Category: Brexit

Deferment of UK Parliamentary Ratification Heightens Uncertainty and Gives Added Urgency to ACP Engagement with EU and UK Contingency Planning Processes

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Summary
The deferment of the UK Parliamentary vote on the EU/UK Withdrawal Agreement and Prime Minister May’s ongoing efforts to secure further assurances from the EU on the improbability of the activation of the Irish border safeguard so as to address UK Parliamentary concerns adds to the uncertainty as to whether a ‘no-deal’ Brexit can be avoided. While Prime Minster May survived the Conservative Party vote of no-confidence in her leadership, with 117 Conservative MPs voting they had no confidence in her leadership largely around the Brexit issue this does not bode well for the ratification of the Withdrawal Agreement. This gives added urgency to the contingency planning underway in both the EU and the UK. ACP governments and private sector exporters will need to engage with these contingency planning processes to ensure that the needs and interests of ACP exporters are accommodate within the emergency measures set in place. Early targeted action in this regard to help minimise the trade disruptions arising from a ‘no-deal’ outcome to the current Brexit negotiations. Read more “Deferment of UK Parliamentary Ratification Heightens Uncertainty and Gives Added Urgency to ACP Engagement with EU and UK Contingency Planning Processes”

Implementation of EU-ACP Economic Partnership Agreements: The State of Play in 2017 in Perspective

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Summary
While EPA negotiations commenced with all ACP countries in 2002 by the end of 2017 only 28 of 79 ACP governments had signed and ratified EPAs in place. Negotiations to complete regional EPAs in the EAC and West Africa remain stalled by the reluctance of key governments to accede to a regional EPA, with this generating tension within regional integration initiatives. While tariff reduction and elimination commitments vary across agreements in terms of scope and the timetables for implementation, provisions restricting the utilisation of non-tariff trade policy tools are common to all agreement and are likely to have the same effects if rigorously interpreted and applied, despite variations in wording. EU agro-food exporters see the application of non-tariff measures as more important than tariffs in holding back further expansion of EU exports. This is likely to become a growing area of contention in EU-ACP trade relations, since to date the EC has ‘soft peddled’ on this issue in an efforts to complete regional EPA negotiation processes in Africa. Meanwhile the value of ACP preferential access for agro-food exports is being undermined by new EU trade FTA agreement. These effects are likely to further compounded by the Brexit process. ACP efforts to place their structural economic development objectives at the heart of the future ACP-EU Partnership Agreement are being resisted by the EC, with this reflecting and underlying tension between EU agro-food sector export interests and ACP structural development objective sin the agro-food sector. Read more “Implementation of EU-ACP Economic Partnership Agreements: The State of Play in 2017 in Perspective”

UK Dependence on the EU for ‘Dark’ Meat Exports Potential Source of Concern

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Summary
The UK poultry sector is dependent on exports of ‘dark meat’ to maximise its revenues. Currently 70% of these exports go to EU27 markets. This trade will become increasingly difficult under a ‘no-deal’ Brexit scenario if the EU applies both standard MFN tariffs and its rigorous 3rd country import controls on UK poultry meat. The application of such rigorous controls is made more likely by the probable shortage of veterinarians in the UK post Brexit to carry out the inspections and certification required for imports into the EU to take place. Attaining compliance with standard EU poultry meat import requirements or finding internal markets UK markets for poultry ‘dark meat’ if likely to take some time. This could leave UK exporters seeking alternative overseas markets for their ‘dark meat’ exports from 30th March 2019, in a context where ACP markets already take 42.2% of overall UK extra-EU poultry meat exports. Both African and Caribbean governments who wish to support local poultry sector development will need to consider carefully how they are to manage this likely development. Read more “UK Dependence on the EU for ‘Dark’ Meat Exports Potential Source of Concern”

Will The Trusted Trader Scheme Offer Relief to ACP Agro-Food Exporters Under a No-Deal Brexit

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Summary
Against a background of the technological human and physical infrastructure constraints faced by the UK government in implementing border controls under a ‘no deal’ outcome to the EU/UK Withdrawal negotiations it is recognized UK border controls will be ‘less than optimal’. It is recognized a range of significant issues will need to be addressed if the period of sub-optimal application of border controls is to be minimised. Against this background the UK revenue and customs service ‘plans to increase its use of ‘trusted trader’ schemes (1). This raises the questions: What is this UK Trusted Trader Scheme? How does it operate? Can ACP agro-food exporters benefit from making use of the UK’s Trusted Trader Scheme? This article seeks to explore these issues. Read more “Will The Trusted Trader Scheme Offer Relief to ACP Agro-Food Exporters Under a No-Deal Brexit”

Shortages of Cold Storage Space Linked to Brexit Stockpiling Could Disrupt Some ACP Chilled and Frozen Exports

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Summary
Fears of supply chains disruption arising from a ‘no-deal’ Brexit has seen food manufacturers and retailers stockpiling supplies to such an extent there is now an acute shortage of cold store space in the UK. This could generate serious problems for ACP exporters of chilled and frozen products which have not already contractually locked in access to cold storage capacity. ACP exporters of chilled or frozen products urgently need to review whether they have contractually secure access to cold storage capacity on route to serving their final customers. If not they will need to intensify their search for what limited cold store capacity remains available across the UK. Read more “Shortages of Cold Storage Space Linked to Brexit Stockpiling Could Disrupt Some ACP Chilled and Frozen Exports”

UK National Audit Office Warns of Lack of Border Preparedness for Brexit

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Summary
The NAO report on UK border preparedness for a ‘no-deal’ Brexit makes disturbing reading, confirming many of the concerns raised earlier by private sector bodies and professional associations. For example, it is highly unlikely 11 of the 12 work streams required to ensure effective management of border operations will be in place on time, while recruitment programmes for veterinary staff required to continue to ensure the smooth trade in animal products have not yet got underway, despite their planned launch in April 2018. The prospect of serious failures in UK border control systems under a ‘no-deal’ scenario is seen as high while even a twenty one month transition period would leave the UK government facing serious challenges. ACP agro-food exporters, particularly those serving UK markets via EU27 member states, need to start examining how they can reduce their vulnerability to Brexit related failures in UK border control systems and what they can do to ‘Brexit proof’ their supply chains. They will also need to look at how contracts can be structured to share the burden of possible trade disruptions (leading to high levels of wastage of food products) and whether insurance cover can be secured against such risks. Read more “UK National Audit Office Warns of Lack of Border Preparedness for Brexit”

UK Withdrawal Agreement Concluded At Negotiators’ Level

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Summary
Withdrawal Agreement and Political Declaration on the framework for future EU/UK relations have been agreed at ‘negotiators’ level’. While the UK Cabinet backed the deal 2 of 24 senior Cabinet ministers resigned including the Brexit Secretary. The Withdrawal Agreement includes an automatic rolling over of the terms and conditions of access currently enjoyed by ACP exporters to the UK market until 1st January 2021. This could be prolonged given the Irish backstop now consists of an EU/UK customs union which would remain in place until a long term EU/UK trade deal is finalised. The Political Declaration provides only a summary outline of the future EU/UK relationship but includes a commitment to ‘build on the single customs territory provided for in the Withdrawal Agreement’. The UK Parliament still needs to ratify the Withdrawal Agreement, with the parliamentary arithmetic not currently looking good for Prime Minister May. EU leaders meanwhile have made it clear there is no room for substantive renegotiations of the existing Withdrawal Agreement. While approval of the Withdrawal Agreement would defer any problems for ACP agro-food exporters, political uncertainty in the UK means ACP governments and agro-food sector stakeholders should continue to prepare for the consequences of a non-deal Brexit. Read more “UK Withdrawal Agreement Concluded At Negotiators’ Level”

Growing African Demand Fuelling Poultry Meat Imports with EU Likely to Continue to Play Major Role

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Summary
Growth in African poultry production is projected to lag behind growth in consumption making Africa the region with the highest rate of growth in poultry meat imports. African governments need to adopt policies which will encourage poultry companies in exporting countries to invest in local poultry meat production. This would build on an emerging trend. This may require managed trade regimes in the poultry meat sector, similar to those used by the EU. This may also require flexibility in how existing EPA commitments on the use of non-tariff trade policy tools are interpreted and applied so as to create market space for expanded domestic production.  However the trade disruptive effects of a ‘no deal’ could make it more difficult for the EC to implement such a flexible approach. Read more “Growing African Demand Fuelling Poultry Meat Imports with EU Likely to Continue to Play Major Role”

ACP Banana Sector Concerns Raised  in EP Opinion on Apportioning Bilaterally Negotiated EU TRQs within the Brexit Process

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Summary
The issue of the future of EU TRQs negotiated as part of FTAs has been formally raised in the European Parliament opinion on the EU’s proposal for apportioning WTO agreed TRQs. This is an important issue for ACP banana exporters, particularly Cameroon, Ivory Coast and Surinam, whose banana exports are focused on EU27 markets. Any failure to apportion existing EU bilaterally negotiated TRQs would de facto increase competition on EU27 markets in the post-Brexit period by around 20%. With this potentially have severe price effects on ACP suppliers. With the potential for a ‘no-deal’ Brexit increasing there is an urgent need for the European Commission to clarify its approach on this issue, so ACP banana exporters can develop marketing strategies to deal with the increase in competition on EU27 markets they may face from 30th March 2019. Read more “ACP Banana Sector Concerns Raised  in EP Opinion on Apportioning Bilaterally Negotiated EU TRQs within the Brexit Process”

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”