Summary
With the ending of the two year notification period set out under Article 50 of the EU Treaty and the House of Commons having rejected the Withdrawal Agreement for a 3rd time, the Brexit process is on borrowed time. The UK government will now have to submit an alternative way forward in the Brexit process if a no deal Brexit is to be avoided on the 12th April 2019. While this may include a longer extension of the Article 50 period beyond the 2 weeks the EU Council has currently granted, the prospect of a no-deal Brexit on 12th April cannot be ruled out, despite a huge 240 Parliamentary majority against the UK leaving the EU without a deal. Against this background, after providing an update on the Brexit process in the UK, this article reviews the situation of ACP countries and regions which currently trade with the UK under an EU EPA. Read more “Which ACP EPA Signatory Countries Would be Most Vulnerable to a 12th April No Deal Brexit?”
Category: Sectors
UK Signs Continuity Agreement with Caribbean ACP Countries
Summary
On 22nd March 2019 the UK government signed a Continuity Agreement with representatives of a number of Caribbean ACP governments. The UK government press release highlighted the benefits of the agreement to Caribbean banana, sugar and rum exporters. While the agreement leaves Caribbean signatories well placed to exploit expanded market opportunities which a no-deal Brexit would give rise to, these benefits could rapidly disappear. The UK government is committed to a wide ranging review of its temporary MFN tariff schedule within 12 months of a no-deal departure from the EU. It is essential for Caribbean Continuity Agreement signatories to ensure existing MFN duties for bananas and sugar remain in place in the medium to long term. Important issues related to the functioning of triangular supply chains and the future of autonomous UK phytosanitary controls linked to UK agro-climatic conditions also need to be addressed. In light of these issues there is a need to attach an “Annex of Concerns” to the newly conclude UK-Caribbean Continuity Agreement. This should set out both areas where the rolled over provisions of the existing EPA can and should be improved to enhance Caribbean exports trade and where additional agreements are needed to preserve continuity of current flows, including triangular trade flows. Read more “UK Signs Continuity Agreement with Caribbean ACP Countries”
Trends in the EU Rice Market and the Potential Impact of Brexit on ACP Rice Exports
Summary
While 6 ACP countries export rice to the EU, this trade is wholly dominated by Guyana and Suriname. The unit value of Guyanese and Surinamese rice exports to the EU has fallen 23% and 30% respectively between 2012 and 2017. This needs to be seen in the context of the granting of fully duty free-quota free access to LDC rice exporters from 2009 and the reduction of the EU intervention price for rice and shift over to direct aid payments to EU rice producers in 2013. Despite the price decline Guyana exported 31% more rice to the EU market in 2017 than 2007. Up to 2030 EU rice imports are projected to increase 16.7%, although this does not factor in the withdrawal of the UK from the EU. The UK takes 22.7% of total EU rice imports and 12.4% of rice imports from ACP countries. The UK’s withdrawal would impact on the EU’s TRQ based managed trade regime for rice, since such imports would then be concentrated on EU27 markets. What is more any moves by the UK to abolish current MFN tariffs on rice given the absence of domestic UK production would greatly intensify competition from Indian and Thai rice exporters, potentially pushing Guyanese and Surinamese rice exporters entirely out of the UK market. Read more “Trends in the EU Rice Market and the Potential Impact of Brexit on ACP Rice Exports”
Fiji and Papua New Guinea Sign onto Continuity Agreements with the UK
Summary
While the concluded Continuity Agreement with Fiji and PNG preserves current duty free quota free access to the UK market under a no-deal Brexit scenario, it provides only temporary assurances on the maintenance of the value of these rolled over tariff preferences. The UK’s no-deal Brexit MFN tariffs announced on 13th March, will only last up to12 months after the UK’s departure from the EU, with a substantive tariff review being conducted during this period. In addition the existing Continuity Agreement fails to take account of the scope for improving the current rules of origin applied to Pacific island exports which could open up substantial new export opportunities in a context where the regions export trade with the UK has been in decline in recent years. In this context there would appear to be a need to attach an “Annex of Concerns” to the newly conclude UK-Pacific Continuity Agreement, setting out areas where the rolled over provisions of the existing EU EPA can and should be improved and where additional agreements are needed to preserve and enhance current trade. Read more “Fiji and Papua New Guinea Sign onto Continuity Agreements with the UK”
The UK’s Proposed New MFN Tariff Regime: Protects ACP Interests in the Short Term But…..
The UK’s Proposed New MFN Tariff Regime: Protects ACP Interests in the Short Term
Summary
While the UK’s proposed no-deal Brexit MFN tariff schedule would ease immediate ACP concerns over the loss of value of rolled over tariff preferences arising from the removal of MFN import duties, the short duration of the proposed measures provides no longer term assurances of the value of any tariff preferences which might be rolled over under the UK’s proposed ‘Continuity Agreements’. The new announcement leaves unaddressed just how the UK plans to roll over existing ACP tariff preferences under a no-deal outcome to the current Brexit negotiations. Indeed, it could see ACP banana, horticulture, rice, beef, fisheries and cocoa product exporters all facing new tariffs on exports to the UK if Continuity Agreements are not concluded by the date of the UK’s ‘no-deal’ departure from the EU. What is more serious questions have been raised as to the viability and sustainability of specific UK proposals to avert a hard border on the island of Ireland. Read more “The UK’s Proposed New MFN Tariff Regime: Protects ACP Interests in the Short Term But…..”
Why Eliminating UK MFN Tariffs on Bananas Would be Bad News for ACP Banana Exporters
Summary
While the UK Secretary of State for International Trade has committed to taking account of the impact the removal of MFN tariffs would have on the preferential treatment accorded developing countries, there remain persistent rumours that given the absence of any domestic UK production, bananas would be one of the first products where existing EU MFN tariffs would be eliminated. However such a move would bring only marginal benefits to UK consumers, with the banana pricing policies of UK supermarkets having a far greater impact on the final purchase price of bananas than the MFN tariffs applied. This would however see a significant erosion of the competitive position of mainly Commonwealth African and Caribbean banana exporting countries which are focussed on the UK market in their banana export trade with the EU. This could cause considerable harm to these banana exporting economies, in a context where the banana sector not only providing significant livelihood opportunities in rural areas in the main banana exporting countries but where it is also providing the commercial basis for the development of variety of new non-traditional fruit exports to the UK market. Read more “Why Eliminating UK MFN Tariffs on Bananas Would be Bad News for ACP Banana Exporters”
Growth in EU28 poultry meat exports to ACP markets could accelerate under a no deal exit of the UK from the EU
Summary
SPS restrictions on poultry meat imports from Brazil saw EU poultry meat production expand in 2017 despite AI outbreaks. This highlights how important trade measures can be in stimulating domestic poultry meat production. In the face of AI related import bans EU poultry meat exporters have found new alternative markets for exports in Africa. The projected 3.9% expansion of EU poultry meat production to 2030 will drive a further expansion of exports (+18.4% or +219,000 between 2018 and 2030), with growing volumes of poultry parts being exported to Africa at progressively lower prices. Given likely Brexit related disruptions of the EU27/UK poultry meat trade, export growth to Africa could be even higher, particularly for UK poultry parts exports of which are currently concentrated on EU27 markets. Potential Brexit related trade effects are not factored into current EU projections. ACP governments may need to use non-tariff trade policy tools to protect against sudden import surges, with this potentially becoming a contentious issue. Additional SPS issues arise from the growing level of processing of Ukrainian raised chickens in the EU, parts of which are then exported as EU chicken to ACP markets. Read more “Growth in EU28 poultry meat exports to ACP markets could accelerate under a no deal exit of the UK from the EU”
Is the Final Count Down to Brexit Underway or Will the ACP have Three More Months to Take Action to Mitigate the Trade Disruption Effects of No Deal Brexit?
Summary
The UK government has now laid down a clear Parliamentary route to defining a final UK position on the ‘no-deal’ Brexit option. This could lead to an extension of the article 50 process for either 3 month or 21 months. This would provide time for ACP governments to set in place policy initiatives to mitigate the adverse effects of a no-deal Brexit on ACP trade with both the UK and the EU27. This would require the launching of a specific political initiative towards the UK government to ensure three major issue clusters are addressed: the shortcomings of the UK’s existing ‘Continuity Agreement’ approach; the trilateral administrative arrangements required to ensure continuity of trade flows in the immediate post-Brexit period and the value of existing DFQF access granted ACP countries is retained through accommodating ACP concerns in the UK’s future MFN tariff schedule. It would also require the launching of a political initiative towards the EU to ensure issues in future EU27 relations arising from the UK’s departure from the EU are fully addressed, so as to reduce the adverse effects of Brexit on ACP economies. Read more “Is the Final Count Down to Brexit Underway or Will the ACP have Three More Months to Take Action to Mitigate the Trade Disruption Effects of No Deal Brexit?”
‘No-Deal’ Brexit Challenges in Cut Flower Sector Highlight Problems for ACP Triangular Supply Chains
Summary
The Netherlands plays a dominant role as a distribution hub for ACP cut flowers to markets across the EU28. Any disruption UK cut flower imports from the Netherlands would carry important implications for most ACP cut flowers exporters, unless remedial administrative measures can be put in place. The likelihood of delays stripping value out of cut flower supply chains will require the role of the UK Groceries Code Adjudicator to be extended, with a special focus on ensuring unfair trading practices don’t increase in response to Brexit related trade disruptions. ACP cut flower exporters will need to urgently explore the scope for increased direct freight flights to the UK to circumvent delays along triangular supply chains. Those ACP cut flower exporters who can successfully ‘Brexit proof’ their supply chains will be well placed to capitalise on the shortages and rising prices a ‘no-deal’ Brexit could give rise to. Read more “‘No-Deal’ Brexit Challenges in Cut Flower Sector Highlight Problems for ACP Triangular Supply Chains”
UK Development NGOs Call for Extension of Existing Tariff Preferences on Unilateral Basis While Problems of UK Continuity Agreements Are Addressed
Summary
UK development NGOs have described as ‘unreasonable’ the UK government’s expectation that developing countries sign onto ‘Continuity Agreements’, without being able to assess their value. UK Secretary of State Fox has indicated he sees no harm in eliminating tariff where the UK has no production interest. However eliminating tariffs in areas where the UK has no production interest would potentially impact adversely on over €1 billion of exports from African and Caribbean countries to the UK of agri-food products where preferential duty free access is enjoyed against a background of high EU MFN tariffs. This would be likely to cause harm to the export interest of these African and Caribbean exporters who are currently being encouraged to sign on to ‘UK-only’ ‘Continuity Agreements’. Such agreements while ensuring continuity of current tariff preferences would provide no assurances on the continuity of the value of existing tariff preferences. This is particularly the case if the impacts of a ‘no deal’ Brexit on ACP triangular trade flows to the UK via EU27 member states are taken into account. This strongly suggests a need for the UK government to review its current approach to the signing of ‘Continuity Agreements’ by granting unilaterally an extension of current terms and conditions of access to the UK market for developing countries, so that future trade agreements can be based on a full assessment of the benefits of bilateral trade deals with the UK, in light of the changed policy and commercial context emerging in the post-Brexit period. Read more “UK Development NGOs Call for Extension of Existing Tariff Preferences on Unilateral Basis While Problems of UK Continuity Agreements Are Addressed”