Category: Southern Africa

State of Play in the EU/UK Brexit Negotiations: Update 4 February 2019

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Summary
The last epamonitoring.net article dealing with the process of EU/UK withdrawal negotiations covered the EU’s approval of the UK/EU Withdrawal Agreement (26th November 2018) and the subsequent deferment of the UK parliamentary vote on approving the Withdrawal Agreement. From mid-December until mid-February the UK Parliamentary process for ratifying the mutually agreed EU/UK Withdrawal Agreement has been stalled. This article provides an update of developments since the December 2018 UK governments’ decision to defer the Parliamentary vote on the Withdrawal Agreement until 2019 and the potential implications for ACP exporters serving the UK market of the ongoing uncertainty. Read more “State of Play in the EU/UK Brexit Negotiations: Update 4 February 2019”

UK Signs Continuity Agreement with ESA Governments

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Summary
The UK’s ambition to ‘rolled over’ EU reciprocal trade agreements into ‘UK only’ trade agreements has been given practical expression with the conclusion of the first 2 ‘Continuity Agreements’, with Chile and the ESA EPA Group respectively. Additional agreements are planned in the coming weeks with CARIFORUM, Fiji, PNG and the SADC EPA group. However it is unclear whether such trade agreements can be concluded with Kenya, Ghana, Ivory Coast and Cameroon. Failure to conclude a Continuity Agreement would see exporters in these countries facing standard MFN or GSP import tariffs. These Continuity Agreements appear to leave a range of important issues unresolved ranging from: the trade documentation to be utilised from day 1 of Brexit; the future value of duty free quota free access to the UK market in the post Brexit context; the disruptive impact of a non-deal Brexit on triangular supply chains and most fundamentally the rules of origin to be applied under ‘UK-Only’ trade deals once the UK is no longer part of the single EU customs territory. It is unclear whether these ‘Continuity Agreements’ are simply a mechanism to secure ACP duty free-quota free access to the UK market under a ‘no-deal’ scenario or a crafty attempt to side step comprehensively addressing the rules of origin constraint on UK exporters under ‘UK-Only’ trade deals which will arise from leaving the customs territory of the EU. In this context  it would appear more appropriate for the UK government to unilaterally extend existing terms and conditions of access to the UK market which ACP EPA signatories enjoy, so as to allow time for a more thorough going negotiation of bilateral UK-only trade agreements which are WTO compatible, operationally applicable and development friendly. Read more “UK Signs Continuity Agreement with ESA Governments”

Impact of EU FTAs in the Agri-Food Sector

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Summary

EU FTAs are of growing importance to the growth of EU agri-food sector exports, with the EU using a variety of policy tools to increasingly open up overseas markets to EU exports. However the EU’s use of trade policy tools to protect EU producers is in distinct contrast to the policy prescriptions the EU seeks to enshrine in its trade agreements with ACP countries when it comes to the use of traditional agri-food sector trade policy tools aimed at managing trade liberalisation processes in sensitive sectors. The structure of EU EPAs does little to address the fundamental structural imbalance in EU-ACP agri-food sector relations. Fundamental policy coherence issues need to be addressed across the broad ambit of EU-ACP agri-food sector relations if the structural imbalance is to be addressed. The challenges faced in this regard are only likely to be exacerbated by recent EU agricultural policy changes and the Brexit process. Read more “Impact of EU FTAs in the Agri-Food Sector”

Putting the Implementation of the SADC-EU EPA in Context Factoring in the Earlier EU-South Africa TDCA

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Summary
The review of the implementation of the EU-SADC EPA in 2017 notes in passing the exceptionally high growth rate in EU agro-food exports to South Africa since the entry into force of the EU reciprocal preferential trade agreement in 2000. Since 2009 this has seen remarkably high rates of expansion in food categories where tariffs have been dismantled and the EU has been exempted from trade measures adopted to curb increases in imports which threaten to undermine domestic production. The experience since 2009 raises serious questions about the effectiveness of the anti-dumping and safeguard provisions included in EU trade agreements. The implementation of safeguard measures and even SPS measures against EU agro-food exports is a fiercely contested area under the EU-SADC EPA. Finally the linking of development assistance provisions to EPA implementation priorities is potentially a double edged sword, since it raises the question of whose priorities are being promoted. This needs to be seen in the context of the acute tensions between African structural economic development objectives and EU export interests in the agro-food sectors which are seen as increasingly central to the European agricultural model. Read more “Putting the Implementation of the SADC-EU EPA in Context Factoring in the Earlier EU-South Africa TDCA”

Implementation of EU-ACP Economic Partnership Agreements: The State of Play in 2017 in Perspective

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Summary
While EPA negotiations commenced with all ACP countries in 2002 by the end of 2017 only 28 of 79 ACP governments had signed and ratified EPAs in place. Negotiations to complete regional EPAs in the EAC and West Africa remain stalled by the reluctance of key governments to accede to a regional EPA, with this generating tension within regional integration initiatives. While tariff reduction and elimination commitments vary across agreements in terms of scope and the timetables for implementation, provisions restricting the utilisation of non-tariff trade policy tools are common to all agreement and are likely to have the same effects if rigorously interpreted and applied, despite variations in wording. EU agro-food exporters see the application of non-tariff measures as more important than tariffs in holding back further expansion of EU exports. This is likely to become a growing area of contention in EU-ACP trade relations, since to date the EC has ‘soft peddled’ on this issue in an efforts to complete regional EPA negotiation processes in Africa. Meanwhile the value of ACP preferential access for agro-food exports is being undermined by new EU trade FTA agreement. These effects are likely to further compounded by the Brexit process. ACP efforts to place their structural economic development objectives at the heart of the future ACP-EU Partnership Agreement are being resisted by the EC, with this reflecting and underlying tension between EU agro-food sector export interests and ACP structural development objective sin the agro-food sector. Read more “Implementation of EU-ACP Economic Partnership Agreements: The State of Play in 2017 in Perspective”

UK Dependence on the EU for ‘Dark’ Meat Exports Potential Source of Concern

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Summary
The UK poultry sector is dependent on exports of ‘dark meat’ to maximise its revenues. Currently 70% of these exports go to EU27 markets. This trade will become increasingly difficult under a ‘no-deal’ Brexit scenario if the EU applies both standard MFN tariffs and its rigorous 3rd country import controls on UK poultry meat. The application of such rigorous controls is made more likely by the probable shortage of veterinarians in the UK post Brexit to carry out the inspections and certification required for imports into the EU to take place. Attaining compliance with standard EU poultry meat import requirements or finding internal markets UK markets for poultry ‘dark meat’ if likely to take some time. This could leave UK exporters seeking alternative overseas markets for their ‘dark meat’ exports from 30th March 2019, in a context where ACP markets already take 42.2% of overall UK extra-EU poultry meat exports. Both African and Caribbean governments who wish to support local poultry sector development will need to consider carefully how they are to manage this likely development. Read more “UK Dependence on the EU for ‘Dark’ Meat Exports Potential Source of Concern”

Shortages of Cold Storage Space Linked to Brexit Stockpiling Could Disrupt Some ACP Chilled and Frozen Exports

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Summary
Fears of supply chains disruption arising from a ‘no-deal’ Brexit has seen food manufacturers and retailers stockpiling supplies to such an extent there is now an acute shortage of cold store space in the UK. This could generate serious problems for ACP exporters of chilled and frozen products which have not already contractually locked in access to cold storage capacity. ACP exporters of chilled or frozen products urgently need to review whether they have contractually secure access to cold storage capacity on route to serving their final customers. If not they will need to intensify their search for what limited cold store capacity remains available across the UK. Read more “Shortages of Cold Storage Space Linked to Brexit Stockpiling Could Disrupt Some ACP Chilled and Frozen Exports”

UK National Audit Office Warns of Lack of Border Preparedness for Brexit

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Summary
The NAO report on UK border preparedness for a ‘no-deal’ Brexit makes disturbing reading, confirming many of the concerns raised earlier by private sector bodies and professional associations. For example, it is highly unlikely 11 of the 12 work streams required to ensure effective management of border operations will be in place on time, while recruitment programmes for veterinary staff required to continue to ensure the smooth trade in animal products have not yet got underway, despite their planned launch in April 2018. The prospect of serious failures in UK border control systems under a ‘no-deal’ scenario is seen as high while even a twenty one month transition period would leave the UK government facing serious challenges. ACP agro-food exporters, particularly those serving UK markets via EU27 member states, need to start examining how they can reduce their vulnerability to Brexit related failures in UK border control systems and what they can do to ‘Brexit proof’ their supply chains. They will also need to look at how contracts can be structured to share the burden of possible trade disruptions (leading to high levels of wastage of food products) and whether insurance cover can be secured against such risks. Read more “UK National Audit Office Warns of Lack of Border Preparedness for Brexit”

Growing African Demand Fuelling Poultry Meat Imports with EU Likely to Continue to Play Major Role

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Summary
Growth in African poultry production is projected to lag behind growth in consumption making Africa the region with the highest rate of growth in poultry meat imports. African governments need to adopt policies which will encourage poultry companies in exporting countries to invest in local poultry meat production. This would build on an emerging trend. This may require managed trade regimes in the poultry meat sector, similar to those used by the EU. This may also require flexibility in how existing EPA commitments on the use of non-tariff trade policy tools are interpreted and applied so as to create market space for expanded domestic production.  However the trade disruptive effects of a ‘no deal’ could make it more difficult for the EC to implement such a flexible approach. Read more “Growing African Demand Fuelling Poultry Meat Imports with EU Likely to Continue to Play Major Role”

Sugar Substitution Gaining Pace in EU Amid Falling EU Import Demand

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Summary
While the impact of EU sugar production quota abolition is the most immediate concern to ACP exporters given the dramatic decline in EU prices paid for ACP sugar and the 60% decline in ACP sugar export volumes to the EU, the long term trend towards replacing sugar and reducing sugar usage in food and drinks is also a major source of concern. This will lead to an overall reduction in EU sugar consumption in a context where the future scaling back of EU production from record levels in 2017/18 is unlikely to see a return to historical levels of EU imports from ACP countries. This is likely to be compounded by the withdrawal of the UK from the EU. This means ACP sugar exporters will need to look to markets in Asia and particularly for African producers, in Africa. They will also need to look to the more systematic exploitation of non-sugar revenue streams linked to sugar cane production. Read more “Sugar Substitution Gaining Pace in EU Amid Falling EU Import Demand”