Summary
The EC has announced the launch of separate FTA negotiations with Australia and New Zealand. This will need to involve negotiations in sensitive agricultural sectors. How the EU prepares its TRQ offers to Australia and New Zealand in sensitive agricultural products could provide insights into how it plans to deal with the Brexit related apportionment of bilaterally negotiated TRQ access in areas of direct export interest ACP countries (e.g. bananas, sugar and rice). Read more “EU to Launch FTA Negotiations with Australia and New Zealand”
Category: Sugar
The reduction of EU sugar prices and scheduled abolition of EU sugar production quotas have and will continue to transform the market conditions faced by ACP sugar exporters to the EU. Under the impact of EU sugar sector reforms prices on sugar markets served by ACP sugar exporters are likely to be increasingly volatile. In addition the consolidation and internationalisation of European sugar companies which EU reforms have given rise to are having important effects on patterns of ACP-EU sugar trade. Intensified competition on EU sugar markets is bringing into question the financial sustainability of the full-time raw cane sugar refiners who traditionally refined ACP raw sugar exports. The final stages of EU sugar sector reforms will carry particularly profound consequences for smallholder sugar cane farmers in ACP countries. Close attention will ned to be paid to strengthen the regulatory framework for the functioning of ACP-EU sugar supply chains. This will need to include the development of new revenue sharing formulas which allow independent sugar cane growers to gain a share of revenues from the new products increasingly manufactured from sugar cane.
The challenges faced in ACP-EU sugar sector relations will be further complicated by the impending departure of the UK from the EU.
Read more.
Sugar Reduction Target Missed But Pipeline of Pending Initiatives Encouraging
Summary
The failure of the UK food industry to meet the voluntary 5% sugar reduction target established in 2016 is leading to increased calls for mandatory action, given the effectiveness of the Soft Drinks Industry Levy (SDIL) in stimulating reformulation efforts which resulted in an 11% reduction in sugar usage. Despite the failure to meet the ambitious first year target efforts to reduce sugar usage in food and drink products appears to on track, with this being likely to carry implications for ACP sugar exporters.
For low cost ACP sugar exporters analysing in detail the trends in sugar usage in the UK food and drink sector set out in the PHE report could assist in formulating strategies to reduce their vulnerability to the long term trend towards reduced sugar usage in food and drink products. Unfortunately for higher cost ACP sugar exporters the longer term trend in UK sugar consumption is likely to be just another nail in the coffin of their traditional sugar exports. Read more “Sugar Reduction Target Missed But Pipeline of Pending Initiatives Encouraging”
Treatment of Agriculture under a EU27/UK FTA
Summary
Even with a comprehensive EU27/UK free trade area agreement in place it is almost inevitable that costs along EU27/UK agro-food sector supply chains will increase. It is far from clear whether the customs partnership option, maximum facilitation options or some amalgam of the two, will offer any solutions to the driving factors behind the cost increasing consequences of Brexit in the agro-food sector within the time frame envisaged for the transition period. Negotiating EU27/UK free trade arrangements in the agro-food sector is likely to prove difficult, despite the EU27’s interest in ensuring the continued free flow of agro-food exports to the UK market.
It is within this context that ACP governments will need to explore how current options under discussion can best be deployed to address the potential disruptions which could arise along triangular supply chains utilized by ACP exporters serving UK markets via EU27 member states or EU27 markets via the UK (i.e.UK-Ireland trade). Read more “Treatment of Agriculture under a EU27/UK FTA”
Will New Flexibilities in EU Voluntary Coupled Support Payments Provoke a WTO Challenge?
Summary
The timing of the EU’s decision to relax the requirements for the deployment of voluntary coupled support (VCS), which de facto removes the link between such payments and maintaining existing production in disadvantaged areas, could well fuel calls for a formal WTO challenge to VCS payments in the sugar sector under Articles 5 to 7 of the WTO Agreement on Subsidies and Countervailing Measures (SCM). The EC and some member states had opposed the amendment of the scheme ‘citing in particular WTO implications’, while an analysis from the European Parliament suggested the ‘market distorting effects …of the introduction of coupled support in the CAP 2014-2020’ should be addressed. The findings of modelling undertaken by Wageningen University Research on the impact of VCS payments in the sugar sector would appear to strengthen the basis for an effective challenge to EU VCS payments under the SCM provisions of the WTO agreement. Read more “Will New Flexibilities in EU Voluntary Coupled Support Payments Provoke a WTO Challenge?”
British Sugar Commissioned Study Favours Maintenance of Existing Sugar Trade Policies Post-Brexit
Summary
The debate on future UK sugar sector trade policy is intensifying. A British Sugar commissioned study recommends future UK sugar trade policy should: recognise the distortions in global sugar markets; ensure future UK policies address these distortions; avoid any unilateral cuts in sugar tariffs and replicate existing EU trade arrangements. The reports treatment of the subsidisation issue ignores the current effects of EU policies on EU27-UK trade in sugar and the knock-on effects this has on ACP/LDC suppliers, which are now being squeezed out of the UK market. The report also underestimates the difficulties of securing acceptance of the proposed apportionment of existing bilaterally agreed EU28 sugar TRQs between EU27 and UK markets post Brexit. Read more “British Sugar Commissioned Study Favours Maintenance of Existing Sugar Trade Policies Post-Brexit”
EU Sugar Quota Abolition Begins to Eat at ACP/LDC Export Volumes and Earnings
Summary
The reduction of EU sugar imports forecast to occur following the abolition of EU sugar production quotas is well underway, with exports to the sugar deficit UK market from traditional ACP sugar suppliers coming under particular pressure. Given the proposed 21 month transition period in EU27/UK trade relations this is likely to continue until at least 1st January 2021 and may extend beyond, depending on the nature of the long term post-Brexit EU27/UK trade arrangement set in place.
EU sugar exports are also growing faster than projected, with this reportedly contributing to the decline in world market sugar prices which has been underway. In the longer term growing EU export volumes could threaten production in less competitive sugar producing countries including in Africa (particularly West Africa and high cost Eastern African sugar producing countries). Against this background sugar sector trade policy could become a contested area in EU-Africa relations. Read more “EU Sugar Quota Abolition Begins to Eat at ACP/LDC Export Volumes and Earnings”
Parliament Committee Warns of Disastrous Consequences for the UK food and Drink Industry of a ‘No Deal’ Brexit
Summary
The BEIS Committee has come out heavily in favour of maintaining as ‘frictionless’ access to the EU27 market as possible in order to protect the interests of UK processed food and drink exporters. The BEIS Committee further noted the lowering of tariffs on imports could be extremely damaging for UK farming, while bringing only marginal consumer price benefits. The importance of replicating all existing and pending EU trade deals to the UK processed food and drink sector was highlighted if growth in exports to non-EU markets is to be promoted. Amongst ACP countries particularly importance was attached to replicating the EU trade agreement with South Africa. In terms of resolving any potential conflict between maintaining access to EU27 markets and concluding new trade agreements the Committee implicitly came down in favour of concluding a comprehensive FTA with the EU27. While future close alignment of UK and EU27 agro-food sector tariffs could avert the threat of preference erosion on UK markets for products like bananas, rice, citrus fruit and other Mediterranean products, it would not assist in addressing the deteriorating position of the less efficient ACP sugar exporters on the UK market, which is linked to growing EU27 sugar exports to the sugar deficit UK market. Read more “Parliament Committee Warns of Disastrous Consequences for the UK food and Drink Industry of a ‘No Deal’ Brexit”
French Exporters Lead The Charge for African Sugar Markets
French Exporters Lead The Charge for African Sugar Markets
Summary
The dominant role which French companies play in the expanding EU export trade in sugar to ACP countries is potentially a matter of major concern to efforts to develop intra-African trade in sugar. French companies are highly exposed to sugar exports to the UK, with any loss of the UK market arising from a ‘hard’ Brexit, requiring a 77% increase in French extra-EU sugar exports, if domestic EU27 markets are not to be disrupted by a ‘hard’ Brexit. Such a sudden expansion of EU27 sugar exports to African markets could severely disrupt sugar markets in Africa and the efforts of competitive sub-Saharan Africa sugar producers to expand intra-African trade in sugars. It could also see an intensification of EC pressure on EPA signatories to live up to their trade agreement commitments in regard to the prohibition of the use of quantitative restrictions on imports from the EU. Read more “French Exporters Lead The Charge for African Sugar Markets”
March 2018 AU Position on Future Negotiations with EU Sparks Controversy
Summary
The recently adopted African Union (AU) Executive Council decision to recommend the new agreement with the EU ‘should be separated from the ACP context’ is in contradictions to established common ACP positions, which in line with the recent CARIFORUM statement had emphasises the importance of building on the acquis by negotiating with the EU at the all-ACP level. By abandoning substantive negotiations at the pan-ACP level (the only level at which the EC is obliged to conclude an agreement by March 2020) the AU position risks weakening the position of regional negotiators on issues where there are tensions in the ACP-EU relationship. This includes a range of agro-food sector trade issue which in the context of evolving trends could come to take on growing significance fort African, Caribbean and Pacific countries, most notably in regard to the wider policy framework within which the EU seeks the implementation of EPA commitments. This could carry particularly important implications for African structural economic transformation objectives in the agro-food sector. Read more “March 2018 AU Position on Future Negotiations with EU Sparks Controversy”
Impact of Brexit on the Functioning of EU27 Markets: The Case of Sugar and Bananas
On 22 February 2018 ACT Alliance convened Seminar on the Implications of Brexit in the agro-food sector for ACP countries and for the forthcoming ACP-EU Post-Cotonou negotiations. A series of twelve 2 page summary notes were produced for the seminar covering both substantive issues arising within the Brexit process and the current state of play in the Brexit process. Note 6 explores the impact of Brexit on the functioning of EU27 markets with specific reference to the sugar and banana sectors given the extent if EU bilaterally agreed TRQ arrangements and the scale of UK import demand within the overall EU28 market equation. Read more “Impact of Brexit on the Functioning of EU27 Markets: The Case of Sugar and Bananas”