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”
Part 2 Country Specific Trends in EU Agri-food Sector Trade with ESA EPA Countries
Summary
The value of EU agri-food exports to Mauritius grew 53% between 2013 and 2017 while the value of EU agri-food imports from Mauritius fell 26%, with this largely attributable to the impact of EU sugar sector reforms. A ‘no deal’ Brexit however could present opportunities for Mauritian refined sugar exporters. In contrast the value of Malagasy agri-food exports to the EU grew 164%, while the value of imports from the EU grew 44%. This is attributable to the fragile political and economic stability attained since 2013. Zimbabwe’s agri-food sector trade flows have been impacted by the sustained political and economic crisis, with volatile export values and no change in the value of imports from the EU for the period as a whole. The value of agri-food exports from the Comoros has increased almost 60% since 2013, with strong growth in the unit value of earnings of both vanilla and essential oils. EU agri-food exports to the Comoros have grown faster than overall exports, at double the rate, with a strong increase in the value of EU poultry meat exports and an even larger increase in the volume. There has also been a strong increase in EU beef exports to Comoros. The Seychelles has no agro-food sector export trade with the EU, while the value of agri-food imports from the EU rose 61% between 2013 and 2017. Dairy products led the way in this trade expansion, with EU poultry meat exports also getting under way during this period. Brexit related issues arise for Zimbabwe in the resurgent cut flower trade given the dominant role the Dutch flower auction houses play in this trade and the potential for Brexit related disruption of triangular supply chains. Initiatives will be needed to ‘Brexit-proof’ these supply chains. For Seychelles and Madagascar Brexit related rules of origin issues in the fisheries sector will also need to be addressed under a ‘no-deal’ outcome to the current Brexit negotiations, with this potentially opening up investment and export trade opportunities in relations with the UK. Read more “Part 2 Country Specific Trends in EU Agri-food Sector Trade with ESA EPA Countries”
Part 1 Overall Trends in EU Trade with ESA EPA Countries
Summary
The EU-ESA EPA is not a single agreement but a collection of five individual yet similar agreements covering a population of some 45.5 million. For 4 countries these agreement have been in place since 2012 while the 5th is scheduled to enter into force shortly. These agreements fall far short of the ambitious regional EPA, embracing up to 18 countries with a population of 541 million, which the EC initially sought. This has split the larger ESA region into 3 distinct groups in terms of trade relations with the EU, thereby complicating intra-regional trade integration efforts. Since the signing of the EPAs EU agri-food exports to ESA EPA signatories have grown strongly (+48%), despite there being no growth in direct EU exports to Zimbabwe. The growth in the value of EU agri-food imports from ESA4 countries was been slower at only +27%. This growth was attributable to the 164% growth in the value of imports from Madagascar which now dominates the ESA4 agri-food export trade to the EU. EU agricultural reforms and the multiplication of EU trade agreements with non-ACP countries are serving to reduce the value of traditional agri-food sector trade preferences, particularly for Mauritius and Zimbabwe. The Brexit process further complicates the situation, although a ‘no-deal’ Brexit could potentially open up new opportunities on the UK market for Mauritian refined sugar exports. Other important issues faced relate to the impact of the new EU plant health regulations on horticulture and floriculture exports and the impact of the expansion of EU agri-food exports on opportunities for the structural development of local agri-food sectors serving national and regional markets. ESA EPA signatories face differing challenges and opportunities as a result of current trends in EU agri-food exports to ESA EPA signatories and the wider Eastern and Southern African region. How EPA provisions are implemented in practice in the future, in the face of Brexit related commercial pressures, will have an important bearing on the future evolution of EU-ESA trade, as well as the scope for the development of intra-regional trade in the Eastern and Southern African region. Read more “Part 1 Overall Trends in EU Trade with ESA EPA Countries”