Category: West African EPA

UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market

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Summary
The UK governments’ decision to breach substantive provisions of the Northern Ireland Protocol to the jointly agreed Withdrawal Agreement threatens to make ratification of any EU/UK agreement which may still be concluded extremely difficult. It increases the prospect of an acrimonious no-deal UK departure from the EU customs union and single market at the end of 2020. While the scope exists for policy measures to minimise the negative impact of a no deal UK departure on ACP exports, the window of opportunity for taking these necessary measures is rapidly closing. The absence of appropriate policy intervention will leave ACP exporters alone in facing the cost increasing challenges of a no-deal UK departure will generate. Not all current ACP exporters will be able to adjust to these new commercial realities, with all but the largest and best prepared ACP exporters being squeezed out of UK and some EU27 markets. Read more “UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market”

How Helpful is the ECs Orientation in EU Trade Policy Review Consultation in addressing Post Covid-19 Recovery Challenge in ACP Countries?

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Summary
The EU consultation note on the revision of its trade policy in light of recent developments, has introduced the concept of ‘Open Strategic Autonomy’ as a model for the design and future implementation of EU trade policy. This concept is designed to allow the EU greater policy space in defending EU economic and trade interests, while allowing the EU to more forcefully pursue its long standing policy of preferentially opening up 3rd country markets to EU exports. This is to be realised through the activities of the newly established EU Chief Trade Enforcement Officer. This approach could carry serious implications for the implementation of the ACP EPAs, agreed with the EU as long ago as 2007. It could limit the active use of established trade policy measures in support of post Covid-19 recovery. This despite the relevance of the initial Strategic Autonomy concept to the post Covic-19 socio-economic recovery needs of ACP counties. Current realities in ACP countries require the maintenance and expansion of policy space for measures to reduce the economic vulnerability and enhance the economic resilience of ACP countries. This suggest a need to subordinate the definition and enforcement of EPA commitments to the strategic autonomy needs of ACP countries, defined in light of their specific Covid-19 revealed vulnerabilities. Read more “How Helpful is the ECs Orientation in EU Trade Policy Review Consultation in addressing Post Covid-19 Recovery Challenge in ACP Countries?”

Implications for ACP Exporters of Further Reductions of Import Tariffs on Ecuadorian Bananas

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Summary
At the beginning of 2020 Ecuador secured the benefits of the tariff reductions included in the EU-Andean Pact FTA.  Ecuadorian exporters believe this will further stimulate banana exports to the EU, in a context where Ecuador already accounts for 1 in 4 bananas imported to the EU. It is unclear what the impact of the Covid-19 pandemic will be on Ecuador’s banana export trade to the EU. The Ecuadorian experience highlights the importance of the tariffs applied to banana imports on trade flows. In this context two issues arise for African banana exporters, namely: the future MFN tariffs the UK plans to apply to banana imports after it has left the EU customs union and whether the UK will unilaterally roll over existing duty free access for Ghanaian, Cameroonian and Ivorian banana exports, given the Covid-19 interruptions of ongoing negotiations on ‘UK-only’ Continuity Agreements which were intended to replace the EU trade agreement which will lapse once the UK leaves the EU customs union. African banana exporters have actively made their economic development concerns known to the UK government. It remains to be seen just how the UK government will respond to these concerns. Read more “Implications for ACP Exporters of Further Reductions of Import Tariffs on Ecuadorian Bananas”

Criticisms of New Rainforest Alliance Banana Certification Standards Highlights Centrality of Price Issues to Sustainability Efforts

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Summary
The new Rainforest Alliance certification standard has been criticised by Latin American banana producers for failing to get to grips with the structural problems of cost and revenue distribution along the supply chain. While Rainforest Alliance is keenly aware of the problem, it holds certification alone cannot solve this structural imbalance. Rainforest Alliance is therefore looking to use other tools to leverage changes in cost and revenue distribution along banana supply chains. This could usefully focus on ensuring the inclusion of provisions on cost and revenue distribution in any EU ‘Green Deal’ regulatory initiatives aimed at promoting compliance with environmental and climate change concerns, and their coordinated implementation alongside the EU’s Unfair Trading Practices regulation. This could provide a means of getting to grips the long-term structural concerns of banana producers. Read more “Criticisms of New Rainforest Alliance Banana Certification Standards Highlights Centrality of Price Issues to Sustainability Efforts”

Dominican Republic and Bananas Dominate ACP Organic Products Exports to the EU28

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Summary
ACP countries account for a growing share of EU organic imports, with the Dominican Republic and bananas playing a particularly important role in this trade. In 2019 the entry into force of new EU organic regulations and the UK’s departure from the EU customs union and single market could prove disruptive, unless sensitivity is shown to the potential trade disruptions changes to trade documentation requirements can cause. In the Brexit context an extended transitional period during which the EU and UK will continue to recognize certifications issued by organic certification bodies in each other territories would appear essential. Alternatively, ACP exporters will need to seek dual certification from EU27 and UK registered bodies, with this involving additional costs and considerable uncertainty given Covid-19 related movement and social distancing restrictions. Read more “Dominican Republic and Bananas Dominate ACP Organic Products Exports to the EU28”

Preparing for the Impact of a New EU/UK Border on ACP Exports to the EU

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Summary
This article seeks to highlight the main areas of impact of the new EU/UK border arrangements as these are likely to affect ACP exporters serving EU27 markets. While this will mainly impact ACP exporters using triangular supply chains, it will also have some effects on direct exports to the EU, mainly via it effects on trade administration documentation requirements, the need for valid authorisations and certifications, customs and taxation rules and the rules of origin requirements under preferential trade agreements. While ACP exporters themselves need to make their own assessments of the impact of the UK’s full withdrawal from the EU and set in process appropriate preparations for the changes which will occur, there is some scope for policy interventions to try and mitigate the adverse impact on ACP supply chains.  However, this will require proactive engagement with the EU by the governments of the country’s most seriously impacted by the impending changes. To date there is no evidence the concerned government have yet appreciated the urgency of such policy initiatives.  This could leave ACP exporters having to cope alone with further trade disruptions. This is likely to be most severely felt by those ACP exporting countries already suffering most severely because of Covid-19 related trade disruptions. Read more “Preparing for the Impact of a New EU/UK Border on ACP Exports to the EU”

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”

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”