Summary
There are 3 main areas of concern for ACP agri-food sectors arising from the EC’s new priority programme. The appointment of a Chief Trade Enforcement Officer could lead to increased pressure on ACP governments to eliminate the use of non-tariff barriers on imports form the EU as agreed in most concluded EPAs. This needs to be seen in the context of the increasing interest of EU agri-food businesses in rapidly growing African markets, evolving global economic trends and trade conflicts elsewhere. New EC trade related sustainability commitments, depending on how they are interpreted and applied in practice could increase the costs of serving EU market, with the burden falling particularly heavily on small scale exporters and smallholder farmers across the ACP. Budgetisation of the EDF alongside Brexit related financial pressures and ongoing security and migration concerns on the EU’s southern border could see far less grant financed development assistance being extended to agriculture development in ACP countries, with loan based financial instruments being unlikely to meet the needs of smallholder producers or small and medium sized agri-food sector enterprises in ACP countries. Read more “Implications for ACP Agriculture of the New EC President’s Agenda”
Category: EU trade policy
Ghana prepares for EPA implementation with finalisation of its revised tariff offer
Summary
The government and Ghana has agreed revised tariff phase down commitments on imports from the EU. Tariff reductions will commence in the first quarter of 2020 and be completed by 2029. It is unclear how the revised EPA will support Ghanaian structural development objectives given wider trends in trade with the EU. However it is likely to accelerate existing trends towards expanded EU agro-food exports to Ghana and increase pressure on Ghana to sign a bilateral FTA with the UK within 18 months. Potentially Brexit could open up opportunities for an expansion of Ghanaian exports of value added cocoa products and preserved tuna directly to the UK market. This could support Ghanaian structural economic development objectives. This however will require the conclusion of an agreement with the UK which in the long term preserves current duty free-quota free access for Ghanaian exports. Discussions around cocoa sector issues could be complicated by growing concerns in the EU over the level of deforestation resulting from cocoa production in West Africa. Read more “Ghana prepares for EPA implementation with finalisation of its revised tariff offer”
EU FTA Implementation Report Highlights the Importance of Trade Agreements to EU Agro-Food Exports
Summary
The latest EC FTA implementation report highlighted the particular importance of such agreement to EU agro-food exporters. Attention is increasingly being focused on the removal of non-tariff barriers to EU exporters in the context of the full implementation of agreed tariff reduction commitments. While in 2018 exports to sub-Sahara Africa were an exception to the overall trend in the expansion of the value of EU agro-food exports, the decline in the value of exports to sub-Saharan Africa was less marked in countries where fully implemented FTAs were in place. A review of trends in EU exports of agro-food products where the implementation of an EU FTA had been completed (the EU-South Africa TDCA) revealed that in those products where the margins of tariff preferences generated by the agreement were significant a remarkable growth in the value of EU exports occurred between 2009 and 2016, with in most of these product areas this growth continuing through to 2018 despite South Africa’s economic difficulties (though be it at a slower rate). This illustrates the true value of EU trade agreements to the EU agro-food sector in trade relations with sub-Saharan Africa. Read more “EU FTA Implementation Report Highlights the Importance of Trade Agreements to EU Agro-Food Exports”
The EU Mercosur Agreement Part 4 Will the Mercosur Agreement Pose a Threat to Belizean Orange Juice Exports?
Summary
Spanish citrus producers are concerned the new Mercosur trade agreement could flood the EU market with frozen orange juice concentrate. This potentially impacts on frozen orange juice exporters from Belize and South African, with this being of particular concern to Belize where these exports constituted 1.3% of total exports to the EU in 2018. The conclusion of the Mercosur agreement could give added importance to exploiting the ‘rolled-over’ CARIFORUM-UK ‘Continuity Agreement’, given the potential trade disruptions which could arise from a ‘no-deal’ Brexit for the export of reconstituted orange juice and domestic EU27 orange juice to the UK. Read more “The EU Mercosur Agreement Part 4 Will the Mercosur Agreement Pose a Threat to Belizean Orange Juice Exports?”
The EU-Mercosur Agreement Part 3: Will the Mercosur Agreement Pose a Threat to the Stability of EU27 Banana Markets
Summary
EU banana producers have expressed fears over the impact any EU-Mercosur banana tariff concessions could have on the level of banana imports from Brazil. Based on recent trends in EU banana imports in response to tariff reductions these fears have solid foundations. However from an ACP perspective such fears should not be overstated with the likely market effects of increased Brazilian banana exports to the EU needing to be seen in the context of all the wider sources of pressure on the EU market position of ACP banana exporters. Individual ACP banana exporters will need to evaluate the specific implications of any new Mercosur agreement tariff concessions for the particular EU banana market components they serve. Where necessary enhanced marketing and product differentiation strategies will need to be set in place in order to maintain their current export trade to the EU. However, it needs to be recognized this will not be possible for all existing ACP banana exporters. Read more “The EU-Mercosur Agreement Part 3: Will the Mercosur Agreement Pose a Threat to the Stability of EU27 Banana Markets”
The EU-Mercosur Agreement Part 2: EU Sectoral Impacts and Implications for the ACP
Summary
The main products of concern to ACP countries where quota restricted duty free access is to be phased in for Mercosur exporters are sugar; ethanol; beef; poultry meat; and rice. The TRQ granted for sugar will reduce the margins of tariff preference enjoyed by ACP sugar exporters on EU27 markets and intensify price pressure on ACP sugar suppliers. It will make supplying the EU27 market increasingly difficulty for all but the most competitive ACP sugar exporters, unless some form of quality differentiated offering is on sale. In contrast the TRQ for ethanol is likely to have little impact on current ACP exports which are marginal. The TRQ for beef could generate increased competition on beef market components which Namibian exporters are increasingly targeting, although further investment in quality based product differentiation could serve to insulate Namibian exporters from any adverse price effects. In the poultry meat sector the new TRQ could serve to further fuel the growth in EU exports of frozen poultry parts to African market. In the rice sector given the relatively small size of the TRQ granted to Mercosur exporters it is unclear to what extent this poses a threat to ACP rice exporters in Guyana and Suriname. Read more “The EU-Mercosur Agreement Part 2: EU Sectoral Impacts and Implications for the ACP”
The EU-Mercosur Agreement Part 1: Overview and Lessons for the ACP
Summary
The structure of the EU-Mercosur FTA potentially holds important lessons for ACP governments. This is most notably the case in regard to the use of TRQs to carefully manage trade liberalisation in sensitive agro-food sectors. The EU makes extensive use of TRQs under trade agreements with its major agro-food sector trade partners in order to protect the interests of EU farmers, while meeting consumer demand. The contrasts sharply with the use made of TRQs by African governments in trade agreements with their major agro-food sector trade partner, the EU. With the exception of the EU-SADC EPA no other African governments have used TRQs to manage imports from the EU in sensitive agro-food products. In addition the application of tariff standstill commitments to products not subject to tariff reduction commitments under the EU-Mercosur agreement is potentially of concern to ACP governments if this approach is extended to the interpretation and application of EPA commitments. The use of regionalisation arrangements for SPS controls however would usefully be extended to the treatment of certain ACP exports to the EU (e.g. Namibian beef and lamb exports). Finally the ’non-alteration’ rule included in the Mercosur agreement could usefully be taken up and applied in an extended form in the context of a no-deal Brexit under the existing EU-ACP EPAs and rolled over UK-ACP Continuity Agreements. Read more “The EU-Mercosur Agreement Part 1: Overview and Lessons for the ACP”
Commissioner Hogan Highlights Agri-food Sector No Deal Brexit Preparations
Summary
In the event of a ‘no-deal’ Brexit EU market disturbance mitigation measures will consist of a combination of public intervention buying, aid to private storage, support for product withdrawal schemes, targeted financial assistance and support for the development of alternative markets. These instruments can be combined in various ways in light of sectoral needs, with the EC maintaining its experience of previous market disturbance in the 2014-16 period provides a wealth of experience to draw on. The experience of trade diversion to ACP markets following the August 2014 Russian import embargo is a source of concern for ACP producers. This experience suggests a need for a pro-active ACP engagement with the EC on the design and implementation of EU Brexit-related market disturbance mitigation measures, to ensure such measures take into account the interests of ACP producers and traders. Read more “Commissioner Hogan Highlights Agri-food Sector No Deal Brexit Preparations”
EU Urged to Continue to Use High Tariffs to Protect EU Egg Sector
Summary
A WUR report suggests the EU egg sector would face serious competitiveness challenges from imports without continued high levels of tariff protection. While this is justified on the basis of the high regulatory standards applied in the EU, even in the absence of higher EU regulatory standards major 3rd country egg exporters would still enjoy significant cost advantages. The contradiction between the EU’s continued use of a combination of high tariffs and quantitative restrictions on imports to regulate the EU egg market and the EU’s inclusion of provisions in trade agreements with ACP countries which seek to ban the use of quantitative restriction on imports from the EU needs to be recognised and addressed through continuing to flexibly interpret and enforce such commitments in trade with ACP countries. ACP governments need to be allowed to continue to use a range of trade policy tools in trade with the EU (including quantitative restrictions) where patterns of EU exports threaten national sector development strategies and aspirations. Read more “EU Urged to Continue to Use High Tariffs to Protect EU Egg Sector”
EU Formally Challenges Application of SACU Safeguard Duties in the Poultry Sector
Summary
The EC has initiated a process leading to the establishment of an arbitration panel to rule on the validity of safeguard measures taken against EU poultry meat imports under the EU-SADC Group EPA. While many of the EC’s objections are technically correct they ignore the wider context of the evolution of EU poultry meat exports, to which tariff reduction and ‘tariff standstill’ commitments contained in the pre-existing EU-South Africa TDCA made a unique contribution prior to the introduction of SPS related import restrictions in December 2016. With the progressive lifting of these restrictions, the longer term structural trend towards increasing EU exports of poultry meat to South Africa is beginning to re-assert itself. This needs to be seen against the background of concerns a ‘no deal’ Brexit could lead to a huge surge in EU27 poultry meat exports to extra-EU markets. In this context the current EC action can be seen as part of EU ‘no-deal’ Brexit preparations. As such this raises the spectre of the aggressive pursuit by the EC of the full implementation of nominal EPA commitments, so as to open up new market possibilities for EU27 export sectors facing the prospect of severe trade and market disruptions under a ‘no-deal’ outcome to the ongoing Brexit process. Read more “EU Formally Challenges Application of SACU Safeguard Duties in the Poultry Sector”