Summary
Currency depreciation, economic recession, uncertainty over the future basis for access to the UK market and the disruption of triangular Fairtrade supply chains serving the UK market via a EU27 member states are some of the main effects of Brexit on Fairtrade producers highlighted. Urgent unilateral UK government action is required to guarantee continued duty free-quota free access to the UK market for ACP exporters. The disruption of triangular supply chain in the cocoa/chocolate sector is a particular source of concern. This concern reaches beyond Fairtrade producers given the importance of this trade to Africa’s overall agro-food sector exports to the EU and the depressed state of the global cocoa market. Small scale importers face particular challenges in ‘Brexit-proofing’ their supply chains, with government assistance modelled on the Irish governments “Be Prepared Grants’ being urgently needed. Read more “Traidcraft Highlights the Impact of the Brexit Process on Smaller Scale Suppliers in Developing Countries”
The June 2018 CAP Reform: Part 4 CAP and Policy Coherence for Development
Summary
As part of the proposals for the revision of the EU’s common agricultural policy, the EC has released a substantive staff working paper which seeks to assess the impact of the European Commission proposals. Annex 5 of the EC Staff Working Paper which reviews the ‘Results of Quantitative and Multi-Criteria Analysis’ includes a section on ‘policy coherence’. This provides insights into the EC’s approach to addressing policy coherence for developments issues. It is noteworthy that policy coherence for development is only one dimension of the EU’s policy coherence agenda which need to be taken on board in the design and implementation of the CAP, and as such may not be accorded a high priority. While asserting the consistency of the CAP with EU development policy objectives the EU implicitly acknowledged the trade distorting nature of ‘coupled’ direct aid payments. This suggests a need for specific measures to avoid any adverse effects on developing countries in sector where sugar and dairy sectors are important or sector development programmes are under implementation. This is likely to require a flexible and responsible interpretation and enforcement of EPA commitments on the use of non-tariff trade measures by ACP governments. A commitment in this regard should be enshrined in ‘Right to Development’ provisions under future EU partnership agreements with African, Caribbean and Pacific countries. Read more “The June 2018 CAP Reform: Part 4 CAP and Policy Coherence for Development”
The June 2018 CAP Reforms: Part 3 the Trade Dimensions of the CAP and the ACP
Summary
In the background documentation to its CAP reform proposals the EC highlights the growing international focus of the EU agro-food sector and hence the importance of securing preferential trade access for EU agro-food exports to 3rd country markets where food demand is growing rapidly. This includes securing the preferential removal of not only tariffs on EU exports but also the removal of non-tariff barriers to EU agro-food exports. The EC analysis highlights just how central EU trade policy is to the implementation of the CAP and the achievement of overall EU policy objectives for the agricultural sector. In an ACP-EU context this suggests the issue of the interpretation and implementation of EPA commitments is likely to take on growing importance in the coming years. This needs to be seen in a context where EU policy prescriptions for ACP governments in sensitive agro-food sectors diverge markedly from EU policy practices in sensitive agro-food sectors. Read more “The June 2018 CAP Reforms: Part 3 the Trade Dimensions of the CAP and the ACP”
The June 2018 CAP Reforms: Part 2 – Importance of CAP Instruments to EU Agriculture and Issues Arising for the ACP
Summary
At the beginning of June 2018 the EC issued a range of documents setting out both proposals for the amendment of CAP regulations and the background to these proposals. The EC sought to outline the developments since 2013 which required further reforms to be introduced. The EC also highlighted the important role which EU agricultural support plays in enhancing farm incomes, and by implication, sustaining agricultural production. The EC also highlighted the growing importance of risk management as global price movements begin to transmit onto EU markets. The EC highlighted the desire of EU member states governments to minimise changes to support instruments and support levels. The preference of some member state governments for higher levels of coupled support could well see an expansion of the use of this instrument as more discretionary powers are devolved to EU member states. While the EC has sought to assert the non-trade distorting nature of EU agricultural support instruments, this seems to conflate the compatibility of EU support instruments with WTO rules with the absence of any trade consequences for developing country partners. Read more “The June 2018 CAP Reforms: Part 2 – Importance of CAP Instruments to EU Agriculture and Issues Arising for the ACP”
The June 2018 CAP Reforms: Part 1 The EC proposals for Amendment of CAP Regulations
Summary
The EC has tabled proposals for the establishment of a new delivery model for the CAP, which devolves design of Strategic Plans to EU member states on the basis of a common EU policy framework and common EU tool box. EU member states are to have more flexibility in how they combine tools and there is to be a greater focus on risk management. The structure of financing remains unchanged as does the overall objectives of the CAP. There are concerns the granting of greater flexibility could lead to increased use of trade policy tools which are de facto trade distorting. Concerns also arise over the future use of the centralised crisis reserve fund particularly in the dairy sector, where EU intervention buying and storage have contributed to a sustained depression of global skimmed milk powder prices. While 9 specific objectives for the CAP are set out, no reference is included to the EU policy objective of ensuring the coherence of its agricultural policy interventions with its commitments to promoting policy coherence for development. Read more “The June 2018 CAP Reforms: Part 1 The EC proposals for Amendment of CAP Regulations”
Continued Dominant Role for EU Dairy Exports Forecast
Summary
From an ACP perspective the OECD/FAO analysis highlights the impact of EU skimmed milk powder (SMP) stocks on prospects for global SMP prices. It suggests EU SMP stock polices continue to limit the rise of global SMP prices. This is important since SMP and fat filled milk powder (FFMP) imports represent the principal competitor to domestic milk producers in African ACP countries. There is however also a growing EU export trade in liquid milk to African and Caribbean countries. The role of the EU in the global dairy trade is projected to grow in the coming ten years, in a context where the EU is less well placed to serve the main import market China, than Oceanian dairy exporters. The OECD/FAO highlighted how import restrictions continue to influence patterns of global dairy trade, with this suggesting eliminating import restrictions on EU products on a preferential basis likely to become an important focus of EU trade policy in the coming period. Read more “Continued Dominant Role for EU Dairy Exports Forecast”
Will the UK Commit to Unilaterally Maintaining the Free Flow of Goods Under ‘No Deal’ Brexit?
Summary
Suggestions that in the face of a ‘no-deal’ Brexit the UK may take unilateral action to ensure goods continue to flow freely into the UK appear to be taking the Brexit Secretary’s remarks at the launch of the governments ‘no-deal’ guidance notes too far. Information contained in the UK government guidance notes on a ‘no-deal’ Brexit suggests unilateral UK action to waive tariffs and 3rd country import controls is not envisaged. ACP exporters serving UK markets along triangular supply chains (e.g. via the Netherlands) may need to urgently rethink their routes to UK markets under a ‘no deal’ Brexit scenario. In addition at the policy level the issue of how the extra costs arising from a ‘no-deal’ Brexit are to be distributed along the supply chain arises, with a clear need to strengthen both UK and EU frameworks for avoiding unfair trading practices along ACP-EU28 supply chains. Read more “Will the UK Commit to Unilaterally Maintaining the Free Flow of Goods Under ‘No Deal’ Brexit?”
Arla Highlights Short Term Dangers of a ‘No Deal’ Brexit in the Dairy Sector
Summary
Given the UK’s dependence on dairy imports the pan-EU dairy company Arla is deeply concerned about possible dairy trade disruptions under a ‘hard’ Brexit. Concerns were expressed over the application of non-tariff measures to EU27/UK trade, which it was felt, could lead to acute port congestion. Particular concerns were expressed over the likely shortage of vets to inspect animal products if standard 3rd country controls were applied. There were also concerns over possible labour shortages in the sector. Some of these concerns were held to apply even under a ‘softer’ Brexit scenario. As with the Russian embargo any disruption of EU/UK trade could see increased exports to ACP markets, particularly in West Africa and Southern and Eastern Africa. Read more “Arla Highlights Short Term Dangers of a ‘No Deal’ Brexit in the Dairy Sector”
EC Sets Out Framework for Preparations for a ‘Hard’ Brexit’
Summary
The EC has issued a dedicated communication on Brexit preparedness urging all concerned stakeholders to ‘take the necessary preparedness actions and to take them now’. The EC has also published 68 notifications dealing with specific areas of impact of the UK’s withdrawal from the EU. However the EC has provided no clarifications to its developing country partners on the consequences Brexit will carry for bother their trade with the UK and the EU27. The issues faced in this context range from the impact on the functioning of triangular supply chains, through the rules of origin applied to ACP inputs used in goods packaged and further processed in the UK for onward sale in an EU27 member state to the future of the EU27s bilaterally negotiated TRQ obligations in product areas where the ACP have major export interests (e.g. bananas and sugar). Read more “EC Sets Out Framework for Preparations for a ‘Hard’ Brexit’”
Getting to Grips with the Import Controls Required If the UK Is Treated As Just Another 3rd Country
Summary
If the UK leaves the EU without alternative trade arrangements in place which deal comprehensively with both tariff and non-tariff issues the EU will have no choice but to treat the UK the same as any other third country. This could make it very difficult to avoid disruption of existing trade flows. If a UK/EU27 free trade area dealing with tariffs were agreed this would still require the negotiation of comprehensive arrangement related to the application of non-tariff measures to EU imports from the UK. What the absence of such an agreement would mean in practice in the area of the future application of EU Food Law has been set out in a February 2018 EC notifications to stakeholders on the implications of the UK leaving the EU. This notification highlights how products of animal origin are likely to be the worst affected agro-food sectors, given the stringent controls on 3rd country imports which the EU applies. This suggests ACP governments will need to look carefully at what trade policy tools they have available to deal with sudden surges in UK and EU27 exports of product of animal origin. Read more “Getting to Grips with the Import Controls Required If the UK Is Treated As Just Another 3rd Country”