Category: Regions

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?”

Nestlé’s Withdrawal from Fairtrade Cocoa Purchases Highlights the Need for ‘Due Diligence’ Regulations to Address Price and Income Issues

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Summary
The decision by Nestlé UK&I to abandon Fairtrade cocoa purchases and bring sustainability certification in-house, is in line with a wider corporate trend towards in-house certification in response to growing public concern over the need to promote more sustainable child labour free production practices. This can be seen as part of corporate efforts to pre-empt the introduction of potentially costly mandatory ‘due diligence’ regulations. However, moves away from guaranteed farmgate prices and cocoa farming community Premiums, which the abandonment of Fairtrade sourcing represents, demonstrates a singular lack of understanding of the underlying economic forces which drive deforestation, child labour and unsustainable farming practices. To be effective ‘due diligence’ requirements must be based on delivering a decent income to cocoa farmers and must promote thriving cocoa farming communities. To date beyond some rare corporate initiatives only Fairtrade certification has effectively addressed this issue. Without solid economic foundations, deforestation, child labour and sustainable farming practice commitments are likely to face periodic reversals whenever prices take a downturn. Read more “Nestlé’s Withdrawal from Fairtrade Cocoa Purchases Highlights the Need for ‘Due Diligence’ Regulations to Address Price and Income Issues”

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”

Craft Chocolate Sector Bears Initial Brunt of the Effects of Covid-19 in the Cocoa Sector

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Summary
The craft chocolate market component has been most severely affected by the demand effects of the Covid-19 pandemic, with supply side issues linked to quality and certification also being faced. Providing public sector support to strengthening partnership relationships between fine cocoa producers and craft chocolate companies to enhance the resilience of marketing infrastructure, could provide an important means of assistance to the recovery of this sub-sector. Issues linked to the distribution of price premiums generated by the trend to single origin chocolate products also need to be addressed, to ensure producers of fine cocoa share in the extra income generated by this new trend. Read more “Craft Chocolate Sector Bears Initial Brunt of the Effects of Covid-19 in the Cocoa Sector”

The Covid-19 Pandemic Highlights the Fragility of Moves Towards Child Labour Free and More Sustainable Cocoa Sector Farming Practices

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Summary
To date the demand effects of the covid-19 pandemic have had the greatest effect in the cocoa sector, with the pattern of retail closures hitting the craft chocolate sector most severely. As the pandemic takes hold in West and Central Africa more supply problems could emerge, particularly given recent and projected falls in cocoa prices. This will place increased pressure on already poor and economically distressed households, where an increase in the use of child labour in Cote d’Ivoire has recently been reported. Any moves to address child labour and environmental sustainability concerns will need to address price instability issues and ensure improvements in the net income position of cocoa farmers if they are to be sustainable in the long term. Read more “The Covid-19 Pandemic Highlights the Fragility of Moves Towards Child Labour Free and More Sustainable Cocoa Sector Farming Practices”

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”

What Options for Strengthened EU Regulatory Requirements Would Best Serve the Interests of African Cocoa Farmers?

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Summary
Some form of EU regulatory initiative to promote more sustainable and child labour free cocoa production in the course of 2021 now looks inevitable. The question arises: what form should such regulatory action take, if it is to support the attainment of a decent living wage for cocoa producers? This is a critical question since poor prices and heightened poverty levels have an important bearing on the use of child labour and the pursuit of environmentally damaging cocoa farming practices.  A combination of initiatives founded on bilateral cocoa supply chain agreements between the EU and cocoa exporting countries, linked to the subsequent formulation of due diligence requirements and appropriate modifications to EU competition law, all aimed at addressing the low prices paid to farmers and ensuring net gains to the financial position of farmers as a result of the implementation of environmental and forest protection measures as well as the ending of the use of child labour, would appear to offer the greatest scope for effective action in addressing shared concerns. Read more “What Options for Strengthened EU Regulatory Requirements Would Best Serve the Interests of African Cocoa Farmers?”

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”

EU Figure Highlights Importance of UK Market to EU27 Poultry Sector

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Summary
The UK is a major export market for EU27 poultry meat producers, in recent years taking 1/3 of extra-EU27 exports. In the absence of a UK/EU trade agreement which preserves duty free access on mutual trade in poultry meat, EU exporters would face standard MFN duties in exporting to the UK, while UK exporters would face standard MFN duties in exporting to the EU. If EU exporters faced the same tariffs as Brazilian exporters, then EU exporters of chilled and frozen chicken meat would rapidly be displaced from the UK market in most product areas. This would be likely to generate a substantial surplus of poultry meat on the EU market, for which markets would need to be found across the globe. This needs to be seen in the context of the current importance of African markets in total extra-EU poultry meat exports. Read more “EU Figure Highlights Importance of UK Market to EU27 Poultry Sector”

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”