Summary
If the UK leaves the EU without alternative trade arrangements in place which deal comprehensively with both tariff and non-tariff issues the EU will have no choice but to treat the UK the same as any other third country. This could make it very difficult to avoid disruption of existing trade flows. If a UK/EU27 free trade area dealing with tariffs were agreed this would still require the negotiation of comprehensive arrangement related to the application of non-tariff measures to EU imports from the UK. What the absence of such an agreement would mean in practice in the area of the future application of EU Food Law has been set out in a February 2018 EC notifications to stakeholders on the implications of the UK leaving the EU. This notification highlights how products of animal origin are likely to be the worst affected agro-food sectors, given the stringent controls on 3rd country imports which the EU applies. This suggests ACP governments will need to look carefully at what trade policy tools they have available to deal with sudden surges in UK and EU27 exports of product of animal origin. Read more “Getting to Grips with the Import Controls Required If the UK Is Treated As Just Another 3rd Country”
Category: Brexit
Dairy UK and the European Dairy Association (EDA) Launch Joint Position to Minimise Brexit Related Dairy Sector Disruptions
Summary
UK and EU dairy associations are seeking to develop a common approach to avoiding Brexit related disruptions of the existing dairy trade. While the UK governments white paper proposals appear aimed at remaining as close as possible to the single market and customs union, while formally leaving both, it is unclear whether these UK proposals would be consistent with the ‘redlines’ the EU has established in order to maintain the integrity of the single market and the alignment of its trade policy with WTO rules. The potential for ‘terrible market turbulence’ which a poorly manage Brexit process could give rise to in the dairy sector is an issue of concern to ACP countries, since as Dairy UK and the EDA position paper highlights, the last time EU exporters lost access to 3rd country markets (the Russian import embargo) this saw a massive expansion in EU exports of milk powders to Africa. This has served to further undermine efforts to develop local milk-to-dairy supply chains in Africa. Read more “Dairy UK and the European Dairy Association (EDA) Launch Joint Position to Minimise Brexit Related Dairy Sector Disruptions”
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”
EC Notification on Brexit Related Rules of Origin Complications Could Create Opportunities for New Thinking on Rules of Origin Applied to ACP Exports
Summary
Once the UK leaves the EU, the use of UK inputs in products produced in the EU27 and exported under preferential trade arrangements could create problems given UK inputs will no longer count as ‘originating’ under the preferential rules of origin applicable under EU trade agreements. The EC is advising EU manufacturers who export under preferential trade arrangements to review whether the UK’s changed status will impact on the eligibility of their products for preferential treatment under EU trade agreements. Given the highly integrated nature of EU28 supply chains this could pose challenges to both EU exporters under existing EPAs and UK exporters under any subsequent bilateral UK trade arrangements.
This potentially provides an opportunity for ACP governments to argue for a comprehensive overhaul of existing rules of origin applied to ACP exports to the EU. This could potentially assist ACP agro-food exporters in moving up the value chain where non-originating materials are required in composite food products and packaging materials need to be imported. It also suggests issues of regional cumulation could also be revisited given the potential pressures to allow a special dispensation for UK inputs under EU trade agreements while new origin certification arrangements or alternate supply chains are being set in place. Read more “EC Notification on Brexit Related Rules of Origin Complications Could Create Opportunities for New Thinking on Rules of Origin Applied to ACP Exports”
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”
EU to Launch FTA Negotiations with Australia and New Zealand
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”
Dangers of Chlorine Washed Chicken Highlighted in New UK Study
Summary
Scientific findings on the public health hazards of relying on end of process chlorine washing highlight the difficult choices which lie ahead for the UK government in regard to the future basis for post-Brexit food safety standards. These choices will carry important implications for UK-US trade negotiations and the level of controls the EU will apply to agro-food imports form the UK. This issue of regulatory divergence heightens the danger of a ‘hard’ Brexit in the agro-food sector. This suggest a need for ACP exporters serving triangular supply chains to start work now on identifying what administrative measures can be put in place to minimise disruption of current supply chains. Read more “Dangers of Chlorine Washed Chicken Highlighted in New UK Study”
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”