Category: Eastern African

UK Launches Consultation on its 260,000 Tonne Autonomous Tariff Quota for Raw Cane Sugar Imports

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Summary
The UK government has launched a public consultation on its new 260,000 tonnes duty free sugar ATQ. A critical issue will be how the UK manages the ATQ. Given the profound uncertainties around the future supply situation on the UK sugar market arising from the unresolved EU/UK trade negotiations a strong case exists for the adoption of a carefully managed application of the sugar ATQ, with its deployment being regulated to prevent both the emergence of supply surpluses or supply deficits on the UK market in the course of 2021. Such an approach would be beneficial to both ACP/LDC sugar exporters and domestic UK sugar beet producers and processors and could also support the attainment of public health policy objectives, if it was used to foster a gradual increase in UK sugar prices. Two complicating factors however exist, namely: the depth of the impending Covid-19 recession in the UK and the serious commercial challenges facing Tate & Lyles Sugar, which desperately needs to expand the capacity utilisation of its Thames refinery in the context of more remunerative market prices for sugar. The question arises as to whether the experience and capacity exists in the hard pressed UK government administration for the nuanced and sophisticated management of the new sugar ATQ. Read more “UK Launches Consultation on its 260,000 Tonne Autonomous Tariff Quota for Raw Cane Sugar Imports”

How Helpful is the ECs Orientation in EU Trade Policy Review Consultation in addressing Post Covid-19 Recovery Challenge in ACP Countries?

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Summary
The EU consultation note on the revision of its trade policy in light of recent developments, has introduced the concept of ‘Open Strategic Autonomy’ as a model for the design and future implementation of EU trade policy. This concept is designed to allow the EU greater policy space in defending EU economic and trade interests, while allowing the EU to more forcefully pursue its long standing policy of preferentially opening up 3rd country markets to EU exports. This is to be realised through the activities of the newly established EU Chief Trade Enforcement Officer. This approach could carry serious implications for the implementation of the ACP EPAs, agreed with the EU as long ago as 2007. It could limit the active use of established trade policy measures in support of post Covid-19 recovery. This despite the relevance of the initial Strategic Autonomy concept to the post Covic-19 socio-economic recovery needs of ACP counties. Current realities in ACP countries require the maintenance and expansion of policy space for measures to reduce the economic vulnerability and enhance the economic resilience of ACP countries. This suggest a need to subordinate the definition and enforcement of EPA commitments to the strategic autonomy needs of ACP countries, defined in light of their specific Covid-19 revealed vulnerabilities. Read more “How Helpful is the ECs Orientation in EU Trade Policy Review Consultation in addressing Post Covid-19 Recovery Challenge in ACP Countries?”

Preparing for the Impact of a New EU/UK Border on ACP Exports to the EU

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Summary
This article seeks to highlight the main areas of impact of the new EU/UK border arrangements as these are likely to affect ACP exporters serving EU27 markets. While this will mainly impact ACP exporters using triangular supply chains, it will also have some effects on direct exports to the EU, mainly via it effects on trade administration documentation requirements, the need for valid authorisations and certifications, customs and taxation rules and the rules of origin requirements under preferential trade agreements. While ACP exporters themselves need to make their own assessments of the impact of the UK’s full withdrawal from the EU and set in process appropriate preparations for the changes which will occur, there is some scope for policy interventions to try and mitigate the adverse impact on ACP supply chains.  However, this will require proactive engagement with the EU by the governments of the country’s most seriously impacted by the impending changes. To date there is no evidence the concerned government have yet appreciated the urgency of such policy initiatives.  This could leave ACP exporters having to cope alone with further trade disruptions. This is likely to be most severely felt by those ACP exporting countries already suffering most severely because of Covid-19 related trade disruptions. Read more “Preparing for the Impact of a New EU/UK Border on ACP Exports to the EU”

Nestlé Move Away from Cane Sugar Compounds Wider Sugar Sector Demand Trends

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Summary
Nestle’s decision to switch to beet sugar will have a greater impact on the UK market for ACP cane sugar than the companies sugar reduction efforts since 2015. The decision of Nestle will compound the wider structural trend in the UK and elsewhere in Europe towards a reduction of human consumption of ‘hidden’ sugars. While to date, as part of its latest anti-obesity campaign launched in the face of the devastating link uncovered between obesity and serious Covid-19 infections and deaths, the UK government has resisted pressured to extent the SDIL to high sugar content food products, pressure for regulatory measures to reduce the use of ‘hidden’ sugar in a wide range of food products is only likely to increase in the coming years. The long-term structural trends towards reduced consumption of sugar and greater local sourcing, is something ACP cane sugar exporters will need to adjust to, as they look towards their future marketing options. The ability of different ACP exporters to adjust to these new market realities varies greatly and will need to be assessed country by countries and even company by company. Read more “Nestlé Move Away from Cane Sugar Compounds Wider Sugar Sector Demand Trends”

Will ACP Exports to the UK Be Impacted by the New UK-EU Border Control Requirements?

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Summary
While the UK government asserts the introduction of UK border controls on goods entering from the EU will leave trade with ACP countries and the rest of the world unaffected, this is not entirely the case. ACP goods entering the UK market via EU27 member states along so-called triangular supply chains, will be most severely affected, though be it in a wide variety of ways. This will depend on:

  1. The nature of product and whether any significant alteration to the product takes place in the territory of the EU on route to the UK, specifically whether the consignment is simply broken down or undergoes repackaging or some simple level of processing prior to onward trade to the UK.
  2. Whether the product remains formally ‘in transit’ under the provisions of the CTC.
  3. Whether the good enters the customs territory of the EU prior to onward movement to the UK.
  4. The basis on which the UK finally leaves the EU customs union and single market.
  5. The efficiency of UK border control services and border clearance infrastructure in the face of the basis on which the UK leaves the EU customs union and single market.

All these factors will influence the impact the UK’s departure from the EU customs union has on ACP exports to the UK. In addition even direct ACP exports to the UK will be affected by the new UK/EU border requirements, in terms of the trade documentation required to enter the UK customs area and the overall efficiency of UK border control services, in the face of the new demands a UK/EU border will generate. ACP exporters will need to be alert to and prepare for all these potential impacts, with the level of adjustment required varying considerably across products. Read more “Will ACP Exports to the UK Be Impacted by the New UK-EU Border Control Requirements?”

EU Sugar Market Still Attractive but Brexit Related Complications Likely in 2021

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Summary
The difficult global sugar market situation and rapid transition from a large projected deficit to a significant surplus is likely to put pressure on EU sugar prices, which have to date held up well. There are concerns the UK duty free sugar quota of 260,000 tonnes could see EU/UK sugar trade restricted, with this driving EU27 sugar exports off the UK market and intensifying competition on the EU market. This could also complicate the onward trade in ACP sugar and products containing ACP sugar between the UK and the EU. Disturbances on European sugar markets look likely in 2021, including for ACP Fairtrade sugar, where exporters may need to review their routes to market and refining partners. Alternatively, special onward trade arrangements may need to be negotiated as part of wider efforts to avert disruption of ACP triangular supply chains.  This can be seen as an urgent policy priority. Meanwhile ACP sugar exporting companies will need to explore their sugar marketing options for 2021, in the light of a variety of scenarios for the UK’s departure from the EU customs union and single market. Read more “EU Sugar Market Still Attractive but Brexit Related Complications Likely in 2021”

UK International Trade Secretary Raises Concerns Over UK Border Control on Imports From EU

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Summary
The UK Trade Secretary has expressed concerns over plans for a phased implementation of UK border controls on imports from the EU27 regarding their WTO compatibility, the impact on smuggling operations and the credibility of UK trade policy. Concerns have also been raised over the practicality of implementing ‘light touch’ border control systems between the mainland UK and Northern Ireland. Problems in designing and implementing ‘light touch’ border control systems and concerns over smuggling could see more rigorous controls applied to ACP goods entering the UK market via EU27 member states.  Unless special arrangements are set in place to facilitate the continued smooth functioning of ACP triangular supply chains, the functioning of important ACP export sectors could be seriously undermined (e.g. short shelf life horticulture products and cut flowers, value added cocoa products and even fisheries products). Read more “UK International Trade Secretary Raises Concerns Over UK Border Control on Imports From EU”

Could Leaked Requirements for Movement of Goods to Northern Ireland Provide Basis for Special Arrangements for ACP Triangular Supply Chains

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Summary
Proposals for consolidated electronic document requirements for the movement of goods from the mainland UK to Northern Ireland could provide a basis for special arrangements to facilitate the continued smooth functioning of ACP triangular supply chains. Additional arrangements to remove the need for phytosanitary checks on ACP goods entering the UK market via EU27 countries would however be required. While there is seen as being no political objection in the UK to averting disruption of trade with developing countries which enters the UK market via EU27 member states, there is not currently the ‘band width’ in UK government services to deal with this issue, given Covid-19 related demands and the fraught state of UK/EU negotiations. There is therefore a need for the most directly affected ACP governments to launch a political initiative for the establishment of special arrangements to ensure the continued smooth functioning of ACP triangular supply chains. Such an initiative would need to reach out to both the UK and EU authorities to make sure suitable arrangements are in place along the whole of the supply chain. Read more “Could Leaked Requirements for Movement of Goods to Northern Ireland Provide Basis for Special Arrangements for ACP Triangular Supply Chains”

Deferment AfCFTA Implementation Leads to Sequencing Issues in Kenya US Trade Negotiations

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Summary
The Kenyan President has announced trade negotiations with the USA will be delayed given the deferment of the implementation of the AfCFTA in the face of Covid-19 disruptions. This raises issues related to the UK governments approach to trade agreements with African countries such as Kenya. While substantive ‘face to face’ negotiations to resolve outstanding technical issues and regional concerns have not been possible since February the UK government continues to insist Continuity Agreements can be concluded by the end of 2020.  While this is perfectly possible for an agreement which solely addresses UK concerns and interests, it is not possible for an agreement which addresses African regional complications and issues and concerns arising from the UK’s departure from the EU customs union. Comprehensively addressing these latter concerns is vital to ensuring continuity in African exports to the UK from 1st January 2021. Against this background the UK government should conclude qualified Continuity Agreements by the end of the year to preserve existing duty-free access for exporters from the concerned African countries, but with the implementation of reciprocal obligations being deferred until outstanding technical issues and regional concerns have been addressed. Read more “Deferment AfCFTA Implementation Leads to Sequencing Issues in Kenya US Trade Negotiations”

Commitment to Phasing in of UK Controls on Goods Entering from the EU Provides a Framework for Addressing ACP Triangular Supply Chains Issues

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Summary
On 12th June 2020, the UK has announced there will be no extension of the transition period in UK/EU trade relations. At the same time, the UK announced plans for phasing in of border controls on imports from the EU. This phased approach is aimed at providing time for UK businesses to prepare for changes in border arrangements given the setbacks to preparatory activities generated by the Covid-19 pandemic. However, the underlying border controls challenges facing the UK government pre-dated the Covid-19 pandemic and remain substantial. Against this background ACP exporters using triangular supply chains need to intensify preparation for the implementation of new UK/EU border arrangements, while ACP governments will need to ensure their Continuity Agreements with the UK, fully address the need to ensure ‘continuity’ in the smooth functioning of triangular supply chains. The governments of least developed countries will also need to ensure a mechanism is found to make similar arrangements for the smooth functioning of triangular supply chains used by LDC based exporters. Read more “Commitment to Phasing in of UK Controls on Goods Entering from the EU Provides a Framework for Addressing ACP Triangular Supply Chains Issues”