Category: Topics

Addressing the Needs of ACP Triangular Supply Chains Within the Forthcoming EU/UK Trade Negotiations

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Addressing the Needs of ACP Triangular Supply Chains Within the Forthcoming EU/UK Trade Negotiations

Summary

Given the UK governments commitment to leaving the EU custom union and single market by 1st January 2021 and the time constraint this places on establishing a successor trade agreement, the EU takes the view only a ‘light’ EU/UK trade arrangement can be in place by 1st January 2021. It is essential such a ‘light’ trade arrangement addresses the specific policy and administrative issues which will arise along ACP triangular supply chains as a result of the UK formally leaving the EU customs union and single market on 1st January 2021. For this to occur a specific commitment will need to be included in the EC’s negotiating mandate, to be finalised by February 2020, to addressing triangular supply chains issue. This is a particularly important issue for cut flower, fruit and vegetable exporters in Eastern Africa, whose principal supply routes to UK markets lie through initial ports of landing in the Netherlands and Belgium. A political initiative towards the President of the European Commission will be required from the governments of concerned ACP exporting countries if arrangements to ensure the continued smooth flow of short shelf life cut flowers, fruit and vegetable products to the UK market along triangular supply chains is to be assured. Read more “Addressing the Needs of ACP Triangular Supply Chains Within the Forthcoming EU/UK Trade Negotiations”

Ghana prepares for EPA implementation with finalisation of its revised tariff offer

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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”

Conservative Party Election Victory Mean Full Speed Ahead with Brexit and Raises The Threat of Loss of ACP Tariff Preference as a Result of Post-Brexit UK MFN Tariff Choices

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Summary
The Conservative Party’s election victory which has delivered a 80 seat majority means Parliamentary approval of the Withdrawal Agreement can now go ahead and the UK can leave the EU on 31st January 2020. The UK will however remain part of the EU customs union and single market until at least 1st January 2021. The size of the majority means the influence of the ERG hard Brexit group of Conservative MPs will be reduced. This will give Prime Minister Johnson more space to extend UK membership of the EU customs union and single market if the conclusion of a comprehensive free trade area agreement by 1st January 2021 proves unrealistic. In this context the major issue facing ACP exporters in the first half of 2020 will be the impact of the scheduled UK-Only MFN tariff review on the value of rolled over ACP tariff references, with bananas, preserved tuna, fresh beans and certain value added cocoa products looking vulnerable to a loss of value of rolled over preferences (current ACP direct exports to the UK valued at €936 million). This need to be seen in a context where the UK government has already made the decision to set UK-only MFN tariffs for all other fruit, vegetables and cut flowers at zero (current ACP direct exports to the UK valued at €449 million). The trade effects for these products could be even greater given the volume of exports to the UK which takes place along triangular supply chains focussed on the landing of cargoes in the Netherlands and Belgium prior to onward shipment. The commercial impact of this process of preference erosion will however needs to be assessed on a product by product basis in light of the functioning of individual ACP supply chains and current patterns of UK imports and the tariffs actually levied on this current trade. Read more “Conservative Party Election Victory Mean Full Speed Ahead with Brexit and Raises The Threat of Loss of ACP Tariff Preference as a Result of Post-Brexit UK MFN Tariff Choices”

Rising EU SMP Prices and New Mechanism for Monitoring FFMP Exports Could Lay the Basis for Easing Competitive Pressures on ACP Milk Producers

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Summary
Given the trade in milk powders is the principal area through which EU dairy sector developments impact on ACP dairy sector development, the increase in EU SMP prices which has followed on from the elimination of EU SMP intervention stocks should offer some relieve to African milk producers. This being noted no immediate benefits will be felt given the 30% increase in EU SMP exports from January to July 2019. The situation is further complicated by the level of EU exports of fat filled milk powders to sub-Saharan Africa, which is likely to continue to expand for the foreseeable future. Monitoring this trade should be simpler in future given the creation of a consolidated tariff heading for this product (19019050). The revised EU27/UK Withdrawal Agreement along with the UK’s post Brexit MFN tariffs for dairy products could reduce the adverse trade effects of any ‘No-Deal’ Brexit which could still emerge from 1st January 2021. What this could mean for EU-ACP dairy sector trade flows will however require detailed product by product analysis, with the key consideration being the extent to which disruptions of existing EU27 dairy exports to the UK result in increased EU production and stocks of SMP. Read more “Rising EU SMP Prices and New Mechanism for Monitoring FFMP Exports Could Lay the Basis for Easing Competitive Pressures on ACP Milk Producers”

Non-Tariff Costs For ACP Exporters Will Need to Be Addressed under a ‘No-Deal’ or ‘Hard’ Brexit

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Summary
According to UNCTAD trade costs linked to NTM are now higher than tariffs, with a need for cooperation and greater use of IT solutions to minimise such cost while meeting key public policy objectives. The non-tariff issues arising for ACP exporters within the process of the UK’s withdrawal from the EU, particularly under a ‘No-Deal’ Brexit scenario need to be fully addressed is substantial new costs are not to be generated for ACP agro-food exporters. Key areas where clear UK and EU policy commitments are needed include:  removing the need for customs checks where DFQF access is enjoyed to the EU and UK markets; allowing continued use of trade facilitating IT systems until alternatives are in place; continuing with phytosanitary checks in the EU for goods destined for the UK; -establishing mechanisms for a review of ‘UK-Only’ phytosanitary controls in Continuity Agreements concluded with the UK. Read more “Non-Tariff Costs For ACP Exporters Will Need to Be Addressed under a ‘No-Deal’ or ‘Hard’ Brexit”

Stricter EU SPS Controls Set Kenyan Exporters in Search of New Markets

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Summary
Kenyan exporters are once again facing stricter MRL controls on exports to the EU with this increasing the costs of market entry for the affected products. In addition new pre-export requirements for EU defined priority quarantine pests are increasing the risk of consignments being rejected at the EU’s borders. This has seen a reported 90% of Kenyan exporters of chillies seeking out new markets in the Middle East. This is indicative of the adjustment strategies a wide range of ACP horticultural and floriculture exporters may need to adopt in the coming years in the face of increasingly strict EU SPS import controls. While market adjustment processes will need to be private sector led, ACP governments will also need to take policy initiatives, for example ensuring that in any future trade agreements with the UK provision is made for reviewing UK-only phytosanitary controls where agro-climatic conditions and patterns of agricultural production in the UK make existing EU phytosanitary import control requirements unnecessary. Read more “Stricter EU SPS Controls Set Kenyan Exporters in Search of New Markets”

No-Deal Brexit Could Adversely Impact Cocoa Prices but Open Up opportunities for Increased Value Added Cocoa product Exports to the UK

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Summary
Given the role the London Cocoa Future market plays in setting the benchmark for cocoa prices, through its impact on the value of the £ a ‘No-Deal’ Brexit could have a significant impact on cocoa prices. With growing investment in local cocoa value added processing for the domestic market in countries such as Ghana, the application of the UK’s currently proposed post-Brexit unilateral MFN tariff schedule could create new market opportunities for the export of not fatted cocoa paste and cocoa butter to the UK market. However, given the existing ownership structure of value added cocoa processing activities, there may be a reluctance to plan for an expansion of local value added processing to serve the UK market since this would directly compete with similar facilities in the Netherlands and Belgium which are part of the same corporate family. Read more “No-Deal Brexit Could Adversely Impact Cocoa Prices but Open Up opportunities for Increased Value Added Cocoa product Exports to the UK”

EU Sugar Production Adjusting After Quota Abolition and In Face of Low Prices, with Renewed Growth in Imports and Reduced Exports

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Summary
In the face of sustained low prices EU sugar production is declining as part of the now post-quota abolition market adjustment, with lower areas under sugar beet being contracted by beet processing companies. There is a growing variation in prices across EU markets with ACP exporters needing to enhance their marketing operations in the EU to maximum total revenues gained on sales to the EU. ACP export volumes to the EU nearly doubled in 2018/19 compared to the depressed levels of 2017/18, while EU export volume fell back dramatically (-53%), but nevertheless remained above pre-quota abolition export levels (+23%). ACP sugar exporters have a disproportionate dependence on the UK market with Belize Guyana and Fiji being particularly exposed. ACP sugar exporters will thus need to keep a close eye on developments around Brexit in the coming year, given the impact a ‘Hard’ Brexit could have on price levels on both the UK and EU27 markets. Read more “EU Sugar Production Adjusting After Quota Abolition and In Face of Low Prices, with Renewed Growth in Imports and Reduced Exports”

Evidence Suggests Extending Sugar Content Tax to Snacks Would be More Effective in Combatting Obesity

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Summary
Public health concerns are leading to a gradual but sustained reduction in EU sugar sector consumption. With the EU sugar sector finding a new post-quota equilibrium this is likely to reduce market opportunities in the EU for ACP sugar exporters. This will require improved marketing of sugar in the EU and the identification and exploitation of markets beyond the EU. This will also need to include at the national level in ACP sugar exporting countries structured dialogues with the international sugar companies involved in local sugar production on a common strategy for market and revenue diversification which protects and promotes the economic well-being of local sugar farmers and sugar sector workers. Read more “Evidence Suggests Extending Sugar Content Tax to Snacks Would be More Effective in Combatting Obesity”

EU Exports of Poultry Meat Continue to Increase Dramatically

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Summary
EU poultry meat production and consumption continues to increase, with this generating a 12% growth in exports in the first half of 2019 and the prospect of continued growth in exports up to 2021. EU poultry meat exports are once again taking off to South Africa as the December 2016 AI based import restrictions are progressively removed. The expansion of EU poultry meat exports to sub-Saharan Africa is unlikely to ease in the coming years with this posing policy dilemmas for governments where local poultry industries exist.  Given current trends in EU policy, African government are likely to come under increased pressure to remove all existing non-tariff measures which inhibit EU poultry meat exports, where these are in technical violation of EPA commitments. These pressures would be intensified by a ‘No-Deal’ of ‘Hard’ Brexit from 1st January 2021. Read more “EU Exports of Poultry Meat Continue to Increase Dramatically”