Summary
This article seeks to highlight the main areas of impact of the new EU/UK border arrangements as these are likely to affect ACP exporters serving EU27 markets. While this will mainly impact ACP exporters using triangular supply chains, it will also have some effects on direct exports to the EU, mainly via it effects on trade administration documentation requirements, the need for valid authorisations and certifications, customs and taxation rules and the rules of origin requirements under preferential trade agreements. While ACP exporters themselves need to make their own assessments of the impact of the UK’s full withdrawal from the EU and set in process appropriate preparations for the changes which will occur, there is some scope for policy interventions to try and mitigate the adverse impact on ACP supply chains. However, this will require proactive engagement with the EU by the governments of the country’s most seriously impacted by the impending changes. To date there is no evidence the concerned government have yet appreciated the urgency of such policy initiatives. This could leave ACP exporters having to cope alone with further trade disruptions. This is likely to be most severely felt by those ACP exporting countries already suffering most severely because of Covid-19 related trade disruptions. Read more “Preparing for the Impact of a New EU/UK Border on ACP Exports to the EU”
Category: Topics
Nestlé Move Away from Cane Sugar Compounds Wider Sugar Sector Demand Trends
Summary
Nestle’s decision to switch to beet sugar will have a greater impact on the UK market for ACP cane sugar than the companies sugar reduction efforts since 2015. The decision of Nestle will compound the wider structural trend in the UK and elsewhere in Europe towards a reduction of human consumption of ‘hidden’ sugars. While to date, as part of its latest anti-obesity campaign launched in the face of the devastating link uncovered between obesity and serious Covid-19 infections and deaths, the UK government has resisted pressured to extent the SDIL to high sugar content food products, pressure for regulatory measures to reduce the use of ‘hidden’ sugar in a wide range of food products is only likely to increase in the coming years. The long-term structural trends towards reduced consumption of sugar and greater local sourcing, is something ACP cane sugar exporters will need to adjust to, as they look towards their future marketing options. The ability of different ACP exporters to adjust to these new market realities varies greatly and will need to be assessed country by countries and even company by company. Read more “Nestlé Move Away from Cane Sugar Compounds Wider Sugar Sector Demand Trends”
Will ACP Exports to the UK Be Impacted by the New UK-EU Border Control Requirements?
Summary
While the UK government asserts the introduction of UK border controls on goods entering from the EU will leave trade with ACP countries and the rest of the world unaffected, this is not entirely the case. ACP goods entering the UK market via EU27 member states along so-called triangular supply chains, will be most severely affected, though be it in a wide variety of ways. This will depend on:
- The nature of product and whether any significant alteration to the product takes place in the territory of the EU on route to the UK, specifically whether the consignment is simply broken down or undergoes repackaging or some simple level of processing prior to onward trade to the UK.
- Whether the product remains formally ‘in transit’ under the provisions of the CTC.
- Whether the good enters the customs territory of the EU prior to onward movement to the UK.
- The basis on which the UK finally leaves the EU customs union and single market.
- The efficiency of UK border control services and border clearance infrastructure in the face of the basis on which the UK leaves the EU customs union and single market.
All these factors will influence the impact the UK’s departure from the EU customs union has on ACP exports to the UK. In addition even direct ACP exports to the UK will be affected by the new UK/EU border requirements, in terms of the trade documentation required to enter the UK customs area and the overall efficiency of UK border control services, in the face of the new demands a UK/EU border will generate. ACP exporters will need to be alert to and prepare for all these potential impacts, with the level of adjustment required varying considerably across products. Read more “Will ACP Exports to the UK Be Impacted by the New UK-EU Border Control Requirements?”
Nestlé’s Withdrawal from Fairtrade Cocoa Purchases Highlights the Need for ‘Due Diligence’ Regulations to Address Price and Income Issues
Summary
The decision by Nestlé UK&I to abandon Fairtrade cocoa purchases and bring sustainability certification in-house, is in line with a wider corporate trend towards in-house certification in response to growing public concern over the need to promote more sustainable child labour free production practices. This can be seen as part of corporate efforts to pre-empt the introduction of potentially costly mandatory ‘due diligence’ regulations. However, moves away from guaranteed farmgate prices and cocoa farming community Premiums, which the abandonment of Fairtrade sourcing represents, demonstrates a singular lack of understanding of the underlying economic forces which drive deforestation, child labour and unsustainable farming practices. To be effective ‘due diligence’ requirements must be based on delivering a decent income to cocoa farmers and must promote thriving cocoa farming communities. To date beyond some rare corporate initiatives only Fairtrade certification has effectively addressed this issue. Without solid economic foundations, deforestation, child labour and sustainable farming practice commitments are likely to face periodic reversals whenever prices take a downturn. Read more “Nestlé’s Withdrawal from Fairtrade Cocoa Purchases Highlights the Need for ‘Due Diligence’ Regulations to Address Price and Income Issues”
EU Sugar Market Still Attractive but Brexit Related Complications Likely in 2021
Summary
The difficult global sugar market situation and rapid transition from a large projected deficit to a significant surplus is likely to put pressure on EU sugar prices, which have to date held up well. There are concerns the UK duty free sugar quota of 260,000 tonnes could see EU/UK sugar trade restricted, with this driving EU27 sugar exports off the UK market and intensifying competition on the EU market. This could also complicate the onward trade in ACP sugar and products containing ACP sugar between the UK and the EU. Disturbances on European sugar markets look likely in 2021, including for ACP Fairtrade sugar, where exporters may need to review their routes to market and refining partners. Alternatively, special onward trade arrangements may need to be negotiated as part of wider efforts to avert disruption of ACP triangular supply chains. This can be seen as an urgent policy priority. Meanwhile ACP sugar exporting companies will need to explore their sugar marketing options for 2021, in the light of a variety of scenarios for the UK’s departure from the EU customs union and single market. Read more “EU Sugar Market Still Attractive but Brexit Related Complications Likely in 2021”
UK International Trade Secretary Raises Concerns Over UK Border Control on Imports From EU
Summary
The UK Trade Secretary has expressed concerns over plans for a phased implementation of UK border controls on imports from the EU27 regarding their WTO compatibility, the impact on smuggling operations and the credibility of UK trade policy. Concerns have also been raised over the practicality of implementing ‘light touch’ border control systems between the mainland UK and Northern Ireland. Problems in designing and implementing ‘light touch’ border control systems and concerns over smuggling could see more rigorous controls applied to ACP goods entering the UK market via EU27 member states. Unless special arrangements are set in place to facilitate the continued smooth functioning of ACP triangular supply chains, the functioning of important ACP export sectors could be seriously undermined (e.g. short shelf life horticulture products and cut flowers, value added cocoa products and even fisheries products). Read more “UK International Trade Secretary Raises Concerns Over UK Border Control on Imports From EU”
What Options for Strengthened EU Regulatory Requirements Would Best Serve the Interests of African Cocoa Farmers?
Summary
Some form of EU regulatory initiative to promote more sustainable and child labour free cocoa production in the course of 2021 now looks inevitable. The question arises: what form should such regulatory action take, if it is to support the attainment of a decent living wage for cocoa producers? This is a critical question since poor prices and heightened poverty levels have an important bearing on the use of child labour and the pursuit of environmentally damaging cocoa farming practices. A combination of initiatives founded on bilateral cocoa supply chain agreements between the EU and cocoa exporting countries, linked to the subsequent formulation of due diligence requirements and appropriate modifications to EU competition law, all aimed at addressing the low prices paid to farmers and ensuring net gains to the financial position of farmers as a result of the implementation of environmental and forest protection measures as well as the ending of the use of child labour, would appear to offer the greatest scope for effective action in addressing shared concerns. Read more “What Options for Strengthened EU Regulatory Requirements Would Best Serve the Interests of African Cocoa Farmers?”
Could Leaked Requirements for Movement of Goods to Northern Ireland Provide Basis for Special Arrangements for ACP Triangular Supply Chains
Summary
Proposals for consolidated electronic document requirements for the movement of goods from the mainland UK to Northern Ireland could provide a basis for special arrangements to facilitate the continued smooth functioning of ACP triangular supply chains. Additional arrangements to remove the need for phytosanitary checks on ACP goods entering the UK market via EU27 countries would however be required. While there is seen as being no political objection in the UK to averting disruption of trade with developing countries which enters the UK market via EU27 member states, there is not currently the ‘band width’ in UK government services to deal with this issue, given Covid-19 related demands and the fraught state of UK/EU negotiations. There is therefore a need for the most directly affected ACP governments to launch a political initiative for the establishment of special arrangements to ensure the continued smooth functioning of ACP triangular supply chains. Such an initiative would need to reach out to both the UK and EU authorities to make sure suitable arrangements are in place along the whole of the supply chain. Read more “Could Leaked Requirements for Movement of Goods to Northern Ireland Provide Basis for Special Arrangements for ACP Triangular Supply Chains”
Emerging UK/EU Dispute Over ‘Green Box’ Payments Highlights Long-Standing ACP Concerns
Summary
The UK is objecting to the inclusion of a ‘peace clause’ in any future EU/UK trade agreement which would prevent the UK from challenging the trade distorting effects of EU ‘green box’ agricultural support payments. The trade distorting effects of EU ‘green box’ support payments, has long been a focus of discontent for ACP producers, who see the trade effects of these measures as grossly unfair. While the EU is unlikely to abandon its robust defence of the non-trade distorting nature of existing ‘green box’ payments, the accommodation reached with the UK on this issue could potentially hold important lessons for ACP governments seeking to defend domestic producers against unfair ‘green box’ support driven trade distortions. It would therefore be appropriate for ACP governments to closely monitor these UK/EU discussions. Read more “Emerging UK/EU Dispute Over ‘Green Box’ Payments Highlights Long-Standing ACP Concerns”
EU Figure Highlights Importance of UK Market to EU27 Poultry Sector
Summary
The UK is a major export market for EU27 poultry meat producers, in recent years taking 1/3 of extra-EU27 exports. In the absence of a UK/EU trade agreement which preserves duty free access on mutual trade in poultry meat, EU exporters would face standard MFN duties in exporting to the UK, while UK exporters would face standard MFN duties in exporting to the EU. If EU exporters faced the same tariffs as Brazilian exporters, then EU exporters of chilled and frozen chicken meat would rapidly be displaced from the UK market in most product areas. This would be likely to generate a substantial surplus of poultry meat on the EU market, for which markets would need to be found across the globe. This needs to be seen in the context of the current importance of African markets in total extra-EU poultry meat exports. Read more “EU Figure Highlights Importance of UK Market to EU27 Poultry Sector”