Summary
As part of the proposals for the revision of the EU’s common agricultural policy, the EC has released a substantive staff working paper which seeks to assess the impact of the European Commission proposals. Annex 5 of the EC Staff Working Paper which reviews the ‘Results of Quantitative and Multi-Criteria Analysis’ includes a section on ‘policy coherence’. This provides insights into the EC’s approach to addressing policy coherence for developments issues. It is noteworthy that policy coherence for development is only one dimension of the EU’s policy coherence agenda which need to be taken on board in the design and implementation of the CAP, and as such may not be accorded a high priority. While asserting the consistency of the CAP with EU development policy objectives the EU implicitly acknowledged the trade distorting nature of ‘coupled’ direct aid payments. This suggests a need for specific measures to avoid any adverse effects on developing countries in sector where sugar and dairy sectors are important or sector development programmes are under implementation. This is likely to require a flexible and responsible interpretation and enforcement of EPA commitments on the use of non-tariff trade measures by ACP governments. A commitment in this regard should be enshrined in ‘Right to Development’ provisions under future EU partnership agreements with African, Caribbean and Pacific countries. Read more “The June 2018 CAP Reform: Part 4 CAP and Policy Coherence for Development”
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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The June 2018 CAP Reforms: Part 3 the Trade Dimensions of the CAP and the ACP
Summary
In the background documentation to its CAP reform proposals the EC highlights the growing international focus of the EU agro-food sector and hence the importance of securing preferential trade access for EU agro-food exports to 3rd country markets where food demand is growing rapidly. This includes securing the preferential removal of not only tariffs on EU exports but also the removal of non-tariff barriers to EU agro-food exports. The EC analysis highlights just how central EU trade policy is to the implementation of the CAP and the achievement of overall EU policy objectives for the agricultural sector. In an ACP-EU context this suggests the issue of the interpretation and implementation of EPA commitments is likely to take on growing importance in the coming years. This needs to be seen in a context where EU policy prescriptions for ACP governments in sensitive agro-food sectors diverge markedly from EU policy practices in sensitive agro-food sectors. Read more “The June 2018 CAP Reforms: Part 3 the Trade Dimensions of the CAP and the ACP”
The June 2018 CAP Reforms: Part 2 – Importance of CAP Instruments to EU Agriculture and Issues Arising for the ACP
Summary
At the beginning of June 2018 the EC issued a range of documents setting out both proposals for the amendment of CAP regulations and the background to these proposals. The EC sought to outline the developments since 2013 which required further reforms to be introduced. The EC also highlighted the important role which EU agricultural support plays in enhancing farm incomes, and by implication, sustaining agricultural production. The EC also highlighted the growing importance of risk management as global price movements begin to transmit onto EU markets. The EC highlighted the desire of EU member states governments to minimise changes to support instruments and support levels. The preference of some member state governments for higher levels of coupled support could well see an expansion of the use of this instrument as more discretionary powers are devolved to EU member states. While the EC has sought to assert the non-trade distorting nature of EU agricultural support instruments, this seems to conflate the compatibility of EU support instruments with WTO rules with the absence of any trade consequences for developing country partners. Read more “The June 2018 CAP Reforms: Part 2 – Importance of CAP Instruments to EU Agriculture and Issues Arising for the ACP”
The June 2018 CAP Reforms: Part 1 The EC proposals for Amendment of CAP Regulations
Summary
The EC has tabled proposals for the establishment of a new delivery model for the CAP, which devolves design of Strategic Plans to EU member states on the basis of a common EU policy framework and common EU tool box. EU member states are to have more flexibility in how they combine tools and there is to be a greater focus on risk management. The structure of financing remains unchanged as does the overall objectives of the CAP. There are concerns the granting of greater flexibility could lead to increased use of trade policy tools which are de facto trade distorting. Concerns also arise over the future use of the centralised crisis reserve fund particularly in the dairy sector, where EU intervention buying and storage have contributed to a sustained depression of global skimmed milk powder prices. While 9 specific objectives for the CAP are set out, no reference is included to the EU policy objective of ensuring the coherence of its agricultural policy interventions with its commitments to promoting policy coherence for development. Read more “The June 2018 CAP Reforms: Part 1 The EC proposals for Amendment of CAP Regulations”
Limited Prospects of a Global Sugar Market Price Recovery Exacerbates the Impact of Reduced EU Import Demand and Lower EU Prices
Summary
Global sugar price trends in the coming decade are likely to offer little support to ACP sugar exporters in the face of both lower EU prices and import volumes. Sugar consumption growth is increasingly in the global south, including in sub-Saharan Africa, where production growth although strong is lagging behind consumption growth. This is in part being driven by urbanisation and increased consumption of high sugar content processed food and drinks. This is recognised by the EU sugar companies which are increasingly focused on regaining export markets and developing new ones in sugar deficit regions such as sub-Saharan Africa. Rising EU export volumes beyond earlier projected levels is exacerbating the low price situation on global sugar market. Read more “Limited Prospects of a Global Sugar Market Price Recovery Exacerbates the Impact of Reduced EU Import Demand and Lower EU Prices”
UK Food Exporters Warn of Dangers of a Rules of Origin Based ‘Hidden Hard Brexit’
Summary
Rules of origin issues arising from the UK’s withdrawal from the EU could potentially give rise to a ‘hidden hard Brexit’ in the agro-food sector, unless specific new arrangements are set in place. Depending in how EU27/UK rules of origin issues are addressed this could reduce the adverse effects of Brexit on existing ACP exports where processing takes place in the UK prior to onward sale. In addition it could create opportunities for ACP governments to reopen rules of origin issues which have inhibited movement up agro-food sector value chains in trade with the EU. However with these rules of origin issues coming to ahead in March 2019 swift and targeted consultations are needed to identify the specific ‘asks’ which ACP governments should be putting forward to advance the interests of value added food product manufacturers. Read more “UK Food Exporters Warn of Dangers of a Rules of Origin Based ‘Hidden Hard Brexit’”
What Could the UK’s July 2018 Negotiating Position Mean for ACP Agro-Food Producers
Summary
This article seeks to review the implications of three main elements of UK’s consensus position on future trade relations with the EU for ACP agro-food sectors. It reviews the impact of the UK’s proposed approach on 4 of the 6 main areas of impact of Brexit, namely: the value of ACP tariff preferences on the UK market; the impact on the functioning of triangular supply chains; the impact on non-tariff measures to be applied to future ACP agro-food exports to the UK and EU27 market; the scope for displacement of current EU27/UK trade onto ACP markets. The current UK proposals as set out in the post Chequers statement do not directly impact on the prospects for the retention of current ACP DFQF access to the UK market or the functioning of EU27 markets in the post Brexit period. Read more “What Could the UK’s July 2018 Negotiating Position Mean for ACP Agro-Food Producers”
EU Council authorises launch of Negotiations on apportionment of WTO TRQs
Summary
The EC proposal for a mandate to negotiate the apportionment of WTO agreed TRQs has been approved by the EU Council. The EC’s approach is based on the October 2017 joint UK/EU letter to WTO members. This approach has already been rejected as unacceptable by leading WTO members. The annex to the EC proposal provides TRQ by TRQ details of how much access to the EU27 market would be reduced post Brexit. This nominally includes a reduction in ACP TRQ access for sugar exports: an arrangement which has been superseded by the granting of full duty free-quota free access under the EU’s EBA scheme and various EPAs. This suggests there may be some shortcomings in the EC’s preparatory work for the launch of these TRQ negotiations with WTO members. This could lead to a lengthy process of negotiations. However the EU Council has reserved the right to unilaterally apportion existing TRQs if no specific agreements can be reached with WTO members by the date of the UK’s full departure from the EU. Read more “EU Council authorises launch of Negotiations on apportionment of WTO TRQs”
EU Agri-food Export Growth Continues, Becoming Central to the Future EU Agricultural Prosperity
Summary
EU agri-food exports continued to grow in 2017 (+5.1%), re-confirming the EU as the leading global agri-food trader, with a surplus of €21.5 billion. The EU also maintains a large trade surplus with LDCs (equivalent to 46% of the value of agri-food imports from LDCs). While the EC asserts that following the implementation of CAP reforms ‘EU exports of agri-food products to developing countries are simply a response to supply and demand’, the deployment EU agricultural support tools and trade policy measures continue to have an important bearing on the structure of EU production and patterns of exports to ACP countries, particularly in the dairy, poultry meat and increasingly the sugar sector. While the EU is committed to policy dialogues with ACP governments to strengthen the contribution of the agri-food sector to rural and wider national development, this dialogue will continue to be one-sided unless the EU acknowledges the impact which the deployment of EU policy tools continues to have on patterns of EU exports which can undermine prospects for the structural development of key agri-food sectors. In Africa in particular patterns of EU private sector investment are needed which support rather than hold back the integrated structural development of agri-food sectors so growing African demand for high quality, high value food can increasingly be met from domestic integrated agri-food sector activities. Read more “EU Agri-food Export Growth Continues, Becoming Central to the Future EU Agricultural Prosperity”
EC Seeks Mandate to Negotiate Apportionment of WTO Agreed TRQs
Summary
The EC is seeking a mandate to negotiate the apportionment of existing WTO TRQ market access commitments between the UK and EU27 markets in the post Brexit period. However it is unclear whether this apportionment approach will also be applied to bilaterally negotiated TRQ arrangements under EU FTAs. This is an important issue for ACP sugar and banana exporters, given the expansion of reduced duty TRQ access allowed under EU FTAs in recent years and the role the UK plays as a market for extra-EU imports of sugar and bananas. ACP governments could usefully seek consultations with the EU on this issue; with ACP exporters of affected products needing to clearly identify which apportionment option best protects ACP export interests. Read more “EC Seeks Mandate to Negotiate Apportionment of WTO Agreed TRQs”