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.

State of Play in the EU/UK Brexit Negotiations: Update 4 February 2019

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Summary
The last epamonitoring.net article dealing with the process of EU/UK withdrawal negotiations covered the EU’s approval of the UK/EU Withdrawal Agreement (26th November 2018) and the subsequent deferment of the UK parliamentary vote on approving the Withdrawal Agreement. From mid-December until mid-February the UK Parliamentary process for ratifying the mutually agreed EU/UK Withdrawal Agreement has been stalled. This article provides an update of developments since the December 2018 UK governments’ decision to defer the Parliamentary vote on the Withdrawal Agreement until 2019 and the potential implications for ACP exporters serving the UK market of the ongoing uncertainty. Read more “State of Play in the EU/UK Brexit Negotiations: Update 4 February 2019”

Part 2 Country Specific Trends in EU Agri-food Sector Trade with ESA EPA Countries

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Summary
The value of EU agri-food exports to Mauritius grew 53% between 2013 and 2017 while the value of EU agri-food imports from Mauritius fell 26%, with this largely attributable to the impact of EU sugar sector reforms. A ‘no deal’ Brexit however could present opportunities for Mauritian refined sugar exporters. In contrast the value of Malagasy agri-food exports to the EU grew 164%, while the value of imports from the EU grew 44%. This is attributable to the fragile political and economic stability attained since 2013. Zimbabwe’s agri-food sector trade flows have been impacted by the sustained political and economic crisis, with volatile export values and no change in the value of imports from the EU for the period as a whole. The value of agri-food exports from the Comoros has increased almost 60% since 2013, with strong growth in the unit value of earnings of both vanilla and essential oils. EU agri-food exports to the Comoros have grown faster than overall exports, at double the rate, with a strong increase in the value of EU poultry meat exports and an even larger increase in the volume. There has also been a strong increase in EU beef exports to Comoros. The Seychelles has no agro-food sector export trade with the EU, while the value of agri-food imports from the EU rose 61% between 2013 and 2017. Dairy products led the way in this trade expansion, with EU poultry meat exports also getting under way during this period. Brexit related issues arise for Zimbabwe in the resurgent cut flower trade given the dominant role the Dutch flower auction houses play in this trade and the potential for Brexit related disruption of triangular supply chains. Initiatives will be needed to ‘Brexit-proof’ these supply chains. For Seychelles and Madagascar Brexit related rules of origin issues in the fisheries sector will also need to be addressed under a ‘no-deal’ outcome to the current Brexit negotiations, with this potentially opening up investment and export trade opportunities in relations with the UK. Read more “Part 2 Country Specific Trends in EU Agri-food Sector Trade with ESA EPA Countries”

Part 1 Overall Trends in EU Trade with ESA EPA Countries

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Summary
The EU-ESA EPA is not a single agreement but a collection of five individual yet similar agreements covering a population of some 45.5 million. For 4 countries these agreement have been in place since 2012 while the 5th is scheduled to enter into force shortly. These agreements fall far short of the ambitious regional EPA, embracing up to 18 countries with a population of 541 million, which the EC initially sought. This has split the larger ESA region into 3 distinct groups in terms of trade relations with the EU, thereby complicating intra-regional trade integration efforts. Since the signing of the EPAs EU agri-food exports to ESA EPA signatories have grown strongly (+48%), despite there being no growth in direct EU exports to Zimbabwe. The growth in the value of EU agri-food imports from ESA4 countries was been slower at only +27%. This growth was attributable to the 164% growth in the value of imports from Madagascar which now dominates the ESA4 agri-food export trade to the EU. EU agricultural reforms and the multiplication of EU trade agreements with non-ACP countries are serving to reduce the value of traditional agri-food sector trade preferences, particularly for Mauritius and Zimbabwe. The Brexit process further complicates the situation, although a ‘no-deal’ Brexit could potentially open up new opportunities on the UK market for Mauritian refined sugar exports. Other important issues faced relate to the impact of the new EU plant health regulations on horticulture and floriculture exports and the impact of the expansion of EU agri-food exports on opportunities for the structural development of local agri-food sectors serving national and regional markets. ESA EPA signatories face differing challenges and opportunities as a result of current trends in EU agri-food exports to ESA EPA signatories and the wider Eastern and Southern African region. How EPA provisions are implemented in practice in the future, in the face of Brexit related commercial pressures, will have an important bearing on the future evolution of EU-ESA trade, as well as the scope for the development of intra-regional trade in the Eastern and Southern African region. Read more “Part 1 Overall Trends in EU Trade with ESA EPA Countries”

CARIFORUM EU EPA: Slow Pace of Implementation and Marginal Benefits

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Summary
The EC’s analysis of the CARIFORUM-EU EPA while factually accurate is misleading. While the EU’s growing trade surplus with CARIFORUM is acknowledged the importance of the principal change brought about by the EPA – improved market access for EU exporters is glossed over. EU agro-food exports have shown particular strong growth with dairy products, meat and meat preparations, beverages and fresh vegetables leading the way. In contrasts the value of CARIFORUM agro-food exports has stagnated, although the masks a rise in agro-food exports to the EU from the Dominican republic and a decline in the value of CARICOM exports. The decline in CARICOM exports however mask a rise in non-traditional exports and a dramatic fall in the value of banana and sugar exports to the EU. Despite the institutional structures in place the single most important issue facing CARIFORUM exporters to the EU, Brexit, has not been addressed within EPA consultative structures. The impact of Brexit on the value of preferential exports under the EU EPA will be so profound as to require an immediate policy response from the EU to areas of CARIFORUM concern in regard to improving EPA implementation (e.g. removing all obstacles to full DFQF exports to the DOMs and OCTs, intensifying and acting on SPS dialogues, eliminating UTPs along CARIFORUM-EU supply chains, introducing flexibility in EPA implementation). The EU also needs to recognise and address the effects of its wider policy changes on the value of preferential access granted CARIFORUM countries under the EPA. Failure to do so will amount to a continued failure to deliver on the expectations raised by the EPA agreement in the Caribbean region. Read more “CARIFORUM EU EPA: Slow Pace of Implementation and Marginal Benefits”

EPA Benefits for Fiji Becoming Marginal as Brexit Threatens Further Disruptions

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Summary
In its analysis of the state of the EU-Fijian EPA implementation the EC skates over the evolution of relations since for large parts of this period political relations and EU development assistance programmes with Fiji were suspended following the military coup. In addition at the economic level, given the direction of EU sugar sector reforms, the value of traditional Fijian trade preferences have been progressively undermined over this period. Given the dominant role sugar plays in EU-Fijian trade this does not bode well for future trade relations. Ironically in the short term the prospect of a ‘no-deal’ Brexit could open up new opportunities for Fijian sugar exports to the UK if the UK imposed standard MFN duties on sugar imports from the EU27 and the Fijian government was able to find a way of rolling over its current duty free-quota free access to the UK market from the 30th March 2019. Read more “EPA Benefits for Fiji Becoming Marginal as Brexit Threatens Further Disruptions”

Impact of EU FTAs in the Agri-Food Sector

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Summary

EU FTAs are of growing importance to the growth of EU agri-food sector exports, with the EU using a variety of policy tools to increasingly open up overseas markets to EU exports. However the EU’s use of trade policy tools to protect EU producers is in distinct contrast to the policy prescriptions the EU seeks to enshrine in its trade agreements with ACP countries when it comes to the use of traditional agri-food sector trade policy tools aimed at managing trade liberalisation processes in sensitive sectors. The structure of EU EPAs does little to address the fundamental structural imbalance in EU-ACP agri-food sector relations. Fundamental policy coherence issues need to be addressed across the broad ambit of EU-ACP agri-food sector relations if the structural imbalance is to be addressed. The challenges faced in this regard are only likely to be exacerbated by recent EU agricultural policy changes and the Brexit process. Read more “Impact of EU FTAs in the Agri-Food Sector”

EAC Sugar Sector Continues to Seek Protection and Effective Management of Sugar Imports

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Summary
With sugar sector reforms again stalled Kenya has once again secured an extension of its COMESA sugar sector safeguards, despite rising sugar imports from non-COMESA sources. Tanzania is also facing problems in effectively managing sugar imports in the interests of domestic production growth. This provides the context for the ongoing expansion of EU sugar exports to sub-Saharan Africa which has been underway since 2014. These expanding EU sugar exports are not only linked to the abolition of EU sugar production quotas and the consequent removal of WTO constraints on exports but also EU systems of agricultural support both decoupled direct aid payments and voluntary coupled supports (VCS). VCS may shortly be reclassified in the WTO as a production and trade distorting form of support. These trade trends could pose challenges to African regional trade integration efforts in the agro-food sector. Challenges which will not only need to be addressed in the implementation of African regional trade integration schemes, but also in the implementation of EU EPAs and the design of future EU-Africa trade, development and economic cooperation arrangements in the context of the post-Cotonou ACP-EU negotiations.

  • Stalled Reforms in Kenya Sees COMESA Safeguard Extended

Kenya has once again successfully sought from COMESA a further two year extension of its sugar safeguard measures, which will now run until February 2021 (1).  Kenya has sought to repeatedly renew these safeguard measures since their introduction in 2004 (1).

The most recent request was made in a context where Kenya had imported sugar from outside of the COMESA region, after the Kenyan government ‘scrapped duty on sugar following a sharp decline in production that saw the price rise to Sh400 per two-kilogram packet’ (2). Against this background COMESA members have insisted on the establishment of a joint committee that will oversee the implementation of the safeguard measures and report back on the progress made in preparation for removing the safeguards (3).

Local Kenyan economists have insisted there is little point in extending the safeguard measures if the Kenyan government continues to avoid addressing the underlying issue of the sugar sectors lack of competitiveness. Efforts by the Kenyan government to privatise its State-owned mills, introduce an early maturing cane variety, and pay farmers based on sucrose content have all stalled (1). This leaves production costs at around $600/tonne, in a context where ‘procuring sugarcane alone accounts for 52 per cent of costs’ (4) (ISO 15 day average global sugar price 24 October 2018 equivalent to $295.02/tonne).

Unfortunately ‘all five State-owned milling firms are operating using obsolete milling machineries that drastically hamper efficiency and production capacities’ (4), making them a less than attractive proposition for private investors. Competition from privately owned mills meanwhile is gobbling up what little locally produced sugar cane is available.  According to analysts ‘perennial delays in payments to farmers for cane delivered, coupled with low producer prices of cane between Sh 3,500 and Sh 4,500 per tonne enormously eroded farmers’ confidence in the crop, as many turned to alternative products’ (4).

The Kenyan sugar sector is further plagued by ‘weak legislation governing the sub-sector’. This has been exploited by sugar importing cartels, with it being reported that by the end of the financial year ‘more than 800,000 tonnes was imported (4).

Following the COMESA decision Kenya’s Trade Principal Secretary Dr. Chris Kiptoo acknowledged ‘it is very unlikely that the sector would have implemented the conditions set by Comesa at the end of the two years because of the structural problems facing the sugar millers’ (3).

  • Import Management Problems in Tanzania

Meanwhile in neighbouring Tanzania pressure is mounting on the government to take stronger action to curb illegal sugar imports, with local producers claiming they are ‘struggling to sell their own stockpiles’ in the face of illegal imports. The Chair of the Tanzanian Sugar Producers Association (TSPA) Ashwin Rana said in the face of accumulated stockpiles of imported sugar local producers ‘will find it difficult to sell the 348,989 tonne sugar harvest scheduled for the 2018/19 season. It was maintained that some traders were exploiting the lower duty for ‘industrial sugar’ to import sugar which was then sold as direct consumption sugar to consumers. Tanzania has a major shortfall in sugar production with a domestic direct consumption demand of 630,000 tonnes and an industrial sugar demand of 145,000 tonnes (4).

This situation in the EAC sugar sector provides the background to expanding levels of EU sugar exports.

  • Expanding EU Sugar Exports to Africa and Beyond

The EC reported that by the 18th September 2018 total extra-EU sugar exports had reached 3,220,000 tonnes, a level above earlier projections with almost two weeks left to run until the end of the 2017/18 season. This increase took EU exports to levels 149% above the 5 year average (6).

This expansion in EU export volumes has occurred despite the almost 50% decline in global sugar prices between October 2016 and August 2018. The EC notes ‘the excess supply has put severe pressure on world prices, which have fallen steadily over the last two years from a peak of EUR 540/t in October 2016 to EUR 274/t in August 2018, the lowest level since 2007’(6). A number of analyst however have noted the unique contribution the EU is making to this situation of excess supply on world markets, given the combined effects of its expansion in export volumes and reduction in import demand on what is a residual market.

Table: EU Sugar Exports to Main Sub-Saharan Africa Destination markets first 9 months 2017/18 Season

Total EU Sugar Exports 9 months 2017/18 season:  2.710,000 tonnes
Country Tonnes Country Tonnes
West Africa Southern & Eastern Africa
Mauritania 109,225.0 South Africa 40,450.9
Ghana 66,913.7 Tanzania 34,342.4
Senegal 50,716,.6 Sudan 36,498.7
Cameroon 48,814.3 –          Sub-Total 111,292
Guinea 37,217.5 Total Main SSA Destinations 465,168
Togo 40,988.9 Total Extra-EU 2,710,000
–     Sub-Total 353,876 % share Main SSA Destinations 17.16%

It is against this background that some 9 African countries were among the top 24 destinations for EU sugar exports in marketing year 2017/18 season, with smaller volume also being exported to other ACP destinations. Nine months into the season these destination were taking around 500,000 tonnes of EU white sugar exports, with exports for the whole of the season likely to be substantially in excess of this level.  In the first 9 months of the 2017/18 season the EU exported 3 times more sugar to sub-Saharan African markets than in the whole of the 2016/17 season.

While West African countries were the main destinations for these EU sugar exports, growing volumes also went to the sugar surplus region of Southern and Eastern Africa (5). The leading origins for these EU sugar exports were Belgium and France which accounted for around 59% of total EU sugar exports in the 2017/18 season, with Poland someway behind with around 16%, followed much further behind by Germany, the Netherlands, Denmark and the United Kingdom. Marginal sugar export volumes also took place from 16 other EU member states (around 3% of the total) (5).

This needs to be seen against the background of the most recent trends in EU sugar exports to these top 9 Sub-Saharan African countries. Between 2013 and 2017 an almost 9-fold increase in EU sugar exports occurred (+319,817 tonnes).

EU sugar exports to top 9 Sub-Saharan African countries 2013-2017 (tonnes)

2013 2014 2015 2016 2017
Mauritania 62 – 1 45 118,330
Ghana 2,178 3,187 4,586 9,192 42,441
Senegal 18,825 9,568 11,690 10,717 22,054
Guinea 1,907 2,668 1,570 1,679 7,649
Togo 2,947 1,940 12,385 5,282 19,070
Cameroon 14,735 26,368 22,292 38,356 54,524
South Africa 249 203 4,480 30,822 15,768
Tanzania 48 – 4,231 3,020 24,184
Sudan 74 4,050 2,383 30,314 56,822
–          Sub-Total 41,025 47,985 63,618 129,428 360,842

Source: EC Market Access Data Base

This forms part of a broader picture of expansion of EU sugar exports across African regions.

Trends in Extra EU Sugar exports to Sub-Saharan Africa by region and total extra-EU Sugar exports (tonnes)

2013 2014 2015 2016 2017 +% 2013-17
Total West Africa 63,853 55,754 54,949 52,842 280,913 +339.9%
Total Central Africa 30,303 35,515 32,090 63,598 64,613 +113.2%
Total Eastern Africa 870 4,862 7,782 35,547 89,144 +10,146%
Total Southern Africa 261 257 4,483 30,823 26,605 10,093.5%
           
Total Sub-Saharan Africa 95,287 96,388 99,304 182,810 461,275 +384%
           
Total Extra-EU 1,411,291 1,523,870 1,322,704 1,369,367 2,178,337 +54.4%
% share Sub-Saharan Africa 6.7% 6.3% 7.5% 13.3% 21.2%  
West Africa: Mauritania, Ghana, Senegal, Sierra Leone, Togo, Benin, Mali, Niger, Guinea, Burkina Faso, Nigeria, Liberia, Gambia, Cape Verde, Ivory Coast, Guinea Bissau
Central Africa: Cameroon, Angola, Equatorial  Guinea, ,Gabon, Chad, DRC, Congo, CAR
Eastern Africa: Sudan, Tanzania, Kenya, Somalia, Uganda, Comoros, Madagascar, Ethiopia, Burundi, Rwanda, Mauritius, Eritrea
Southern Africa: South Africa, Namibia, Mozambique

Source: EC Market Access Data Base

Comment and Analysis
The long standing problems faced in the Kenyan sugar sector highlight the profound problems faced in not only promoting competitive sugar production in sectors which have traditionally been protected but also the problems faced in fostering regional free trade in sensitive agricultural products such as sugar. The issues faced in Kenya are not only technical linked to mill management, cane varieties and payments systems but increasingly political given the geographical distribution of sugar production, the politicisation of ethnicity within the electoral process and subsequent de-centralisation of government decision making to provincial authorities.From a trade policy perspective however what is of most concern is the inability of the Kenyan government to effectively manage its nominal trade policy and harness it to the process of necessary production restructuring. The problem of managing trade in sensitive products such as sugar is also apparent in Tanzania. Without an effective capacity to manage trade flows, structured and managed moves towards regional trade integration are likely to be held back and disrupted. This provides the context in East Africa to the dramatic increase in EU sugar exports which is underway.The almost 9-fold expansion in EU sugar exports to sub-Saharan African countries which occurred between 2013 and 2017 needs to be seen in a context where sub-Saharan Africa is a net sugar surplus continent. This also needs to be seen against the background of the intensification of efforts to create both regional free trade areas and a pan-continental free trade area. The danger exists that the growing volume of EU sugar exports (and high sugar content food products) could complicate this process of regional trade integration in the African sugar sector.

This could get particularly complicated when the global corporate strategies of EU sugar companies, which have invested in sub-Saharan African sugar production since 2004, are taken into account. These strategies seek to position the companies concerned so as to have a diversified source of sugar production to meet rising demand in Asian markets, with value added processing commonly taking place in Europe not at the point of production.

By the end of the 2017/18 season the EU will be once again exporting substantially more sugar to Sub-Saharan Africa as a whole (including destinations outside the top 24 markets) than it imports from Sub-Saharan Africa. While by 18 September in the 2017/2018 season some 521,000 tonnes of sugar had been imported from ACP/EBA countries (excluding South Africa), some 49% of these imports came from non-African ACP countries, namely Belize (27%), Fiji (13%) and Guyana (9%). This rapid expansion of EU sugar export has occurred despite the collapse of global sugar prices and the greater inherent efficiency of production of sugar from sugar cane compared to production of sugar from sugar beet.

In this context it should be recalled EU production levels and trade outcomes cannot be divorced from the deployment of EU agricultural support payments, notably the underlying system of decoupled direct aid payments which makes a major contribution to farm incomes and since the abolition of EU sugar production quotas the maintenance of voluntary coupled support payments for sugar producers in member states where the production of sugar beet is less competitive (see companion epamonitoring.net article ‘The June 2018 CAP Reforms: Part 2 – Importance of CAP Instruments to EU Agriculture and Issues Arising for the ACP’, 13 September 2018). This has led to a situation where production has increased in more efficient sugar production zones of the EU but with no corresponding decline in sugar beet production in the less competitive production zones of the EU. It was this that resulted in record EU sugar production in the 2016/17 season (see companion epamonitoring.net article ‘Sugar Substitution Gaining Pace in EU Amid Falling EU Import Demand’, 5 November 2018).

African governments individually and collectively will need to explore just how they are to manage the trade distortions which arise as a result of EU agricultural support policies in the sugar sector as they seek to promote closer intra-African market integration as part of the AfCFTA process.

A major problem faced in this regard is that these distortions are so deeply entrenched within the EU agricultural production system that they are not commonly mistaken for the simple operation of market forces. This is likely to mean that any African efforts to address the sugar sector trade distortions will meet with strong resistance from the European Commission and EU member states, all of which are looking to use the economic partnership agreements and the post-Cotonou EU agreements with African, Caribbean and Pacific  countries to more effectively promote EU trade and investment interests (for details of recent EU initiatives in this regard, specifically the ‘new Africa-EU alliance for sustainable investment and jobs’ initiative, see companion epamonitoring.net article ‘EU Sees Mauritania’s EPA signature as Stepping Stone to an EU-Africa FTA?’, 25 October 2018).

This is going to throw up complex challenges for African governments not only in their relations with the EU but also in their relations with each other as they seek to operationalise their commitments to the creation of an African Continental Free Trade Area (AfCFTA), not only in the sugar sector but across a multiplicity of sensitive sectors.

Sources
(1) People Daily, ‘Sugar safeguards dilemma’, 17 July 2018
http://www.mediamaxnetwork.co.ke/451555/sugar-safeguards-dilemma/
(2) Business Daily , ‘Kenya seeks fresh Comesa sugar import safeguard’, 13 July 2018
https://www.tralac.org/news/article/13264-kenya-seeks-fresh-comesa-sugar-import-safeguard.html
(3) buisnesdailyafrica.com, ‘Relief for Kenya as Comesa team endorses sugar import safeguard’, 16 July 2018
https://www.businessdailyafrica.com/markets/commodities/Comesa-team-endorses-sugar-import-safeguard-Kenya/3815530-4665714-w7mueo/index.html
(4) IPPmedia, ‘Govt urged to get tougher over illegal sugar imports’ 13 July 2018
https://www.ippmedia.com/en/news/govt-urged-get-tougher-over-illegal-sugar-imports
(5) EC, ‘Sugar Market situation’, AGRI G 4 Committee for the Common Organisation of Agricultural Markets, 27 September 2018
https://ec.europa.eu/agriculture/sites/agriculture/files/market-observatory/sugar/doc/market-situation_en.pdf
(6) EC, ‘Short-term outlook for EU agricultural markets in 2018 and 2019’, Autumn 2018
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/short-term-outlook-autumn-2018_en.pdf

Sugar Substitution Gaining Pace in EU Amid Falling EU Import Demand

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Summary
While the impact of EU sugar production quota abolition is the most immediate concern to ACP exporters given the dramatic decline in EU prices paid for ACP sugar and the 60% decline in ACP sugar export volumes to the EU, the long term trend towards replacing sugar and reducing sugar usage in food and drinks is also a major source of concern. This will lead to an overall reduction in EU sugar consumption in a context where the future scaling back of EU production from record levels in 2017/18 is unlikely to see a return to historical levels of EU imports from ACP countries. This is likely to be compounded by the withdrawal of the UK from the EU. This means ACP sugar exporters will need to look to markets in Asia and particularly for African producers, in Africa. They will also need to look to the more systematic exploitation of non-sugar revenue streams linked to sugar cane production. Read more “Sugar Substitution Gaining Pace in EU Amid Falling EU Import Demand”

EU/UK Proposals for Brexit Related TRQ Apportionment Continues to be Challenged

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Summary
September 2018 saw WTO members again objecting to EU/UK agreed plans for apportioning WTO agreed TRQ market access arrangements without consultations with the affected partners. While ACP exporters are only marginally affected by this WTO level TRQ apportionment issue, ACP exporters have serious concerns over how the EU plans to apportion bilaterally negotiated TRQ established under EU FTAs. This could for example carry serious implications for ACP banana exporters, who from 30th March 2019 could face a de facto 20% increase in competition from $ banana exporters on EU27 markets. The governments of ACP banana exporting countries need to urgently seek consultations with the EC on what will happen to EU bilaterally negotiated banana TRQs from the 30th March 2019 under a ‘no-deal’ Brexit scenario. Or alternatively, if a Withdrawal Agreement is concluded and a transition period in EU/UK trade relations is set in place, what will happen to these bilaterally negotiated TRQ arrangements from 1st January 2021. Read more “EU/UK Proposals for Brexit Related TRQ Apportionment Continues to be Challenged”

EU Chief Negotiator Barnier Sets Out What needs to Happen to Avoid a ‘No-Deal’ Brexit

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Summary
The Irish border and the framework for future trade and customs arrangements remain the two main obstacles to a negotiated Brexit. For the EU the UK’s departure from the single market and customs union will inevitable mean new controls on imports from the UK. While on the island of Ireland the EU wants necessary checks to be carried out away from the border, the very notion of such checks falls short of PM May’s desire for continued ‘frictionless trade’. Meanwhile the DUP opposes any concessions which treats Northern Ireland differently from the rest of the UK and is willing to block the UK annual budget on this issue. The EU for its part will not accept UK access to the single market if UK tariffs and regulations vary from those of the EU since this would give UK companies a competitive advantage in the EU.  At the 17th October EU Summit Prime Minister May offered ‘nothing new’ on the Irish border issue, with EU leaders deeming progress insufficient to warrant the convening of a special EU summit in November. Negotiations are now likely to drag on into December and possibly into 2019. EU officials however continue to be believe an agreement can be reached. Against this background ACP countries may need to step up preparations for a ‘no-deal’ Brexit. This should include: fast tacking preparations for the conclusion of ‘UK-only’ trade deals based on the existing EU EPAs; opening discussions with the EC on the future of EU bilaterally negotiated TRQs for bananas and sugar and the scope for minimising disruptions of ACP triangular supply chains under a ‘no-deal’ scenario. Read more “EU Chief Negotiator Barnier Sets Out What needs to Happen to Avoid a ‘No-Deal’ Brexit”