Summary
Both EU sugar beet producers and EU sugar users have expressed concerns a long-term trend towards reduced indigenous EU sugar production is underway. EU sugar users feel this could threaten the competitive position of EU sugar-based food and drink manufacturers. This has led to calls for a ‘radical shift’ in EU sugar trade policy, involving variously: production process ‘mirror clauses’ in trade agreements; the extension of the mandatory EU forestry due diligence regulation to sugar; and the establishment of a traffic light system for regulating sugar imports depending on EU sugar stock levels. However, EC medium term forecasts for the EU sugar market suggest no such sugar market crisis is likely. While current shortages should boost market opportunities for ACP sugar exporters, EU sugar imports are down, in the face of high global sugar prices and massive increases in sea freight charges to Europe. Any structural decline in EU beet production should increase scope for ACP sales to EU beet/raw cane sugar co-refiners. This, however, could complicate the commercial position of full time EU raw cane sugar refiners, while any ‘radical shift’ in EU sugar trade policy could serve to further erode the value of ACP preferential access to EU sugar markets. Overall, ACP sugar exporters face an uncertain future on the EU market, which will require close monitoring and the adoption of targeted marketing strategies by different ACP sugar exporters. Read more “Could EU Sugar Sector Developments Offer Opportunities for ACP Sugar Exporters?”
Category: Pacific
Ending of Transitional Arrangements for ‘Origin’ Declarations Could Pose Serious Challenges to Certain ACP Triangular Supply Chains
Summary
The lapsing of the transitional arrangement for reporting and verifying rules of origin compliance for goods entering from the EU from 1 January 2022, could see serious disruptions arising along a variety of ACP triangular supply chains. Products potentially affected include chilled and fresh fruit and vegetables, cut flowers, fisheries products, clothing products, value added cocoa products and sugar. From 1 January 2022, ‘originating status’ will need to be proved at the point of entry to the UK, and if this cannot be supplied standard MFN tariffs will be levied. This will require a clear understanding of the rules of origin applicable to the particular goods entering the UK. In addition, cargoes may need to visit inland border control facilities for documentation and physical checks, which could extend delivery times. It is only from 1 January 2022 that the full impact of the new rules of origin/MFN tariff complications along ACP triangular supply chains will be felt, with this making the establishment of an appropriate policy solution to this complication a matter of some urgency. Read more “Ending of Transitional Arrangements for ‘Origin’ Declarations Could Pose Serious Challenges to Certain ACP Triangular Supply Chains”
What Are the Implications of New EU Mandatory Forestry Due Diligence Requirements for ACP Agricultural Commodity Exporters?
Summary
The EC’s proposed forestry due diligence regulation seeks to ensure only commodities from land not subject to deforestation and produced in line with national legal frameworks are placed for sale on the EU market. This will involve the progressive establishment of full traceability of all of the affected commodities (beef, wood, palm oil, soya, coffee, and cocoa) placed for sale on the EU market. Obligations placed on businesses will vary based on country and region-specific assessments of the risk of deforestation or forest degradation. A process of benchmarking will be undertaken to establish these risk assessments (high, standard, and low risk). The EC favours a collaborative approach involving all concerned stakeholders in building Forestry Partnerships to promote the transition to active protection of global forestry resources. A €1 billion EC managed facility is to be established to support these Forestry Partnerships. The value of exports to the EU27 from the main ACP exporting countries potentially affected by the new due diligence requirements amounted to nearly €7 billion in 2020. In the ACP the most important affected sector is the cocoa sector, which accounts for 75% of the value of ACP exports of the affected commodities. Important questions arise related to the distribution of the costs of new traceability systems and mitigation measures along supply chains and whether forestry due diligence will be closely linked to decent living income objectives. Addressing living income issues, particularly in the cocoa sector, is seen as essential to ensuring active farmer ‘buy-in’ to the necessary farm level production process transition required to better protect global forestry resources. Read more “What Are the Implications of New EU Mandatory Forestry Due Diligence Requirements for ACP Agricultural Commodity Exporters?”
Some Implications of the EU Code of Conduct on Responsible Food Business and Marketing Practices for ACP Producers
Summary
The EU’s ‘Code of Conduct on Responsible Food Business and Marketing Practices’ can only be welcomed. However, its limitations, in terms of delivering on objectives which ACP governments, producers and exporters share, need to be recognised. The focus on increased collaboration along the whole of the supply chain, means commitments entered into by EU companies will carry real implications for production practices adopted by ACP suppliers. These implications need to be recognised and addressed, in the context of the Codes commitment to ensuring the social and commercial sustainability of the required changes. In regard to each of the aspirational objectives identified, in operationalising the code of conduct there will be a need for meaningful dialogues with ACP stakeholders and governments, if the burden of necessary adjustments is not to be largely shifted on to the shoulders of ACP primary producers. This will require the identification of appropriate institutional frameworks for the conduct of these meaningful dialogues in each of the major areas of concern. Read more “Some Implications of the EU Code of Conduct on Responsible Food Business and Marketing Practices for ACP Producers”
EC Proposal for Resolving Northern Ireland Protocol Issues Could Offer Model for Addressing ACP Triangular Supply Chain Concerns
Summary
The EC’s proposals to resolve the problem of the implementation of the Northern Ireland Protocol try to accommodate the operational concerns of Northern Ireland business leaders. However, the proposals leave unresolved the fundamental political objections the UK government has advanced, on the basis of the objections of Ulster Unionists. While this reduces the prospect of an early EU/UK agreement on the basis of the EC proposals, the technical proposal advanced nevertheless could offer a model for addressing ACP triangular supply chain concerns. This would require an elaboration of the current principles and modalities underpinning the EC proposals, in order to address the specific realities faced along ACP triangular supply chains. This will require political lobbying by the concerns ACP governments and in-depth technical work by the concerns ACP exporters associations. Read more “EC Proposal for Resolving Northern Ireland Protocol Issues Could Offer Model for Addressing ACP Triangular Supply Chain Concerns”
Complex Reality Behind UK Beet Grower Concerns Casts Shadow Over ACP Sugar Exports
Summary
While UK sugar beet growers have expressed concern over their future prospects as a result of the UK governments new sugar trade policy, the most fundamental change is in the UK/EU trade relationship for refined sugar and high sugar content products. This is a result of the new rules of origin requirements under the UK/EU TCA, which exclusively impact on imports of raw cane sugar. These changes could see a major contraction in UK import demand for cane sugar, with Guyana and Fiji likely to be among the most seriously affected of the 9 ACP countries which currently export sugar to the UK. However, the Brexit effects on ACP sugar exports to the UK need to be seen in the context of the dramatic decline in ACP sugar exports to the UK which has taken place since the introduction of EU sugar sector reforms. Read more “Complex Reality Behind UK Beet Grower Concerns Casts Shadow Over ACP Sugar Exports”
Irish Trade Data on Differential Impact of Border Controls Raises Concerns for Future ACP-EU Triangular Supply Chains
Summary
Recent Irish data highlight the impact of new border controls on trade flows with the UK, with ACP ‘re-exports’ from the UK to Ireland likely to be seriously affected. This is not only a result of general cross-border trade complications generated by the Brexit process, but also due to two specific challenges arising for ‘re-exported’ products: notably the rules of origin/MFN tariff complications for re-exported fresh produce and simple processed products (e.g., from raw to refined sugar) and the additional phytosanitary import documentation requirements, namely the need for ‘phytosanitary re-export certificates’. The delays this can generate pose particular problems of value losses for short shelf-life products. While currently these problems are only faced along ACP-to-UK-to-EU supply chains, from October 2021 onwards, similar problems will be faced along ACP-to-EU-to-UK supply chains, with this potentially posing some serious challenges to current triangular supply chain operations. Read more “Irish Trade Data on Differential Impact of Border Controls Raises Concerns for Future ACP-EU Triangular Supply Chains”
Disaggregating EU Short Term EU27 Sugar Sector Trends
Summary
In the short term the EC is projecting an increase in EU sugar production and imports following the Covid-19 import on production and imports. When industrial usage and increased EU exports of sugar containing products are factored out the EU has a surplus of production relative to human consumption of sugar of 15.7%. More recent reports, however, suggest actual imports in 2020/21 are down, with declines in ACP exports being particularly pronounced. This is attributed to the ‘smaller EU sugar price premium.’ With this price development projected to become the norm up to 2030, the commercial prospects for ACP sugar exports to the EU27 look far form favourable. This is likely to be compounded by public health policy measures to reduce the consumption of ‘hidden sugars’ in food and drink products. ACP sugar exports will increasingly need to target sugar deficit EU27 markets, where the price premium is much higher than the EU average. Read more “Disaggregating EU Short Term EU27 Sugar Sector Trends”
UK Government Seeking Fundamental Renegotiation of the Northern Ireland Protocol
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”
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”