Summary
While trade negotiations have now been finalised, duty-free access has still not been restored for Ghanaian exports to the UK. Ghanaian exporters continued to pay import tariffs on banana unloaded in the UK on 7th February 2021. Urgent action is required from the UK government to add Ghana to the list of countries subject to the ‘bridging mechanism’ applied to a range of other countries where trade negotiations have been completed, but agreements have not yet been signed.
On 4 February 2021 a Ghana-UK joint statement was issued on a ‘new interim Ghana-UK Trade Partnership Agreement’, which announced the parties had ‘finalised negotiations on a new Interim Ghana-UK Trade Partnership Agreement’. It declared ‘this agreement will provide for duty free and quota free access for Ghana to the UK market and preferential tariff reductions for UK exporters to the Ghanaian market’ (1)
This led freshplaza.com to post an article announcing, ‘Ghana signs post-Brexit Trade Agreement with UK’ and declaring ‘the agreement restores the duty-free and quota-free access Ghanaian exporters had to the UK market before Brexit’ (2). However, this announcement was premature.
While the negotiations have been concluded, the agreement has not been formally signed and neither has the agreement been formally ratified. It is ratification which is the legal requirement for the agreement to fully enter into force. The 4 February 2021 joint statement declares ‘the Agreement will enter into effect following the completion of relevant internal procedures required in both Ghana and the UK’ (1).
Against this background Ghanaian bananas landed in the UK on 7th February 2021 continued to pay import tariffs of €95/tonne. This is the MFN tariff, since there are no GSP tariff preferences for bananas under the UK’s autonomous tariff regime. The tariffs levied on the 7 February, after the conclusion of negotiations for a UK-Ghana free trade agreement had been announced, add to a mounting tariff bill being paid on imports of bananas from Ghana.
Reports carried in The Independent on 23 January 2021, announced in excess of ‘£100,000 of tariffs have been slapped on Fairtrade bananas’ from Ghana since the 1 January 2021. As the Manager of Ghana’s leading Fairtrade banana exporting company Golden Exotics pointed out ‘such punitive tariffs are clearly unsustainable and it is important that a solution is found as quickly as possible to relieve us of such a burden,” adding ‘if this issue continues for weeks, it will put the jobs of over three thousand workers mostly in rural communities at great risk.’
This needs to be seen in the context of a statement from the MD of the sister importing company, Compagnie Fruitiere, Mr Keith Sadler, who pointed out that with an annual import bill of £1 million being faced ‘no business can operate with that level of extra costs’, warning the company might have to turn its back on Ghana if the issue was not speedily resolved (3).
With further weekly deliveries since 23 January, the tariff bill faced by Compagnie Fruitiere continues to increase, having reached in excess of £150,000 by 8 February. It is unclear how long the UK importer will be able to sustain imports, where losses amounting to $1.60 per box of bananas landed in the UK are being faced.
These losses are solely a result of the UK governments’ decision to halt duty free access for Ghanaian products from 1st January 2021. Not surprisingly Golden Exotics Mr George Kporye called on Secretary of State Truss to ‘waive tariffs in the interim period or commit to refund them after the agreement has been signed’ (3).
The need for urgent actions needs to be seen in a context where other UK fresh produce importers have already switched to alternative sources of supply, from countries where full duty-free access continues to be enjoyed. In addition, despite the announcement of the conclusion of UK-Ghana trade negotiations, exports of Ghanaian canned tuna to the UK (marketed under the John West label) continue to be deferred. This needs to be seen in a context where, in the absence of the de facto restoration of duty-free access for Ghanaian exports by the UK government, the first consignment scheduled for delivery to the UK would face an import tariff bill of £1 million (see companion epamonitoring.net article, ‘Restoring Ghana’s Duty-Free Access to the UK Market is an Urgent Priority’, 26 January 2021).
| Comment and Analysis There is an urgent need for the UK government to immediately restore duty free access for Ghanaian exports to the UK market. Every week that passes sees’ the tariff bill paid by Fairtrade banana supplies increase by in excess of £25,000 and increases pressure on the tuna canning company to relocate its Ghanaian John West label production to one of its other tuna canning plants located in a country which enjoys reliable duty-free access to the UK market.The UK already has a ‘bridging mechanism’ in place for the introduction of transitional duty-free access. According to the UK government website ‘bridging mechanisms are an alternative means to ensure continuity of trade, where the UK or treaty partners are unable to fully ratify or provisionally apply an agreement. These non-binding mechanisms include Memoranda of Understanding or Exchange of Diplomatic Notes and ensure continuity of trade’ (4). This mechanism could provide a vehicle for the immediate restoration of Ghanaian duty-free access to the UK market, pending the formal signing and ratification of the Ghanaian-UK trade agreement. Indeed, this arrangement has been applicable since 1st January 2021 to both banana exporters in neighbouring Cameroon (where signature of the agreement will not take place until the end of February 2021 at the earliest) and Colombia, one of the largest exporters of bananas to the UK. In 2019 Colombia exported 319,338 tonnes of bananas to the UK market with a value of €201 million. This was more than 10 times the volume of Ghanaian exports in the same years and accounted for almost 1/3 of total UK banana exports in 2019. It should be noted, Cameroon was included in the list of countries subject to the ‘bridging mechanism’ from 1st January 2021, despite having only concluded negotiations with the UK on Christmas eve 2020. The UK’s published list of countries benefitting from the ‘bridging mechanism’, updated on Monday 8 February included 3 countries (Colombia, Cameroon, Kenya), but not Ghana, despite the UK-Ghana negotiations having been finalised the previous Thursday. It has always been unclear as to why a similar ‘bridging mechanism’ was not used in the case of Ghana given the 31 December 2020 Joint UK-Ghana statement acknowledged ‘a consensus on the main elements of a new trade agreement’ had been reached, and asserted this provided ‘the basis to replicate, the effects of the existing trade relationship between the UK and Ghana’ (5). Now it is a complete mystery as to why, with the UK-Ghanaian trade negotiations having been officially finalised, the UK government has not simply included Ghana in the ‘bridging mechanism’ thereby allowing the immediate restoration of duty-free access to imports of Ghanaian products to the UK, pending the completion of the signing and ratification process. The UK government needs to ensure the Ghanaian government is aware that a formal Memoranda of Understanding or Exchange of Diplomatic Notes’ (rather than simply a joint statement) is necessary to ensure the restoration of duty-free access for Ghanaian exports to the UK market. Indeed, the Government of Ghana needs to be proactive in this regard and needs to summon the UK High Commissioner to formally complete the process of exchanging diplomatic notes on this important issue. |
Source:
(1) Department for International Trade, ‘Ghana-UK joint statement on a new interim Ghana-UK Trade Partnership Agreement’, 4 February 2021
https://www.gov.uk/government/news/ghana-uk-joint-statement-ghana-uk-trade-partnership-agreement
(2) Freshplaza.com, ‘Ghana signs post-Brexit Trade Agreement with UK’, 8 February 2021
https://www.freshplaza.com/article/9291838/ghana-signs-post-brexit-trade-agreement-with-uk/?edition=3
(3) The Independent, ‘£100,000 of tariffs slapped on Fairtrade bananas from Africa threatening farmers with ruin’, 23 January 2021
https://www.independent.co.uk/news/uk/politics/brexit-tariffs-bananas-africa-farmers-b1791225.html
(4) gov.uk, ‘UK trade agreements with non-EU countries’, Published 29 January 2020, Last updated 8 February 2021
https://www.gov.uk/guidance/uk-trade-agreements-with-non-eu-countries
(5) Department for International Trade, ‘Ghana UK Joint Ministerial Statement on a Continuity Trade Agreement’, 31st December 2020,
https://www.gov.uk/government/news/ghana-uk-joint-ministerial-statement-on-a-continuity-trade-agreement