Summary
The UK’s new Covid-19 linked ‘red list’ travel restrictions threatens to undermine a nascent recovery in passenger-based air freight services from Eastern Africa to the UK. While the public health measures are understandable, they need to be seen in the context of new Brexit trade complications for air freighted fresh produce. This threatens to put Eastern African fresh produce exporters at a competitive disadvantage vis a vis competitors in major product areas such as fresh beans and cut flowers. It gives an added urgency to the promotion of unilateral UK initiatives to resolve the new rules of origin complications on ACP exports shipped to the UK market via the EU.
On 2 April 2021, the UK government announced a ‘red list’ of countries from which visitors will be refused entry. In addition, returning UK and Irish nationals and residents ‘will be required to self-isolate in a government-approved hotel quarantine facility for 10 days.’ This forms part of UK government efforts to protect the UK against new variants of coronavirus at a critical stage in the rolling out of the vaccine programme in the UK. These measures were applied from 04.00 hours on Friday 9 April (1). In regard to East Africa, according to press reports, the UK restrictions are ‘based on concerns Kenya had not closed down routes through which the South African variant of the coronavirus, known as B.1.351, entered the country (2).
The ‘red list’ of countries includes 7 East African, 9 Southern African, 2 Central African, 1 West African and 2 Caribbean ACP countries (3).
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ACP UK Red List Countries |
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| East Africa Kenya Ethiopia Burundi Rwanda Tanzania Seychelles Somalia |
Southern Africa South Africa Namibia Botswana Eswatini Lesotho Mozambique Malawi Zambia Zimbabwe |
Central Africa Caribbean
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The significance of this public health measure lies in the impact it will have on the recovery of air passenger flight-based freight services. In the case of Kenya, a recovery in passenger numbers has been underway since August 2020, with visitor numbers almost tripling by October 2020. This needs to be seen in a context where, in the case of Kenya, ‘passenger flights account for 40% of all cargo transported by air’ (4).
The UK governments announcement has seen both British Airways and Kenya Airways (the only two carriers currently providing direct passenger flights to the UK), cancelling all services from 9th April 2021 until further notice (2).
Ethiopian Airways has also ‘suspended flights in and out of the UK’ following the UK government’s decision to add Ethiopia to the ‘red list’ (2). This closes off the option of using two important regional hubs for the export of air freighted horticultural products from smaller East African producer to the UK (Rwanda, Tanzania). The inclusion of the United Arab Emirates and Qatar, both major passenger and air freight hubs, in the UK’s ‘red list’, will further restrict air cargo options for East African horticulture and floriculture exporters.
This is likely to see a dramatic increase in air freight charges for horticultural cargoes delivered directly to the UK from the affected ACP countries.
This needs to be seen on the context of warnings from the House of Lords European Union Committee that the absence of diagonal cumulation provisions in the EU/UK TCA is creating problems for re-exports of non-processed goods across EU/UK borders. This includes high value air freighted fresh fruit and vegetables and cut flowers and plants, which have traditionally been delivered to UK markets via initial ports of landing in the EU (mainly the Netherlands, Belgium, and Luxembourg).
This rules of origin complication, is resulting in the application of MFN tariffs to these products when they cross an EU/UK border. These MFN tariffs are applied on East African horticulture products crossing an EU/UK border, despite rolled over UK continuity arrangements nominally allowing continued duty-free access for these products to the UK market of exported directly to the UK (5) (for more details see companion epamonitoring.net article, ‘UK Parliamentary Report Reviews Operational Shortcomings of EU/UK TCA and Highlights Rules of Origin Problems Faced by ACP Re-Exports’, 8 April 2021).
Not surprisingly diplomats from the affected countries have expressed anger at the UK’s decision, which it is felt is ill timed. This anger is particularly acute in countries which have both a high dependence on tourism and passenger-based air freight services. This needs to be seen in the context of the uneven access to vaccines and radically different trajectories for infection rates and vaccination rates in the UK and affected African countries.
| Comment and Analysis The UK’s decisions to ‘red-list’ countries where a recovery in air passenger- based freight services is getting underway, comes as a serious blow to this recovery in air freight capacity. The partial nature of the new restrictions, which will impact some suppliers but not all major suppliers, could lead to a serious deterioration in the competitive position of Eastern and Southern Africa suppliers in certain product areas.For example, while Kenya and Ethiopia account for 68% and 20% respectively of total direct UK extra-EU cut rose imports (and other Eastern and Southern Africa regional producers account for a further 3%), the 3rd and 4th largest suppliers of cut roses to the UK market are India and Colombia (6). These countries are not on the UK’s ‘red list’ where travel restrictions are applied, and so passenger-based air freight services will continue without disruption. This creates opportunities for these exporters to gain market share.This is particularly the case, given ACP cut roses shipped to the UK via the EU (the main source of supply) now face the standard MFN tariff of 8% when crossing an EU/UK border given the absence of diagonal cumulation provisions in the EU/UK Trade and Cooperation Agreement (see companion epamonitoring.net article ‘Cut Flowers Sector Concerns Over Proposed UK Border Controls Highlighted’, 23 September 2020). In contrast Colombia enjoys duty free access to the UK market on direct shipments to the UK, while India pays the standard GSP tariff of 5%, in the context where the bulk of India’s cut rose exports to the EU go directly to the UK. In the case of India, the potential challenge also needs to be seen in the context of the considerable private sector investments which have been made in protected farming of roses, alongside substantial public sector investment in the development of the cold store chain to facilitate cut flower exports. A similar situation is faced for ACP fresh bean exporters. While Kenya accounts for over 52.3% of extra EU direct UK fresh bean imports (and other eastern and Southern African suppliers a further 3.7%) and Morocco only 13.9%, Morocco is by far the largest supplier of fresh beans to the EU (57% of total EU28 fresh bean imports in 2019). Many of these Moroccan fresh beans will have found their way to the UK market via the overland route through Spain to the UK. Since the UK’s withdrawal from the EU customs union and single market a new direct ferry services have been launched between Morocco and the UK (Poole). This will not only reduce the journey time for fresh produce from 6 to 3 days, ensuring ‘a longer shelf life for fresh products’, but will also sidestep the new post Brexit border complications (7). As a result of the UK’s ‘red list’ travel restrictions, the opening of this service will also coincide with further escalating costs and disruptions for air freighted Kenyan fresh bean exports direct to the UK and the imposition of MFN tariffs of 10% on Kenyan and other Eastern African fresh beans shipped to the UK via the EU, where fresh bean exports are not shipped under customs supervision. The situation in regard to fresh beans is illustrative, with since the beginning of 2021 a major expansion of a range of Moroccan fruit and vegetable products directly to the UK being underway (+51% in January 2021 compared to January 2020). This includes products as diverse as courgettes and strawberries (8). If the adverse trade effects of the Covid-19 pandemic on East Africa’s export trade to the UK are to be minimised, the UK government will need to take urgent unilateral action to get to grips with the rules of origin complications faced by exporters of fresh fruit and vegetables delivered to the UK via the EU. Eliminating these complications through unilateral UK policy innovations, in the face of sustained EU opposition to the inclusion of diagonal cumulation provisions in the EU/UK TCA, would expand the range of possible routes available to deliver fresh fruit and vegetables to the UK market. This would then reduce the air freight cost inflation effects of the inclusion of so many Eastern and Southern African countries on the UK’s Covid-19 ‘red list’ of countries subject to travel bans. While the UK’s decision to prioritise public health is understandable, the UK government now needs to turn its attention to the practical steps which can be taken to resolve Brexit related complications, which, in the face of the evolving pandemic, could threaten to undermine trade relations with major developing country partners in the ACP, most notably Kenya. This needs to be seen in a context where the impact of Covid-19 linked air freight disruptions will continue to evolve given the uneven rolling out of vaccination programmes and the speed with which new variants are emerging which threaten to undermine the effectiveness of vaccination programmes. |
Sources
(1) gov.uk, ‘Countries added to red list to protect UK against variants of concern’, 2 April 2021
https://www.gov.uk/government/news/countries-added-to-red-list-to-protect-uk-against-variants-of-concern
(2) Business Daily, ‘London air fares jump five times on Kenya travel ban’, 7 April 2021
https://www.businessdailyafrica.com/bd/economy/london-jump-five-times-on-kenya-travel-ban-3351920
(3) ‘Time Out, ‘Travellers from these ‘red list’ countries are now banned from the UK’, 6 April 2021
https://www.timeout.com/news/travellers-from-these-red-listcountries-are-now-banned-from-the-uk-012921
(4) Business daily, ‘UK flight ban to impact Kenyan horticulture recovery’ 7 April 2021
https://www.businessdailyafrica.com/bd/corporate/shipping-logistics/kenya-s-aviation-nose-dive-after-uk-flights-ban-3351588
(5) House of Lords, European Union Committee report, ‘Beyond Brexit: Trade in Goods Paper 249, 25 March 2021
https://publications.parliament.uk/pa/ld5801/ldselect/ldeucom/249/249.pdf
(6) EC Market Access Data Base
https://trade.ec.europa.eu/access-to-markets/en/statistics?includeUK=true
(7) freshfruitportal.com ‘Brexit buster’ direct shipping route announced between UK and Morocco’, 3 March 2021
https://www.freshfruitportal.com/news/2021/03/03/brexit-buster-direct-route-announced-between-uk-and-morocco/
(8) freshplaza.com, ‘UK imports of Moroccan fruit and vegetables have increased since Brexit’, 24 March 2021
https://www.freshplaza.com/article/9305656/uk-imports-of-moroccan-fruit-and-vegetables-have-increased-since-brexit/