Summary
The Fair Trade cocoa price will be increased 20% from October 2019, with this being described as good news by West African cocoa farmers’ representatives. However large numbers of African cocoa farmers continue to live in poverty despite 10 years of corporate efforts to promote greater sustainability in the cocoa sector. For poverty levels to be sustainably reduced price volatility will need to be addressed. Ways need to be found to integrate a sustained increase in the net real value of retained income of cocoa farmers within sustainability schemes, whilst at the same time avoiding the poorest cocoa farmers simply being excluded from individual corporate sustainability initiatives. Moving beyond ‘box-ticking’ when it comes to poverty levels in the cocoa farming sector, will need to recognise the structural link between the ‘lower raw material prices’ which boosted the Barry Callebaut Group’s profits by 31% and the continued high levels of poverty amongst African cocoa farmers. Read more “Fairtrade Premium and Minimum Price for Cocoa to be Raised but Broader Industry Initiative Needed”
Category: Topics
Is the Final Count Down to Brexit Underway or Will the ACP have Three More Months to Take Action to Mitigate the Trade Disruption Effects of No Deal Brexit?
Summary
The UK government has now laid down a clear Parliamentary route to defining a final UK position on the ‘no-deal’ Brexit option. This could lead to an extension of the article 50 process for either 3 month or 21 months. This would provide time for ACP governments to set in place policy initiatives to mitigate the adverse effects of a no-deal Brexit on ACP trade with both the UK and the EU27. This would require the launching of a specific political initiative towards the UK government to ensure three major issue clusters are addressed: the shortcomings of the UK’s existing ‘Continuity Agreement’ approach; the trilateral administrative arrangements required to ensure continuity of trade flows in the immediate post-Brexit period and the value of existing DFQF access granted ACP countries is retained through accommodating ACP concerns in the UK’s future MFN tariff schedule. It would also require the launching of a political initiative towards the EU to ensure issues in future EU27 relations arising from the UK’s departure from the EU are fully addressed, so as to reduce the adverse effects of Brexit on ACP economies. Read more “Is the Final Count Down to Brexit Underway or Will the ACP have Three More Months to Take Action to Mitigate the Trade Disruption Effects of No Deal Brexit?”
‘No-Deal’ Brexit Challenges in Cut Flower Sector Highlight Problems for ACP Triangular Supply Chains
Summary
The Netherlands plays a dominant role as a distribution hub for ACP cut flowers to markets across the EU28. Any disruption UK cut flower imports from the Netherlands would carry important implications for most ACP cut flowers exporters, unless remedial administrative measures can be put in place. The likelihood of delays stripping value out of cut flower supply chains will require the role of the UK Groceries Code Adjudicator to be extended, with a special focus on ensuring unfair trading practices don’t increase in response to Brexit related trade disruptions. ACP cut flower exporters will need to urgently explore the scope for increased direct freight flights to the UK to circumvent delays along triangular supply chains. Those ACP cut flower exporters who can successfully ‘Brexit proof’ their supply chains will be well placed to capitalise on the shortages and rising prices a ‘no-deal’ Brexit could give rise to. Read more “‘No-Deal’ Brexit Challenges in Cut Flower Sector Highlight Problems for ACP Triangular Supply Chains”
UK Development NGOs Call for Extension of Existing Tariff Preferences on Unilateral Basis While Problems of UK Continuity Agreements Are Addressed
Summary
UK development NGOs have described as ‘unreasonable’ the UK government’s expectation that developing countries sign onto ‘Continuity Agreements’, without being able to assess their value. UK Secretary of State Fox has indicated he sees no harm in eliminating tariff where the UK has no production interest. However eliminating tariffs in areas where the UK has no production interest would potentially impact adversely on over €1 billion of exports from African and Caribbean countries to the UK of agri-food products where preferential duty free access is enjoyed against a background of high EU MFN tariffs. This would be likely to cause harm to the export interest of these African and Caribbean exporters who are currently being encouraged to sign on to ‘UK-only’ ‘Continuity Agreements’. Such agreements while ensuring continuity of current tariff preferences would provide no assurances on the continuity of the value of existing tariff preferences. This is particularly the case if the impacts of a ‘no deal’ Brexit on ACP triangular trade flows to the UK via EU27 member states are taken into account. This strongly suggests a need for the UK government to review its current approach to the signing of ‘Continuity Agreements’ by granting unilaterally an extension of current terms and conditions of access to the UK market for developing countries, so that future trade agreements can be based on a full assessment of the benefits of bilateral trade deals with the UK, in light of the changed policy and commercial context emerging in the post-Brexit period. Read more “UK Development NGOs Call for Extension of Existing Tariff Preferences on Unilateral Basis While Problems of UK Continuity Agreements Are Addressed”
Brexit Overshadows EU Dairy Sector with Potentially Important Knock-on Effects on ACP Dairy Sectors
Summary
Difficult production conditions in parts of the EU along with continued high export volumes saw EU SMP stocks substantially run down, with the hope being the remaining stocks would be disposed on in 2019. The EC believes EU dairy producers will be well positioned to serve growing world dairy markets, with the expectation being the EC could ‘could supply close to 35 % of the increase in global demand’. The EC expects these exports to increasingly consist of value added dairy products, with EU generated pressures on milk-to-dairy supply chains in ACP countries linked to exports of low prices SMPs being gradually reduced. The EC believes growing consumer demand could see milk production in Africa grow almost five times faster than in the previous decade. However these projections do not factor in the possible Brexit related disruptions of EU27/UK dairy trade flows which could carry ‘catastrophic repercussions’. These ‘catastrophic repercussions’ could include a major resurgence of EU exports of low priced SMPs which could once again disrupt efforts to develop local milk-to-dairy supply chains in Africa seeking to exploit growing consumer demand for dairy products. Read more “Brexit Overshadows EU Dairy Sector with Potentially Important Knock-on Effects on ACP Dairy Sectors”
First Post Production Quota Year Shows Dramatic Changes on the EU Sugar Market
Summary
The 2017/18 marketing year saw a dramatic fall in imports from EPA/EBA suppliers of some 58% compare to the 2016/17 season. This extended the trend in declining ACP sugar exports which has been underway since the 2013/14 marketing year. This situation on the EU market is unlikely to improve, with the impact of Brexit potentially making the EU27 market situation more difficult for ACP sugar exporters. However opportunities for ACP exporters on the UK market could emerge under a ‘no-deal’ Brexit scenario, if ACP EPA signatory governments can secure a continuation of current duty free-quota free access to the UK market form 30th March 2019. This situation however will be complicated by the likely lobbying by Tate & Lyle Sugars for an expansion of its access to world market priced sugar for refining. Further complications arise from the growing volume of EU white sugar exports to African markets, which, given population and per capita sugar consumption trends, are themselves increasingly attractive to African sugar producers. ACP sugar producers and exporters will need to develop more sophisticate marketing strategies to deal with an increasingly complex set of changing market parameters. Read more “First Post Production Quota Year Shows Dramatic Changes on the EU Sugar Market”
Europeanisation of National EU Poultry Producers Continues with New Plukon Acquisition
Summary
The recent acquisition by Plukon highlights the pan-European nature of EU poultry companies. This potentially complicates the application of ACP SPS controls on imports of poultry meat from the EU, in the face of regular national outbreaks of HPAI, which requires the application of protective SPS measures. Intra-corporate trading raises the issue of need for country of origin labelling of EU products based on the country in which poultry was raised (not processed. This would facilitate effective SPS controls in the face of frequent outbreaks of HPAI in individual EU member states. Issues also arise around the application of country specific anti-dumping duties and rules of origin under EU trade agreements since such measures can easily be circumvented given the pan-European structure of many EU poultry companies, with this in some instances extending beyond the EU’s borders. Read more “Europeanisation of National EU Poultry Producers Continues with New Plukon Acquisition”
RFC Announces Factory Expansion and Investments in Local Milk Supplies in Nigeria Amid Slowdown in Growth EU Exports of SMP
Summary
Royal FrieslandCampina has announced a new €23 million investment in developing milk-to-dairy supply chains in Nigeria. However it is unclear how much of this €23 million is linked to factory improvements to process locally sourced milk and how much targets the processing of imported milk powders. A revival of SMP prices to the December 2013 highs would appear necessary to provide a commercially significant stimulus to local milk production in Nigeria. This is likely to require the removal of production distorting EU farm supports, which stimulate EU milk production despite the production costs of most EU milk producers exceeding the revenue gained from milk sales. Since such an EU policy shift is highly unlikely, the Nigerian government may need to consider the introduction of a carefully manged dairy sector trade policy which links import licences to investments in the gradual expansion of local milk production serving local milk-to-dairy supply chains. This would need to be designed and implemented in close consultation with dairy sector stakeholders. However it is unclear whether the implementation of such a carefully managed trade regime would be possible in a country as large and politically complex as Nigeria. Read more “RFC Announces Factory Expansion and Investments in Local Milk Supplies in Nigeria Amid Slowdown in Growth EU Exports of SMP”
State of Play in the EU/UK Brexit Negotiations: Update 4 February 2019
Summary
The last epamonitoring.net article dealing with the process of EU/UK withdrawal negotiations covered the EU’s approval of the UK/EU Withdrawal Agreement (26th November 2018) and the subsequent deferment of the UK parliamentary vote on approving the Withdrawal Agreement. From mid-December until mid-February the UK Parliamentary process for ratifying the mutually agreed EU/UK Withdrawal Agreement has been stalled. This article provides an update of developments since the December 2018 UK governments’ decision to defer the Parliamentary vote on the Withdrawal Agreement until 2019 and the potential implications for ACP exporters serving the UK market of the ongoing uncertainty. Read more “State of Play in the EU/UK Brexit Negotiations: Update 4 February 2019”
UK Signs Continuity Agreement with ESA Governments
Summary
The UK’s ambition to ‘rolled over’ EU reciprocal trade agreements into ‘UK only’ trade agreements has been given practical expression with the conclusion of the first 2 ‘Continuity Agreements’, with Chile and the ESA EPA Group respectively. Additional agreements are planned in the coming weeks with CARIFORUM, Fiji, PNG and the SADC EPA group. However it is unclear whether such trade agreements can be concluded with Kenya, Ghana, Ivory Coast and Cameroon. Failure to conclude a Continuity Agreement would see exporters in these countries facing standard MFN or GSP import tariffs. These Continuity Agreements appear to leave a range of important issues unresolved ranging from: the trade documentation to be utilised from day 1 of Brexit; the future value of duty free quota free access to the UK market in the post Brexit context; the disruptive impact of a non-deal Brexit on triangular supply chains and most fundamentally the rules of origin to be applied under ‘UK-Only’ trade deals once the UK is no longer part of the single EU customs territory. It is unclear whether these ‘Continuity Agreements’ are simply a mechanism to secure ACP duty free-quota free access to the UK market under a ‘no-deal’ scenario or a crafty attempt to side step comprehensively addressing the rules of origin constraint on UK exporters under ‘UK-Only’ trade deals which will arise from leaving the customs territory of the EU. In this context it would appear more appropriate for the UK government to unilaterally extend existing terms and conditions of access to the UK market which ACP EPA signatories enjoy, so as to allow time for a more thorough going negotiation of bilateral UK-only trade agreements which are WTO compatible, operationally applicable and development friendly. Read more “UK Signs Continuity Agreement with ESA Governments”