Category: Southern Africa

Entry into Force of New EU Plant health Regulation Could Pose Serious Challenges for ACP Horticulture Exporters

epamonitoring

Summary

EU phytosanitary controls are becoming increasingly stringent and administratively demanding. Almost all fruit and vegetable products will now require phytosanitary certificates and be subject to document checks which are being applied with varying degrees of rigour by different national EU phytosanitary authorities. For high risk products comprehensive documentation on control measures in place will need to be submitted in advance, if continued access to the EU market is to be allowed. These stricter EU import controls will require the adoption of pre-export pest control and verification measures. The costs increasing effects this gives rise to could drive smaller ACP exporters out of the EU market, although it is Kenyan pepper exports who have been the first to diversify away from the EU market to lower priced but more reliably accessible markets in the Middle East. The scale of ACP exports potentially adversely affected is huge. However, the UK’s departure from the EU customs union and single market could offer some relief if future UK risk assessments for phytosanitary controls were to be based solely on UK agri-climatic conditions and patterns of production and not pan EU agri-climatic conditions and patterns of production. Read more “Entry into Force of New EU Plant health Regulation Could Pose Serious Challenges for ACP Horticulture Exporters”

Conservative Party Election Victory Mean Full Speed Ahead with Brexit and Raises The Threat of Loss of ACP Tariff Preference as a Result of Post-Brexit UK MFN Tariff Choices

epamonitoring

Summary
The Conservative Party’s election victory which has delivered a 80 seat majority means Parliamentary approval of the Withdrawal Agreement can now go ahead and the UK can leave the EU on 31st January 2020. The UK will however remain part of the EU customs union and single market until at least 1st January 2021. The size of the majority means the influence of the ERG hard Brexit group of Conservative MPs will be reduced. This will give Prime Minister Johnson more space to extend UK membership of the EU customs union and single market if the conclusion of a comprehensive free trade area agreement by 1st January 2021 proves unrealistic. In this context the major issue facing ACP exporters in the first half of 2020 will be the impact of the scheduled UK-Only MFN tariff review on the value of rolled over ACP tariff references, with bananas, preserved tuna, fresh beans and certain value added cocoa products looking vulnerable to a loss of value of rolled over preferences (current ACP direct exports to the UK valued at €936 million). This need to be seen in a context where the UK government has already made the decision to set UK-only MFN tariffs for all other fruit, vegetables and cut flowers at zero (current ACP direct exports to the UK valued at €449 million). The trade effects for these products could be even greater given the volume of exports to the UK which takes place along triangular supply chains focussed on the landing of cargoes in the Netherlands and Belgium prior to onward shipment. The commercial impact of this process of preference erosion will however needs to be assessed on a product by product basis in light of the functioning of individual ACP supply chains and current patterns of UK imports and the tariffs actually levied on this current trade. Read more “Conservative Party Election Victory Mean Full Speed Ahead with Brexit and Raises The Threat of Loss of ACP Tariff Preference as a Result of Post-Brexit UK MFN Tariff Choices”

Rising EU SMP Prices and New Mechanism for Monitoring FFMP Exports Could Lay the Basis for Easing Competitive Pressures on ACP Milk Producers

epamonitoring

Summary
Given the trade in milk powders is the principal area through which EU dairy sector developments impact on ACP dairy sector development, the increase in EU SMP prices which has followed on from the elimination of EU SMP intervention stocks should offer some relieve to African milk producers. This being noted no immediate benefits will be felt given the 30% increase in EU SMP exports from January to July 2019. The situation is further complicated by the level of EU exports of fat filled milk powders to sub-Saharan Africa, which is likely to continue to expand for the foreseeable future. Monitoring this trade should be simpler in future given the creation of a consolidated tariff heading for this product (19019050). The revised EU27/UK Withdrawal Agreement along with the UK’s post Brexit MFN tariffs for dairy products could reduce the adverse trade effects of any ‘No-Deal’ Brexit which could still emerge from 1st January 2021. What this could mean for EU-ACP dairy sector trade flows will however require detailed product by product analysis, with the key consideration being the extent to which disruptions of existing EU27 dairy exports to the UK result in increased EU production and stocks of SMP. Read more “Rising EU SMP Prices and New Mechanism for Monitoring FFMP Exports Could Lay the Basis for Easing Competitive Pressures on ACP Milk Producers”

Non-Tariff Costs For ACP Exporters Will Need to Be Addressed under a ‘No-Deal’ or ‘Hard’ Brexit

epamonitoring

Summary
According to UNCTAD trade costs linked to NTM are now higher than tariffs, with a need for cooperation and greater use of IT solutions to minimise such cost while meeting key public policy objectives. The non-tariff issues arising for ACP exporters within the process of the UK’s withdrawal from the EU, particularly under a ‘No-Deal’ Brexit scenario need to be fully addressed is substantial new costs are not to be generated for ACP agro-food exporters. Key areas where clear UK and EU policy commitments are needed include:  removing the need for customs checks where DFQF access is enjoyed to the EU and UK markets; allowing continued use of trade facilitating IT systems until alternatives are in place; continuing with phytosanitary checks in the EU for goods destined for the UK; -establishing mechanisms for a review of ‘UK-Only’ phytosanitary controls in Continuity Agreements concluded with the UK. Read more “Non-Tariff Costs For ACP Exporters Will Need to Be Addressed under a ‘No-Deal’ or ‘Hard’ Brexit”

EU Sugar Production Adjusting After Quota Abolition and In Face of Low Prices, with Renewed Growth in Imports and Reduced Exports

epamonitoring

Summary
In the face of sustained low prices EU sugar production is declining as part of the now post-quota abolition market adjustment, with lower areas under sugar beet being contracted by beet processing companies. There is a growing variation in prices across EU markets with ACP exporters needing to enhance their marketing operations in the EU to maximum total revenues gained on sales to the EU. ACP export volumes to the EU nearly doubled in 2018/19 compared to the depressed levels of 2017/18, while EU export volume fell back dramatically (-53%), but nevertheless remained above pre-quota abolition export levels (+23%). ACP sugar exporters have a disproportionate dependence on the UK market with Belize Guyana and Fiji being particularly exposed. ACP sugar exporters will thus need to keep a close eye on developments around Brexit in the coming year, given the impact a ‘Hard’ Brexit could have on price levels on both the UK and EU27 markets. Read more “EU Sugar Production Adjusting After Quota Abolition and In Face of Low Prices, with Renewed Growth in Imports and Reduced Exports”

Evidence Suggests Extending Sugar Content Tax to Snacks Would be More Effective in Combatting Obesity

epamonitoring

Summary
Public health concerns are leading to a gradual but sustained reduction in EU sugar sector consumption. With the EU sugar sector finding a new post-quota equilibrium this is likely to reduce market opportunities in the EU for ACP sugar exporters. This will require improved marketing of sugar in the EU and the identification and exploitation of markets beyond the EU. This will also need to include at the national level in ACP sugar exporting countries structured dialogues with the international sugar companies involved in local sugar production on a common strategy for market and revenue diversification which protects and promotes the economic well-being of local sugar farmers and sugar sector workers. Read more “Evidence Suggests Extending Sugar Content Tax to Snacks Would be More Effective in Combatting Obesity”

EU Exports of Poultry Meat Continue to Increase Dramatically

epamonitoring

Summary
EU poultry meat production and consumption continues to increase, with this generating a 12% growth in exports in the first half of 2019 and the prospect of continued growth in exports up to 2021. EU poultry meat exports are once again taking off to South Africa as the December 2016 AI based import restrictions are progressively removed. The expansion of EU poultry meat exports to sub-Saharan Africa is unlikely to ease in the coming years with this posing policy dilemmas for governments where local poultry industries exist.  Given current trends in EU policy, African government are likely to come under increased pressure to remove all existing non-tariff measures which inhibit EU poultry meat exports, where these are in technical violation of EPA commitments. These pressures would be intensified by a ‘No-Deal’ of ‘Hard’ Brexit from 1st January 2021. Read more “EU Exports of Poultry Meat Continue to Increase Dramatically”

EU FTA Implementation Report Highlights the Importance of Trade Agreements to EU Agro-Food Exports

epamonitoring

Summary
The latest EC FTA implementation report highlighted the particular importance of such agreement to EU agro-food exporters. Attention is increasingly being focused on the removal of non-tariff barriers to EU exporters in the context of the full implementation of agreed tariff reduction commitments. While in 2018 exports to sub-Sahara Africa were an exception to the overall trend in the expansion of the value of EU agro-food exports, the decline in the value of exports to sub-Saharan Africa was less marked in countries where fully implemented FTAs were in place. A review of trends in EU exports of agro-food products where the implementation of an EU FTA had been completed (the EU-South Africa TDCA) revealed that in those products where the margins of tariff preferences generated by the agreement were significant a remarkable growth in the value of EU exports occurred between 2009 and 2016, with in most of these product areas this growth continuing through to 2018 despite South Africa’s economic difficulties (though be it at a slower rate). This illustrates the true value of EU trade agreements to the EU agro-food sector in trade relations with sub-Saharan Africa. Read more “EU FTA Implementation Report Highlights the Importance of Trade Agreements to EU Agro-Food Exports”

Spanish Citrus Producers Intensify Pressure for More Controls on Citrus Imports from South Africa

epamonitoring

Summary

New arrangements have been set in place for phytosanitary clearing of South African citrus through the port of Vigo.  This is causing consternation in the financially stressed Spanish citrus sector, with calls being made for a ‘political solution’ to ease their plight. A variety of trade restrictive measures are being advanced including: the designation of a single EU port of entry to maximize the effectiveness of phytosanitary controls; EU in country inspections in South Africa; mandatory cold treatment for all imports; precautionary border closures when a maximum permitted level of interceptions occurs; and the invocation of the safeguard provisions of the EU-SADC EPA. However the commercial implications of many of these measures would lead generate fierce resistance from northern European commercial interests (traders, port authorities, supermarkets). Any pro-active use of pre-export risk assessment requirements against the South African citrus sector meanwhile would send shock waves across all ACP fruit and vegetable exporting countries are of which have weaker compliance enforcement capacities than the highly organized South African citrus sector. Read more “Spanish Citrus Producers Intensify Pressure for More Controls on Citrus Imports from South Africa”

Report Reviews Impact of Current CAP Financial Instruments on Developing Countries

epamonitoring

Summary
A study for the European Committee of the Regions has found ‘CAP subsidies continue to have a production-stimulating effect’, with EU production and exports being greater than would be the case in the absence of CAP subsidies. The case studies in the report look at the effects of CAP subsidies in regard to milk powders, chicken meat and processed tomato products on vulnerable developing countries (VDCs – which includes all ACP countries). It draws nuanced conclusions in regard to the effects of the provision of CAP subsidies but on the basis of the terms of reference of the report largely neglects the effects of CAP related EU agricultural trade policies on VDCs. The report calls for: ‘greater disciplines on coupled support payments’; adjustment to EU market management measures so they do not destabilize prices for VDC producers; ‘the phasing out of decoupled payments for income support’, and ‘the creation of a platform allowing stakeholders from VDCs to be involved in a dialogue on PCD and agri-food trade issues’. Read more “Report Reviews Impact of Current CAP Financial Instruments on Developing Countries”