Summary
Expanding EU sugar production and contracting EU sugar consumption up to 2030 will see EU sugar imports decline (by -300,000 tonnes) and EU sugar exports expand (+700,000 tonnes) compared to 2020. This will increase competition for ACP sugar exports on the EU27 market, in a context where heightened health consciousness and active campaigning is seeing pressure to reduce ‘hidden sugars’ in food and drink products. Further pressures to move away from the use of cane sugar in high sugar content food and drink products will arise from the rules of origin agreed under the EU/UK trade agreement. ACP sugar exporters will need to better understand the market components their exports serve and how they will be impacted by evolving trends. The pressures on ACP sugar exporters could be eased by policy interventions designed to secure automatic cumulation under rules of origin where duty free/quota free access is enjoyed to both the EU and UK markets. Read more “EU Sugar Projections to 2030 Suggest Less Room on EU27 Market for ACP Sugar Exports”
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.
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What Does the New EU UK Trade Agreement Mean for ACP Sugar Exporters?
Summary
The new EU/UK trade agreement includes new rules of origin requirements, which in the absence of ‘diagonal cumulation’ arrangements, could pose problems for some ACP raw sugar sector supply chains, including those serving food and drink manufacturing industries. Given the absence of ‘diagonal cumulation’ provisions in the EU/UK trade agreement a significant restructuring of the affected supply chains will be needed, in a context where demand for ACP sugar is shrinking. This could result in all but the largest and most efficient ACP sugar exporters being driven off UK and even some E27 markets. There is potentially some scope for addressing the problems created by the absence of EU/UK ‘diagonal cumulation’ arrangements through the inclusion of specific provisions in enhanced ‘rolled over’ UK trade agreements and even existing EU agreements, should the EU come around to considering such arrangements. However, this will require a sustained lobbying effort on the part of the governments of the affected ACP countries and allies in other sectors facing similar ‘diagonal cumulation’ constraints on the functioning of triangular supply chains. Read more “What Does the New EU UK Trade Agreement Mean for ACP Sugar Exporters?”
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”
UK Decision to Roll-Over Recognition of EU Issued Organic Certification for Whole of 2021 Welcome News for ACP Organic Exporters, But IT Constraints Will Be Faced
Summary
The UK will continue to recognise EU issued organic certification until the end of 2021. This will avoid any loss of commercial value on ACP exports to the UK market arising from the lapsing of the validity of organic certification issued by EU27 based agencies. The issue of the lapsing of EU recognition of UK issued organic certification from 1st January 2021 however remains unresolved, with an ACP coordinated political initiative in this regard now urgently needed. The UK will however, need to move over to a system of manual organic import controls, given the lapsing of UK access to the EU TRACES system from 1st January 2021, with this potentially causing delays and increasing the administrative cost of clearing organic products through UK border controls. Read more “UK Decision to Roll-Over Recognition of EU Issued Organic Certification for Whole of 2021 Welcome News for ACP Organic Exporters, But IT Constraints Will Be Faced”
Strict Management of Sugar ATQ Necessary on Public Health Grounds Given Failure of Voluntary Measures to Reduce UK Consumption of Hidden Sugars
Summary
Voluntary sugar reduction efforts have proved largely ineffective in reducing the use of sugar in food and drink products in the UK, with the DISL in contrast demonstrating how the ‘price’ of sugar can influence the product re-formulation efforts of companies. This suggests the UK’s future sugar trade policy should be managed in a way which carefully balances the supply and demand situation on the UK sugar market, so as to maintain sugar prices and prevent surplus supplies depressing sugar prices. Otherwise, the UK’s sugar trade policy could unnecessarily depress UK sugar prices, to the detriment of wider public health policy objectives. Read more “Strict Management of Sugar ATQ Necessary on Public Health Grounds Given Failure of Voluntary Measures to Reduce UK Consumption of Hidden Sugars”
With No Deal Brexit Preparation Underway in UK and Serious Challenges Faced ACP Exporters Will Need to Look to “Brexit Proofing” Their Supply Chains
Summary
The announcement by the UK government of new inland Border Control Posts is seen as ‘extremely last minute’, with serious road freight disruptions along the main EU/UK Ro-Ro routes through Kent now seen as almost inevitable. The UK is seen as ‘dangerously ill-prepared’ for leaving the EU customs union and single market on 1st January 2020. As a consequence, significantly large increases in costs of moving goods through EU/UK border controls are likely. However, there are expanding freight options for delivery to UK East Coast and ‘inland’ ports which will side-step traffic congestion in Kent. ACP exporters using triangular supply chains need to adequately prepare for these changes and actively seek to “Brexit-Proof” their supply chains. ACP exporters directly serving the UK market will also need to take similar “Brexit-Proofing” initiatives, with successful companies potentially being able to capitalise on the rising food prices projected for the UK market in 2021. Read more “With No Deal Brexit Preparation Underway in UK and Serious Challenges Faced ACP Exporters Will Need to Look to “Brexit Proofing” Their Supply Chains”
Report Spells Out Impact of Brexit Scenarios for Food and Beverage Supply Chains
Summary
While even under an EU/UK FTA mutual trade in agri-food products will be adversely affected, under a no-deal outcome these effects would be far more severe. Thus, under an FTA it is estimated UK food exports to the EU would fall 22.5%, while under a no-deal outcome the decline would be 63.2%. The corresponding figures for EU food exports to the UK are 22.6% and 61.7% respectively under an FTA or no-deal scenario. This would have substantial market and wider trade consequences. The knock on effects of the outcome of the EU/UK negotiations will be felt in 5 main areas:
o The effects on ACP triangular supply chains serving the UK via the EU.
o The effects on ACP triangular supply chains serving the EU via the UK.
o A possible further revision of the UK’s MFN tariff schedule under a no-deal outcome.
o New opportunities for increased direct exports to the UK market.
o The diversion of displaced EU/UK exports to targeted ACP market.
ACP agri-food sector enterprises and governments will need to make preparations for dealing with the trade and market consequences which will arise under both an EU/UK FTA and more seriously, the growing prospect of anon-deal outcome to the ongoing negotiations. Read more “Report Spells Out Impact of Brexit Scenarios for Food and Beverage Supply Chains”
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”