Summary
The deferment of the implementation of EU’s new organic regulation offers a precedent for addressing the commercial losses ACP organic exporters face if there is no EU/UK organic equivalence agreement in place by 1st January 2021. The lapsing of EU/UK mutual recognition of organic certification on 3rd country products should be deferred until the end of the Covid-19 pandemic plus 9 months, given the travel restrictions and social distancing requirements which complicate the securing of UK or EU27 specific organic certification at the present time. This would avert needless commercial losses for ACP organic exporters and encourage the continued growth in ACP organic exports, which are wholly consistent with both EU and UK sustainability objectives. Read more “Implementation of New EC Organic Products Regulation Postponed but Unresolved Brexit Issue Threatens Commercial Gains of ACP Organic Production”
Category: Sectors
Government of Kenya Looking for Way Out of UK-EAC Continuity Agreement Negotiations Impasse
Summary
Press reports indicate the Government of Kenya is to conclude a bilateral trade agreement with the UK, with other EAC members joining later. This is seen as being based on the concept of ‘variable geometry’, an approach which had been endorsed by the EAC Heads of State in both February 2018 and February 2019.. However, the concept of ‘variable geometry’ has never been utilised in regard to the application of different tariffs within a customs union, since a customs union by definition is based on the application of a Common External Tariff by all members of the customs union. The only way for a Kenya-UK trade agreement to be concluded without undermining the integrity of the EAC customs union Common External Tariff would be if the implementation of reciprocal commitments were deferred until all EAC members agreed to come on board with a common programme of tariff reduction. This would be consistent with the current application of the EU-EAC EPA, where the implementation of reciprocal tariff reduction commitments has not yet been activated, given the reluctance of certain EAC members to come on board. An additional option available to avert a loss of Kenya’s duty-free access to the UK market would be the reactivation of the Transitional Protection Mechanism initially proposed in October 2019, but which was overtaken by events before the need for its’ implementation arose. On this basis, it needs to be recognised any loss of duty-free access for Kenyan exports would be a political choice of the UK government and not an unexpected by-product of the Brexit process. Read more “Government of Kenya Looking for Way Out of UK-EAC Continuity Agreement Negotiations Impasse”
Greenpeace Highlights Trade Policy Payback for Tate & Lyle Sugar for Brexit Support
Summary
Greenpeace has drawn a link between Tate & Lyle Sugars support for Brexit an the 260,000 duty free autonomous quota for sugar established by the UK government, suggesting this trade measure, which will solely benefit Tate & Lyle Sugars, is a reward for earlies political support. Greenpeace believes it will encourage imports of environmentally damaging sugar, mainly from Brazil and harm existing ACP/LDC sugar exporters, while NFU and British Sugar believes it will harm domestic UK sugar beet producers. The effects of the ATQ however will be determined by choices made by the UK government, namely whether it conclude an FTA with the EU and whether the ATQ is used solely as a market stabilisation mechanism or becomes an integral part of the supply equation. These two choices will determine whether less efficient ACP sugar exporters are driven out-off the UK market and the income gained by the remaining ACP suppliers. Read more “Greenpeace Highlights Trade Policy Payback for Tate & Lyle Sugar for Brexit Support”
Road Haulage Issues Likely to be Critical Bottleneck Along ACP Triangular Supply Chains from 1st January 2021
Summary
The scale of the road transportation disruptions along EU/UK supply routes as a result of the UK’s departure from the EU customs union and single market and the consequent creation of border controls are increasingly becoming apparent. The main impact will be unaffected by the outcome of the ongoing EU/UK negotiations. Against this background ACP exporters currently using triangular supply chains may have little choice but to move over to direct exports to final destination markets or the abandonment of markets in the UK, mainland EU or the Republic of Ireland currently served along triangular supply chains. Read more “Road Haulage Issues Likely to be Critical Bottleneck Along ACP Triangular Supply Chains from 1st January 2021”
UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market
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”
Cut Flowers Sector Concerns Over Proposed UK Border Controls Highlighted
Summary
The adverse effects of shortcoming in the UK’s approach to establishing border controls on goods entering from the territory of the EU on the cut flower trade has been highlighted. Information essential to the future conduct of this trade is still not available. Shortcomings in the design of administrative requirements and a general lack of business preparedness have also been highlighted. What is more, multiple freight issues arising from the creation of the new UK/EU border are also likely to severely impact the cut flower sector, with these posing particular problems for the triangular supply chains ACP exporters’ work through. Solutions to facilitate the continued smooth functioning of cut flower triangular supply chains are urgently needed. The outlines of such solutions are now emerging. They need to be actively pushed for by the concerned ACP governments and exporters, in association with Dutch cut flower industry in a context where there is limited ‘band-width’ in the UK and EC for dealing with triangular supply chain issues. Read more “Cut Flowers Sector Concerns Over Proposed UK Border Controls Highlighted”
UK Launches Consultation on its 260,000 Tonne Autonomous Tariff Quota for Raw Cane Sugar Imports
Summary
The UK government has launched a public consultation on its new 260,000 tonnes duty free sugar ATQ. A critical issue will be how the UK manages the ATQ. Given the profound uncertainties around the future supply situation on the UK sugar market arising from the unresolved EU/UK trade negotiations a strong case exists for the adoption of a carefully managed application of the sugar ATQ, with its deployment being regulated to prevent both the emergence of supply surpluses or supply deficits on the UK market in the course of 2021. Such an approach would be beneficial to both ACP/LDC sugar exporters and domestic UK sugar beet producers and processors and could also support the attainment of public health policy objectives, if it was used to foster a gradual increase in UK sugar prices. Two complicating factors however exist, namely: the depth of the impending Covid-19 recession in the UK and the serious commercial challenges facing Tate & Lyles Sugar, which desperately needs to expand the capacity utilisation of its Thames refinery in the context of more remunerative market prices for sugar. The question arises as to whether the experience and capacity exists in the hard pressed UK government administration for the nuanced and sophisticated management of the new sugar ATQ. Read more “UK Launches Consultation on its 260,000 Tonne Autonomous Tariff Quota for Raw Cane Sugar Imports”
Tariff Treatment and Logistical Cost Uncertainties Generated by Stalled EU/UK Trade Negotiations Raises Problems in ACP Supply Contract Negotiations for Exports to the UK Market in 2021
Summary
ACP supply contract negotiations for the delivery of products to the UK market along triangular supply chains are being complicated by the absence of an agreed framework for future EU/UK trade relations and the associated uncertainty around the level of new administrative and logistical costs the new border arrangements will generate. ACP exporters need to try to accommodate estimates of these increased costs into their tender offers for supply contracts currently under negotiation with UK supermarkets. If not, costly surprises could arise if supermarkets insist on current Delivered Duty Paid contract stipulations; which commonly involve all costs linked to the import process being carried by the foreign supplier. For direct ACP exports to the UK market, the prospect of a no-deal UK exit leading to a further revision of the UK’s MFN tariff regime, alongside uncertainty around the basis for the implementation of the UK’s new 260,000 tonne duty free quota for raw sugar imports, is overhanging contract negotiations for products such as bananas and sugar. Read more “Tariff Treatment and Logistical Cost Uncertainties Generated by Stalled EU/UK Trade Negotiations Raises Problems in ACP Supply Contract Negotiations for Exports to the UK Market in 2021”
Structural Price Pressures on UK Banana Market See Winfresh-UK Placed into Administration
Summary
It is unclear what the implications will be for St Lucian banana exports of Winfresh-UK being placed in administration. While efforts are underway to draw Fyffes into a greater role in the marketing of St. Lucian bananas in the UK, it is unclear whether the inclusion of St. Lucian bananas would add value to Fyffes product portfolio, given the uncertainties surrounding the future of the UK banana market. While in May 2020 the UK proposed to retain in place existing MFN tariffs on banana imports beyond 1st January 2021, the UK food price inflation effects of a no-deal UK departure from the EU customs union could see a further revision of the UK MFN tariff schedule, with a move over to the ‘zero production- zero MFN tariff’ approach long advocated by the global trade liberalisation wing of the Conservative Party. St. Lucian and other ACP Bananas exporters would be highly vulnerable to such a policy shift, with this uncertainty making it extremely difficult to plot a way forward for St. Lucian banana exports as supply contract negotiations for 2021 get underway. Read more “Structural Price Pressures on UK Banana Market See Winfresh-UK Placed into Administration”
Continued Lack of Progress Sees Mounting Levels of Frustration on the EU Side and Increased Prospects of a No-Deal UK Departure from the EU Customs Union and Single Market
Summary
EC negotiators are showing growing frustration at the lack of progress in EU/UK trade negotiations. The EU is looking for the UK to move beyond initial ‘red lines’, while the UK is looking for recognition of its sovereign right to determine its trade regulatory framework. Analysts suggest current positions risk lead to a ‘no-deal’ outcome by default. The urgency of ACP exporters assessing the real world implications of the UK’s departure from the EU customs union, with or without a deal, cannot be overstated. Similarly, the urgent need for ACP governments to launch a political initiative to ensure the implications for ACP exporters of the pending changes are acknowledged and addressed cannot be over stated. Read more “Continued Lack of Progress Sees Mounting Levels of Frustration on the EU Side and Increased Prospects of a No-Deal UK Departure from the EU Customs Union and Single Market”