Summary
The review of the implementation of the EU-SADC EPA in 2017 notes in passing the exceptionally high growth rate in EU agro-food exports to South Africa since the entry into force of the EU reciprocal preferential trade agreement in 2000. Since 2009 this has seen remarkably high rates of expansion in food categories where tariffs have been dismantled and the EU has been exempted from trade measures adopted to curb increases in imports which threaten to undermine domestic production. The experience since 2009 raises serious questions about the effectiveness of the anti-dumping and safeguard provisions included in EU trade agreements. The implementation of safeguard measures and even SPS measures against EU agro-food exports is a fiercely contested area under the EU-SADC EPA. Finally the linking of development assistance provisions to EPA implementation priorities is potentially a double edged sword, since it raises the question of whose priorities are being promoted. This needs to be seen in the context of the acute tensions between African structural economic development objectives and EU export interests in the agro-food sectors which are seen as increasingly central to the European agricultural model. Read more “Putting the Implementation of the SADC-EU EPA in Context Factoring in the Earlier EU-South Africa TDCA”
Category: EU trade policy
Implementation of EU-ACP Economic Partnership Agreements: The State of Play in 2017 in Perspective
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”
EU Sees Mauritania’s EPA signature as Stepping Stone to an EU-Africa FTA?
Summary
The EU has sought to place Mauritania’s signature of the West African EPA in the context of the ‘new Africa-Europe alliance for sustainable investment and jobs’ initiative. The ultimate aim of this initiative is to secure a comprehensive EU-Africa FTA. The EC wants to see this include a revisiting of disciplines on domestic policy formulation which African governments consciously steered away from under the EPA negotiations. This needs to be seen in the context of the relative failure of the EC in securing FTAs with African countries. After 16 years of negotiations only 15 African governments have signed, ratified and are in the process of implementing EPAs, with this embracing only 24% of the population of sub-Saharan Africa. Against this background the EC appears to be looking to harness the ‘cart’ of its trade and investment ambitions in Africa to the ‘horse’ of the African Continental Free Trade Area. This could potentially complicate efforts to create a pan-African free trade area for agro-food products. In this context, in operationalising AfCFTA commitments, African governments will need to address the challenge of how to ensure the ‘tail’ of EPAs with the EU does not end up wagging the ‘dog’ of pan-African trade integration, simply by virtue of being first on the scene. Read more “EU Sees Mauritania’s EPA signature as Stepping Stone to an EU-Africa FTA?”
The June 2018 CAP Reform: Part 4 CAP and Policy Coherence for Development
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”
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”
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’”
Ageing EU SMP Intervention Stocks See EU SMP Prices Discounted
Summary
EU SMP exports reached record levels despite declining prices in 2017, while the EU is committed to eliminating SMP intervention stocks in an orderly fashion, discounts have to be offered to encourage purchases. This exerts further downward pressures on SMP prices. No sustained recovery in SMP prices is likely as long as EU public intervention stocks overhang the market. Low SMP prices are a particular source of concern for African ACP countries, since imported milk powder prices provide a bench mark for local milk prices, undermining efforts to develop local milk-to-dairy supply chains in African regions targeted by EU exporters. Trends in EU SMP exports highlight just how divorced EU export patterns can be from underling price trends and the extent to which EU policy measures drive trade flows. Whether the profound effects EU policies have on the functioning of milk powder markets can be mitigated in ways which create new opportunities for the structural development of dairy production in ACP countries remains to be seen. Read more “Ageing EU SMP Intervention Stocks See EU SMP Prices Discounted”
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 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”