Summary
While UK sugar beet growers have expressed concern over their future prospects as a result of the UK governments new sugar trade policy, the most fundamental change is in the UK/EU trade relationship for refined sugar and high sugar content products. This is a result of the new rules of origin requirements under the UK/EU TCA, which exclusively impact on imports of raw cane sugar. These changes could see a major contraction in UK import demand for cane sugar, with Guyana and Fiji likely to be among the most seriously affected of the 9 ACP countries which currently export sugar to the UK. However, the Brexit effects on ACP sugar exports to the UK need to be seen in the context of the dramatic decline in ACP sugar exports to the UK which has taken place since the introduction of EU sugar sector reforms. Read more “Complex Reality Behind UK Beet Grower Concerns Casts Shadow Over ACP Sugar Exports”
Category: Topics
West African Banana Producers Call for a Fairer Distribution of Commercial Benefits Along Banana Supply Chains
Summary
Afruibana has sought to raise the importance of addressing the issue of burden sharing along banana supply chains in the context of the dramatic Covid-19 linked freight and input cost escalation now being faced. Afruibana argues addressing burden sharing and equitable pricing issues is essential to support the necessary ‘ecological and energy transition’ in the banana sector. It would appear important to ensure pricing requirements based on Costs of Sustainable Production (COSP) calculations, form an integral part of EU due diligence requirements aimed at getting to grips with climate and livelihood challenges in the developing world. As the Afruibana letter points out this will require everyone in the supply chain to play their part, through international traders, wholesalers, retailers to end consumers. Equally, in the current context, it is important policy choices made in the EU and UK around the Brexit process do not add to costs along already stressed supply chains. Read more “West African Banana Producers Call for a Fairer Distribution of Commercial Benefits Along Banana Supply Chains”
Major UK Player Exits Fresh and Chilled Produce Cross-Border Trade with the EU
Summary
The Marks & Spencer experience of UK-to-EU supply chain disruption hold important lessons for ACP exporters of fresh and chilled products. It highlights three major areas of impact: the vulnerability of fresh and chilled product supply chains to Brexit related disruptions; the importance of phytosanitary import controls to cross border trade in fresh produce; and the critical important of the trade administration burden generated by new post-Brexit requirements for the movement of goods across EU/UK borders, a dimension which can be the final straw that breaks the camel’s back, in terms of the future functioning of triangular supply chains. The Marks & Spencer experience also provides a foretaste of what can be expected along EU-to-UK supply chains from 1 July 2022. Against this background, ACP exporters need to recognise that by being the first to adjust by shifting over to direct exports to the UK, real possibilities could emerge to pick up new business as traditional EU orientated supply chains fall away. Read more “Major UK Player Exits Fresh and Chilled Produce Cross-Border Trade with the EU”
UK Announces a Further Deferment of Full Border Controls on Goods Crossing Over from the EU
Summary
The UK government has announced the deferment of the implementation of a range of controls on goods entering the UK from the EU. While this is nominally in response to Covid-related disruptions, shortcomings in UK government Brexit planning and investment appears equally important. The response of UK businesses to the deferment announcement has been mixed. Concerns have been expressed the problem has simply been ‘kicked down the road’ to avoid a pre-Christmas crisis, while extending the uncertainties over the conditions under which trading operations will take place in the future. There are concerns ongoing uncertainty is having particularly adverse effects on the ‘re-export’ trade along ACP fresh and chilled produce supply chains, with such business operations simply being placed in the ‘too hard’ basket. Against this background there is a need for political initiatives around the issues facing the ACP re-export trade along triangular supply chains, so as to remove uncertainty and restore business confidence in the future of such trading arrangements. Read more “UK Announces a Further Deferment of Full Border Controls on Goods Crossing Over from the EU”
UK HGV Driver Shortage Raises Contractual Issues for ACP Exporters
Summary
The shortage of HGV drivers in the UK is particularly acute and is intensifying. Food and drink supply chains particularly for shirt life products being severely impacted. This raises the issue of burden sharing along ACP export supply chains serving UK markets. Escalating road haulage costs and the value losses resulting from delays need to be taken up and addressed in Incoterms covering ACP exports to the UK, if ACP exporters are not to bear the full burden of escalating costs and value losses. Read more “UK HGV Driver Shortage Raises Contractual Issues for ACP Exporters”
Irish Trade Data on Differential Impact of Border Controls Raises Concerns for Future ACP-EU Triangular Supply Chains
Summary
Recent Irish data highlight the impact of new border controls on trade flows with the UK, with ACP ‘re-exports’ from the UK to Ireland likely to be seriously affected. This is not only a result of general cross-border trade complications generated by the Brexit process, but also due to two specific challenges arising for ‘re-exported’ products: notably the rules of origin/MFN tariff complications for re-exported fresh produce and simple processed products (e.g., from raw to refined sugar) and the additional phytosanitary import documentation requirements, namely the need for ‘phytosanitary re-export certificates’. The delays this can generate pose particular problems of value losses for short shelf-life products. While currently these problems are only faced along ACP-to-UK-to-EU supply chains, from October 2021 onwards, similar problems will be faced along ACP-to-EU-to-UK supply chains, with this potentially posing some serious challenges to current triangular supply chain operations. Read more “Irish Trade Data on Differential Impact of Border Controls Raises Concerns for Future ACP-EU Triangular Supply Chains”
Concerns Expressed Over Lack of Preparedness for October 2021 UK Controls on Goods Crossing from the EU
Summary
There are mounting industry concerns the UK authorities are not ready for implementing controls on goods crossing over from the EU scheduled to be introduced in October 2021. The de facto extension of the ‘Operation Brock’ emergency powers to regulate traffic flows along the main cross channel routes is seen as an implicit recognition of the dangers of road traffic disruptions. The serious air and sea freight disruptions and freight rate increases over the last year is complicating ACP efforts to restructure triangular supply chains, so as to deliver directly to the UK. This makes getting to grips with the sources of cost increases for ACP re-exports shipped to the UK via the EU a matter of considerable urgency. There is considerable scope for unilateral UK government action to reduce costs increases along triangular supply chains, without this impacting on broader UK/EU negotiations on trade related issues. Equally, on the EU side there is also scope for unilateral actions to reduce cost increases and delays along triangular supply chains. Read more “Concerns Expressed Over Lack of Preparedness for October 2021 UK Controls on Goods Crossing from the EU”
Disaggregating EU Short Term EU27 Sugar Sector Trends
Summary
In the short term the EC is projecting an increase in EU sugar production and imports following the Covid-19 import on production and imports. When industrial usage and increased EU exports of sugar containing products are factored out the EU has a surplus of production relative to human consumption of sugar of 15.7%. More recent reports, however, suggest actual imports in 2020/21 are down, with declines in ACP exports being particularly pronounced. This is attributed to the ‘smaller EU sugar price premium.’ With this price development projected to become the norm up to 2030, the commercial prospects for ACP sugar exports to the EU27 look far form favourable. This is likely to be compounded by public health policy measures to reduce the consumption of ‘hidden sugars’ in food and drink products. ACP sugar exports will increasingly need to target sugar deficit EU27 markets, where the price premium is much higher than the EU average. Read more “Disaggregating EU Short Term EU27 Sugar Sector Trends”
Fundamental Restructuring of Supply Chains Increasingly Needed in Absence of Progress in EU/UK Discussions on the Implementation of Necessary Border Controls
Summary
UK retailers with operations in the EU are counting the costs of the UK’s exit from the EU single market, with a fundamental restructuring of supply chains looking necessary if the affected UK companies are not to lose market share in EU27 countries. This is particularly the case since there continues to be little progress towards the obvious short-term solution, a formal agreement on the ‘temporary’ alignment on UK regulatory requirements with existing EU standards. Rather than pursuing this option the UK government has announced a major regulatory review which will include a review of the use of the EU’s ‘precautionary principle’ approach and its replacement with a ‘proportionality principle’. Such a move can only complicate efforts to find agreements which will restore the smooth flow of goods across EU/UK borders. Against the background of the need for restructuring of supply chains ACP agri-food exporters need to identify how they will adjust their export operations in order to fit into these new restructured supply chains. Early adjustments could help individual ACP exporters sustain and even gain market share, while a failure to adjust could see a reduction of overall exports to the UK as the onward trade from the UK to EU markets grinds to a halt. Read more “Fundamental Restructuring of Supply Chains Increasingly Needed in Absence of Progress in EU/UK Discussions on the Implementation of Necessary Border Controls”
UK Government Seeking Fundamental Renegotiation of the Northern Ireland Protocol
Summary
Following a lack of progress in EU/UK discussion on the implementation of the Northern Ireland Protocol, the UK government has tabled a position paper proposing what amounts to a fundamental re-writing of the mutually agreed Protocol. This would bring into question the continued participation of Northern Ireland in the EU customs union and single market as agreed in the Protocol. The EU continues to insist solution must be found within the framework of the agreed Protocol. Prime Minister Johnson’s willingness to suspend the Protocol, so the UK can act unilaterally subject to joint decision making under the Protocol, if acted upon, could result in a serious deterioration in EU/UK trade relations as early as October 2021. This could then be the final nail in the coffin of ACP triangular supply chains. Even if such action is temporarily averted in October, the UK proposals leave unaddressed issues related to the future regulatory regime applicable to ACP products onward traded from GB to Northern Ireland. This in turn will make it more difficult to set in place solutions to the issues disrupting the functioning of wider ACP triangular supply chains (both ACP-to-UK-to EU and ACP-to-EU-to-UK) Read more “UK Government Seeking Fundamental Renegotiation of the Northern Ireland Protocol”