Summary
The November 2020 NAO report paints a pessimistic picture of the prospects for the effective functioning of the UK/EU border controls in 2021. Developments since November 2020, in regard to the intensifying Covid-19 crisis will not have helped matters. ACP triangular supply chains, which require the movement of goods across an EU/UK border, are likely to be most severely affected. However, serious congestion at UK seaports, with both berthing and unloading delays, could mean direct ACP sea freighted exports could also face delays, with these compounding the system wide challenges UK border control authorities will face in 2021. Read more “Key Challenges Identified in the NAO Brexit Preparedness Report: Implications for the ACP”
Category: West African EPA
Punishing Start to Ghana’s Post Brexit Trade Relations with the UK
Summary
Despite long-standing warnings over the complexities faced in rolling over EU trade agreements with West Africa and the need for transitional arrangement to avert a highly damaging hiatus in trade relations between Ghana and the UK, on 3rd January 2021 the UK government imposed standard MFN tariffs (£95/tonne) on Ghanaian bananas landed in the UK. This is effectively holding a gun to the head of the Ghanaian government to agree to specific provisions in the ‘rolled over’ agreement on the tariff phase down schedule. The Government of Ghana has long expressed concerns over the need to ensure consistency between it tariff commitments under the UK agreement and its regional ECOWAS trade protocol commitments. Given the political sensitivity of this issue in Ghana the ongoing UK/Ghana negotiations could run substantially beyond the matter of weeks alluded to in the Joint December 31st statement. This could seriously undermine Ghana’s long term banana export trade to the UK which has taken over a decade to build up and could ensure Ghana’s tuna canning plants which have been closed over Christmas, never reopen. The first step in the UK’s autonomous trade policy will then have been to undermine tens of thousands of jobs in a key Commonwealth ally in Africa, which represents a bastion of democratic stability in a troubled region. Read more “Punishing Start to Ghana’s Post Brexit Trade Relations with the UK”
Short Term Road Haulage Regulatory Fix Reassures Hauliers but Uncertainties Remain
Summary
The EU has proposed regulatory proposals for contingency measures in four main areas: fishing activities, aviation connectivity and safety, road transport connectivity, and rail connectivity. The two main areas of concern to ACP exporters relate to rail and road connectivity between the mainland EU and the UK. These regulatory measure for the road haulage sector while essential will not address the problems of road haulage delays and rising costs which are now emerging. However, these delays and cost increases will be much more severe from 1st January 2021 if these contingency measures are not in place. The issue of aviation connectivity, if not addressed could also carry consequences for international aviation services. This could compound the air freight challenges which have arisen as a result of the Covid-19 pandemic. Any breakdown in EU/UK fisheries relations meanwhile, could carry trade documentation and even tariff implications for the onward trade in ACP fisheries products from the EU to the UK. Read more “Short Term Road Haulage Regulatory Fix Reassures Hauliers but Uncertainties Remain”
UK Kenya Agreement Leaves Triangular Supply Chain Issues Unresolved but Suggests Progress on Rules of Origin Issues Could be Possible
Summary
A Kenya-UK trade agreement has been concluded which preserves duty free access for Kenyan exports to the UK market beyond 31st December 2020. However, this agreement fails to avoid potential disruptions of all current supply routes for tariff free access to the UK market. This is a result of the failure to address future trade issues along triangular supply chains, which serve the UK market via initial landing in the EU. This issue is of considerable importance to the East African region, given the current routes used in serving the UK market in major export sectors (e.g. cut flowers). In the context of a no-deal UK departure, issues will also arise for other major ACP triangular supply chains where some repackaging or simple processing takes place in the EU prior to onward shipment to the UK. These triangular supply chain issues need to be urgently addressed. While the relaxation of UK phytosanitary controls could facilitate an expansion of Kenyan exports to the UK, this is highly unlikely in the livestock sector. Rules of origin improvements could prove relevant in other ACP-UK EPA contexts and should be studied closely. Finally, the 7-year moratorium on tariff reductions defers any immediate conflicts between the implementation of the UK-Kenya agreement and the maintenance of a common external tariff for the East African Customs Union Read more “UK Kenya Agreement Leaves Triangular Supply Chain Issues Unresolved but Suggests Progress on Rules of Origin Issues Could be Possible”
Appointment of Chief Trade Enforcement Officer Could Signal a Push More Rigorous Enforcement of EPA Commitments Made by ACP Governments
Summary
The appointment of an EU Chief Trade Enforcement Officer is likely to see the EU more rigorously enforce the commitments entered onto by ACP governments under EPAs. Particular concerns arise in regard to the interpretation and application of provision dealing with trade defence mechanisms established under the EPAs (safeguard and anti-dumping provisions), the ‘Prohibition of quantitative restrictions’, and ‘National treatment’. The rigorous interpretation and enforcement of these commitments could undermine national agri-food sector development strategies across a wide range of ACP countries. There are concerns disputes with ACP countries constitute areas for ‘early wins’ for the CTEO, given the limited legal capacity of ACP governments to engage in dispute settlement processes and the limited scope for ACP retaliatory action. Particular concerns arise in product areas where a no-deal Brexit could generate severe EU/UK trade disruptions (e.g. the poultry meat sector) and ACP markets are major outlets for EU exports. Read more “Appointment of Chief Trade Enforcement Officer Could Signal a Push More Rigorous Enforcement of EPA Commitments Made by ACP Governments”
EU joins UK in rolling over recognition of organic certification throughout 2021
Summary
The EC decision to recognise UK issued organic certification for the whole of 2021, averts the immediate danger of any loss of the commercial benefits of organic sales by ACP exporters on EU27 markets where these sales currently take place on the basis of UK issued organic certification. However, in the absence of an EU/UK mutual recognition on organic certification before the end of 2021, ACP exporters will need to secure both EU and UK organic certification with the additional costs this will entail, if the long term commercial benefits of organic sales are to be secured beyond 2021. The scope for these kinds of parallel ‘unilateral’ EU and UK actions and policy initiatives needs to be fully exploited if the commercial disruptions to ACP triangular supply chains are to be minimised. Read more “EU joins UK in rolling over recognition of organic certification throughout 2021”
Effective Engagement with Expanded Freight Forwarding Sector Seen as Critical to Future UK/EU Border Clearance Operations
Summary
The UK government is urging businesses to use the services of freight forwarders and other customs intermediaries, to facilitate the smooth functioning of post Brexit UK/EU border clearance operations. However, the NAO reports the necessary expansion of the customs intermediate sector has simply not occurred and is unlikely to take place until the second half of 2021 at the earliest. This will see both rising costs and shortages of customs intermediaries, which could slow down border clearance operations. The resulting delivery delays could strip value out of ACP short shelf life product triangular supply chains. Urgent action is needed to secure the services of customs intermediaries for ACP trading operation along triangular supply chains in 2021. Unfortunately, given the surging demand for the services of customs intermediaries such actions may already be too late. Read more “Effective Engagement with Expanded Freight Forwarding Sector Seen as Critical to Future UK/EU Border Clearance Operations”
EU27 Poultry Sector Surprisingly Resilient in Face of Covid-19 Challenges, But Brexit Challenges Could See Expanded Export Drive to ACP Markets
Summary
The EU poultry meat sector has proved surprisingly resilient to Covid-19 trade and market disruptions. While both EU imports and exports have fallen, exports of poultry meat to the main sub-Saharan African markets have risen dramatically. This role of sub-Saharan African markets as “markets of last resort” raises concerns about the impact of a ‘no-deal’ or ‘Thin FTA’ outcome to the Brexit process on international trade in poultry meat given the scale of current mutual EU/UK trade (1.2 million tonnes per annum). There are fears ACP markets could be targeted should this EU/UK trade be disrupted. This could then disrupt established or emerging African poultry sectors. ACP governments will need to prepare for these likely export surges, in a context where the EU’s new Chief Trade Enforcement Officer will be increasingly seeking to remove current trade restrictions on EU poultry meat exports, where these violate trade agreement commitments. Greater transparency in trade statistics on EU poultry exports to developing country markets could facilitate operationalising EU policy coherence for development commitments, particularly if a ‘window’ were opened through which the concerns of local ACP poultry producers could be made known. Read more “EU27 Poultry Sector Surprisingly Resilient in Face of Covid-19 Challenges, But Brexit Challenges Could See Expanded Export Drive to ACP Markets”
Uncertainties Arising from Unresolved Future EU/UK Trade Issues Generate Contract Negotiation Challenges for ACP Exporters
Summary
There area host of Brexit related uncertainties overhanging the negotiation of ACP-UK supply contracts for 2021, which threaten to increase costs to such an extent as to erode the profitability of a range of ACP exports to the UK market. ACP short shelf life product exports along triangular supply chains are likely to be most severely affected. The currency issue will also affect direct ACP exports. How these short-term issues are dealt with, could carry long term implications, especially for small scale ACP exporters. Public policy interventions to support Codes of Conduct for dealing with the distribution of additional costs, based on the principles enshrined in the EU UTP directive, could usefully be launched. In the EU, traders in short shelf life products would appear to have a long term vested interest in short term burden sharing initiatives; otherwise ACP exporters will be compelled to seek out new direct routes in serving UK markets. Read more “Uncertainties Arising from Unresolved Future EU/UK Trade Issues Generate Contract Negotiation Challenges for ACP Exporters”
Growing Importance of Raising the Farm Gate Price of Cocoa to the Elimination of Child Labour in Cocoa Supply Chains Recognised, but Strong Headwinds Faced
Summary
While proportionally the use of child labour has not increased in line with the expansion of cocoa production, data suggests some 1.56 million children continue to be employed in the Ghanaian and Ivorian cocoa sectors. NGOs campaigning on child labour issues have condemned 20 years of failure and criticised the focus on public relations rather than substantive solutions. The persistent nature of the challenge faced has been recognised, as has the central issue of net farm gate prices. While the LID payment initiative has been welcomed, a major four-fold increase in farm gate prices is held to be necessary to ‘move the dial’ on the use of child labour in cocoa farming in West Africa. Currently the benefits of the LID payment are dwarfed by losses arising from cocoa market price volatility. Getting to grips with the net farm gate price issues, in ways which ‘move the dial’ on the use of child labour, can be seen as the critical issue to be addressed in the coming months in drawing up EU ‘due diligence’ regulations related to the cocoa sector. Read more “Growing Importance of Raising the Farm Gate Price of Cocoa to the Elimination of Child Labour in Cocoa Supply Chains Recognised, but Strong Headwinds Faced”