Summary
The EC proposal for a mandate to negotiate the apportionment of WTO agreed TRQs has been approved by the EU Council. The EC’s approach is based on the October 2017 joint UK/EU letter to WTO members. This approach has already been rejected as unacceptable by leading WTO members. The annex to the EC proposal provides TRQ by TRQ details of how much access to the EU27 market would be reduced post Brexit. This nominally includes a reduction in ACP TRQ access for sugar exports: an arrangement which has been superseded by the granting of full duty free-quota free access under the EU’s EBA scheme and various EPAs. This suggests there may be some shortcomings in the EC’s preparatory work for the launch of these TRQ negotiations with WTO members. This could lead to a lengthy process of negotiations. However the EU Council has reserved the right to unilaterally apportion existing TRQs if no specific agreements can be reached with WTO members by the date of the UK’s full departure from the EU. Read more “EU Council authorises launch of Negotiations on apportionment of WTO TRQs”
EU Agri-food Export Growth Continues, Becoming Central to the Future EU Agricultural Prosperity
Summary
EU agri-food exports continued to grow in 2017 (+5.1%), re-confirming the EU as the leading global agri-food trader, with a surplus of €21.5 billion. The EU also maintains a large trade surplus with LDCs (equivalent to 46% of the value of agri-food imports from LDCs). While the EC asserts that following the implementation of CAP reforms ‘EU exports of agri-food products to developing countries are simply a response to supply and demand’, the deployment EU agricultural support tools and trade policy measures continue to have an important bearing on the structure of EU production and patterns of exports to ACP countries, particularly in the dairy, poultry meat and increasingly the sugar sector. While the EU is committed to policy dialogues with ACP governments to strengthen the contribution of the agri-food sector to rural and wider national development, this dialogue will continue to be one-sided unless the EU acknowledges the impact which the deployment of EU policy tools continues to have on patterns of EU exports which can undermine prospects for the structural development of key agri-food sectors. In Africa in particular patterns of EU private sector investment are needed which support rather than hold back the integrated structural development of agri-food sectors so growing African demand for high quality, high value food can increasingly be met from domestic integrated agri-food sector activities. Read more “EU Agri-food Export Growth Continues, Becoming Central to the Future EU Agricultural Prosperity”
EC Notification on Brexit Related Rules of Origin Complications Could Create Opportunities for New Thinking on Rules of Origin Applied to ACP Exports
Summary
Once the UK leaves the EU, the use of UK inputs in products produced in the EU27 and exported under preferential trade arrangements could create problems given UK inputs will no longer count as ‘originating’ under the preferential rules of origin applicable under EU trade agreements. The EC is advising EU manufacturers who export under preferential trade arrangements to review whether the UK’s changed status will impact on the eligibility of their products for preferential treatment under EU trade agreements. Given the highly integrated nature of EU28 supply chains this could pose challenges to both EU exporters under existing EPAs and UK exporters under any subsequent bilateral UK trade arrangements.
This potentially provides an opportunity for ACP governments to argue for a comprehensive overhaul of existing rules of origin applied to ACP exports to the EU. This could potentially assist ACP agro-food exporters in moving up the value chain where non-originating materials are required in composite food products and packaging materials need to be imported. It also suggests issues of regional cumulation could also be revisited given the potential pressures to allow a special dispensation for UK inputs under EU trade agreements while new origin certification arrangements or alternate supply chains are being set in place. Read more “EC Notification on Brexit Related Rules of Origin Complications Could Create Opportunities for New Thinking on Rules of Origin Applied to ACP Exports”
Ukrainian Poultry Firm Loses Out in Battle for Doux but Continues Quest for EU Expansion
Summary
Despite the setback to its efforts to take over the failing French poultry processor Doux, the Ukrainian poultry producer MHP remains committed to further acquisitions in the EU. This is seen as an important vehicle for sustaining the expansion of Ukrainian poultry meat exports, which increased almost 67% to the EU in 2017. The processing of Ukrainian produced poultry in the EU potentially raises important SPS control and rules of origin issues under EU preferential trade agreements with Africa (notably South Africa), where export from the Netherlands have traditionally played an important role in EU poultry meat exports. Read more “Ukrainian Poultry Firm Loses Out in Battle for Doux but Continues Quest for EU Expansion”
Pressure Mounts for Ending of Nigerian Wheat Import Tax
Summary
Pressure is mounting on the Nigerian government to abandon its supplementary levies on wheat imports given the failure of the Cassava Bread Development Fund to train and promote investment in the use of blended cassava/wheat flour in bread and other bakery products. Despite the levies Nigerian wheat imports have grown 30% since the 2012/13 season. The experience in the Nigerian, cassava/wheat sector highlights the need for a fully integrated approach to the development of supply chains, which encompasses multi-stakeholder buy-in prior to the launch of specific trade policy measures. The isolated and injudicious use of trade policy interventions can be counter-productive. Read more “Pressure Mounts for Ending of Nigerian Wheat Import Tax”
EC Seeks Mandate to Negotiate Apportionment of WTO Agreed TRQs
Summary
The EC is seeking a mandate to negotiate the apportionment of existing WTO TRQ market access commitments between the UK and EU27 markets in the post Brexit period. However it is unclear whether this apportionment approach will also be applied to bilaterally negotiated TRQ arrangements under EU FTAs. This is an important issue for ACP sugar and banana exporters, given the expansion of reduced duty TRQ access allowed under EU FTAs in recent years and the role the UK plays as a market for extra-EU imports of sugar and bananas. ACP governments could usefully seek consultations with the EU on this issue; with ACP exporters of affected products needing to clearly identify which apportionment option best protects ACP export interests. Read more “EC Seeks Mandate to Negotiate Apportionment of WTO Agreed TRQs”
EU to Launch FTA Negotiations with Australia and New Zealand
Summary
The EC has announced the launch of separate FTA negotiations with Australia and New Zealand. This will need to involve negotiations in sensitive agricultural sectors. How the EU prepares its TRQ offers to Australia and New Zealand in sensitive agricultural products could provide insights into how it plans to deal with the Brexit related apportionment of bilaterally negotiated TRQ access in areas of direct export interest ACP countries (e.g. bananas, sugar and rice). Read more “EU to Launch FTA Negotiations with Australia and New Zealand”
Analysis of the CAPs’ Poverty and Employment Effects in Developing Countries Needs to be Country and Sector Specific
Summary
Analysis of the external effects of the deployment of CAP financial tools from the German Institute for International and Security Affairs (SWP) has argued ‘overall, the production and price effects of the current CAP are negligible’. It maintains if the CAP were completely abolished this would lead to only a small decline in EU production. It argues effects of other policies are often wrongly attributed to the CAP. However the impact of the CAP on developing countries needs to be assessed in the context of the wider policies which are associated with the deployment of CAP financial instruments (e.g. EU trade, food safety policy and SPS control policies) and needs to be assessed at the country and product specific level not the overall level. The SWP analysis says nothing about the price level which would need to prevail to achieve a production neutral outcome to the abolition of the deployment of CAP financial tools. The SWP analysis however rightly stresses the importance of involving developing countries in assessments of the external effects of the CAP, so potentially affected actors themselves can express whether and how the CAP is detrimental to their development. Read more “Analysis of the CAPs’ Poverty and Employment Effects in Developing Countries Needs to be Country and Sector Specific”
Dangers of Chlorine Washed Chicken Highlighted in New UK Study
Summary
Scientific findings on the public health hazards of relying on end of process chlorine washing highlight the difficult choices which lie ahead for the UK government in regard to the future basis for post-Brexit food safety standards. These choices will carry important implications for UK-US trade negotiations and the level of controls the EU will apply to agro-food imports form the UK. This issue of regulatory divergence heightens the danger of a ‘hard’ Brexit in the agro-food sector. This suggest a need for ACP exporters serving triangular supply chains to start work now on identifying what administrative measures can be put in place to minimise disruption of current supply chains. Read more “Dangers of Chlorine Washed Chicken Highlighted in New UK Study”
Sugar Reduction Target Missed But Pipeline of Pending Initiatives Encouraging
Summary
The failure of the UK food industry to meet the voluntary 5% sugar reduction target established in 2016 is leading to increased calls for mandatory action, given the effectiveness of the Soft Drinks Industry Levy (SDIL) in stimulating reformulation efforts which resulted in an 11% reduction in sugar usage. Despite the failure to meet the ambitious first year target efforts to reduce sugar usage in food and drink products appears to on track, with this being likely to carry implications for ACP sugar exporters.
For low cost ACP sugar exporters analysing in detail the trends in sugar usage in the UK food and drink sector set out in the PHE report could assist in formulating strategies to reduce their vulnerability to the long term trend towards reduced sugar usage in food and drink products. Unfortunately for higher cost ACP sugar exporters the longer term trend in UK sugar consumption is likely to be just another nail in the coffin of their traditional sugar exports. Read more “Sugar Reduction Target Missed But Pipeline of Pending Initiatives Encouraging”