid Clouds Still Loom Over the Sector”
Report Spells Out Impact of Brexit Scenarios for Food and Beverage Supply Chains
Summary
While even under an EU/UK FTA mutual trade in agri-food products will be adversely affected, under a no-deal outcome these effects would be far more severe. Thus, under an FTA it is estimated UK food exports to the EU would fall 22.5%, while under a no-deal outcome the decline would be 63.2%. The corresponding figures for EU food exports to the UK are 22.6% and 61.7% respectively under an FTA or no-deal scenario. This would have substantial market and wider trade consequences. The knock on effects of the outcome of the EU/UK negotiations will be felt in 5 main areas:
o The effects on ACP triangular supply chains serving the UK via the EU.
o The effects on ACP triangular supply chains serving the EU via the UK.
o A possible further revision of the UK’s MFN tariff schedule under a no-deal outcome.
o New opportunities for increased direct exports to the UK market.
o The diversion of displaced EU/UK exports to targeted ACP market.
ACP agri-food sector enterprises and governments will need to make preparations for dealing with the trade and market consequences which will arise under both an EU/UK FTA and more seriously, the growing prospect of anon-deal outcome to the ongoing negotiations. Read more “Report Spells Out Impact of Brexit Scenarios for Food and Beverage Supply Chains”
Implementation of New EC Organic Products Regulation Postponed but Unresolved Brexit Issue Threatens Commercial Gains of ACP Organic Production
Summary
The deferment of the implementation of EU’s new organic regulation offers a precedent for addressing the commercial losses ACP organic exporters face if there is no EU/UK organic equivalence agreement in place by 1st January 2021. The lapsing of EU/UK mutual recognition of organic certification on 3rd country products should be deferred until the end of the Covid-19 pandemic plus 9 months, given the travel restrictions and social distancing requirements which complicate the securing of UK or EU27 specific organic certification at the present time. This would avert needless commercial losses for ACP organic exporters and encourage the continued growth in ACP organic exports, which are wholly consistent with both EU and UK sustainability objectives. Read more “Implementation of New EC Organic Products Regulation Postponed but Unresolved Brexit Issue Threatens Commercial Gains of ACP Organic Production”
Government of Kenya Looking for Way Out of UK-EAC Continuity Agreement Negotiations Impasse
Summary
Press reports indicate the Government of Kenya is to conclude a bilateral trade agreement with the UK, with other EAC members joining later. This is seen as being based on the concept of ‘variable geometry’, an approach which had been endorsed by the EAC Heads of State in both February 2018 and February 2019.. However, the concept of ‘variable geometry’ has never been utilised in regard to the application of different tariffs within a customs union, since a customs union by definition is based on the application of a Common External Tariff by all members of the customs union. The only way for a Kenya-UK trade agreement to be concluded without undermining the integrity of the EAC customs union Common External Tariff would be if the implementation of reciprocal commitments were deferred until all EAC members agreed to come on board with a common programme of tariff reduction. This would be consistent with the current application of the EU-EAC EPA, where the implementation of reciprocal tariff reduction commitments has not yet been activated, given the reluctance of certain EAC members to come on board. An additional option available to avert a loss of Kenya’s duty-free access to the UK market would be the reactivation of the Transitional Protection Mechanism initially proposed in October 2019, but which was overtaken by events before the need for its’ implementation arose. On this basis, it needs to be recognised any loss of duty-free access for Kenyan exports would be a political choice of the UK government and not an unexpected by-product of the Brexit process. Read more “Government of Kenya Looking for Way Out of UK-EAC Continuity Agreement Negotiations Impasse”
Greenpeace Highlights Trade Policy Payback for Tate & Lyle Sugar for Brexit Support
Summary
Greenpeace has drawn a link between Tate & Lyle Sugars support for Brexit an the 260,000 duty free autonomous quota for sugar established by the UK government, suggesting this trade measure, which will solely benefit Tate & Lyle Sugars, is a reward for earlies political support. Greenpeace believes it will encourage imports of environmentally damaging sugar, mainly from Brazil and harm existing ACP/LDC sugar exporters, while NFU and British Sugar believes it will harm domestic UK sugar beet producers. The effects of the ATQ however will be determined by choices made by the UK government, namely whether it conclude an FTA with the EU and whether the ATQ is used solely as a market stabilisation mechanism or becomes an integral part of the supply equation. These two choices will determine whether less efficient ACP sugar exporters are driven out-off the UK market and the income gained by the remaining ACP suppliers. Read more “Greenpeace Highlights Trade Policy Payback for Tate & Lyle Sugar for Brexit Support”
Road Haulage Issues Likely to be Critical Bottleneck Along ACP Triangular Supply Chains from 1st January 2021
Summary
The scale of the road transportation disruptions along EU/UK supply routes as a result of the UK’s departure from the EU customs union and single market and the consequent creation of border controls are increasingly becoming apparent. The main impact will be unaffected by the outcome of the ongoing EU/UK negotiations. Against this background ACP exporters currently using triangular supply chains may have little choice but to move over to direct exports to final destination markets or the abandonment of markets in the UK, mainland EU or the Republic of Ireland currently served along triangular supply chains. Read more “Road Haulage Issues Likely to be Critical Bottleneck Along ACP Triangular Supply Chains from 1st January 2021”
UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market
Summary
The UK governments’ decision to breach substantive provisions of the Northern Ireland Protocol to the jointly agreed Withdrawal Agreement threatens to make ratification of any EU/UK agreement which may still be concluded extremely difficult. It increases the prospect of an acrimonious no-deal UK departure from the EU customs union and single market at the end of 2020. While the scope exists for policy measures to minimise the negative impact of a no deal UK departure on ACP exports, the window of opportunity for taking these necessary measures is rapidly closing. The absence of appropriate policy intervention will leave ACP exporters alone in facing the cost increasing challenges of a no-deal UK departure will generate. Not all current ACP exporters will be able to adjust to these new commercial realities, with all but the largest and best prepared ACP exporters being squeezed out of UK and some EU27 markets. Read more “UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market”
Cut Flowers Sector Concerns Over Proposed UK Border Controls Highlighted
Summary
The adverse effects of shortcoming in the UK’s approach to establishing border controls on goods entering from the territory of the EU on the cut flower trade has been highlighted. Information essential to the future conduct of this trade is still not available. Shortcomings in the design of administrative requirements and a general lack of business preparedness have also been highlighted. What is more, multiple freight issues arising from the creation of the new UK/EU border are also likely to severely impact the cut flower sector, with these posing particular problems for the triangular supply chains ACP exporters’ work through. Solutions to facilitate the continued smooth functioning of cut flower triangular supply chains are urgently needed. The outlines of such solutions are now emerging. They need to be actively pushed for by the concerned ACP governments and exporters, in association with Dutch cut flower industry in a context where there is limited ‘band-width’ in the UK and EC for dealing with triangular supply chain issues. Read more “Cut Flowers Sector Concerns Over Proposed UK Border Controls Highlighted”