UK Kenya Agreement Leaves Triangular Supply Chain Issues Unresolved but Suggests Progress on Rules of Origin Issues Could be Possible

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Summary
A Kenya-UK trade agreement has been concluded which preserves duty free access for Kenyan exports to the UK market beyond 31st December 2020. However, this agreement fails to avoid potential disruptions of all current supply routes for tariff free access to the UK market.  This is a result of the failure to address future trade issues along triangular supply chains, which serve the UK market via initial landing in the EU. This issue is of considerable importance to the East African region, given the current routes used in serving the UK market in major export sectors (e.g. cut flowers). In the context of a no-deal UK departure, issues will also arise for other major ACP triangular supply chains where some repackaging or simple processing takes place in the EU prior to onward shipment to the UK. These triangular supply chain issues need to be urgently addressed. While the relaxation of UK phytosanitary controls could facilitate an expansion of Kenyan exports to the UK, this is highly unlikely in the livestock sector. Rules of origin improvements could prove relevant in other ACP-UK EPA contexts and should be studied closely. Finally, the 7-year moratorium on tariff reductions defers any immediate conflicts between the implementation of the UK-Kenya agreement and the maintenance of a common external tariff for the East African Customs Union Read more “UK Kenya Agreement Leaves Triangular Supply Chain Issues Unresolved but Suggests Progress on Rules of Origin Issues Could be Possible”

Appointment of Chief Trade Enforcement Officer Could Signal a Push More Rigorous Enforcement of EPA Commitments Made by ACP Governments

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Summary
The appointment of an EU Chief Trade Enforcement Officer is likely to see the EU more rigorously enforce the commitments entered onto by ACP governments under EPAs. Particular concerns arise in regard to the interpretation and application of provision dealing with trade defence mechanisms established under the EPAs (safeguard and anti-dumping provisions), the ‘Prohibition of quantitative restrictions’, and ‘National treatment’. The rigorous interpretation and enforcement of these commitments could undermine national agri-food sector development strategies across a wide range of ACP countries.  There are concerns disputes with ACP countries constitute areas for ‘early wins’ for the CTEO, given the limited legal capacity of ACP governments to engage in dispute settlement processes and the limited scope for ACP retaliatory action. Particular concerns arise in product areas where a no-deal Brexit could generate severe EU/UK trade disruptions (e.g. the poultry meat sector) and ACP markets are major outlets for EU exports. Read more “Appointment of Chief Trade Enforcement Officer Could Signal a Push More Rigorous Enforcement of EPA Commitments Made by ACP Governments”

EU joins UK in rolling over recognition of organic certification throughout 2021

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Summary
The EC decision to recognise UK issued organic certification for the whole of 2021, averts the immediate danger of any loss of the commercial benefits of organic sales by ACP exporters on EU27 markets where these sales currently take place on the basis of UK issued organic certification. However, in the absence of an EU/UK mutual recognition on organic certification before the end of 2021, ACP exporters will need to secure both EU and UK organic certification with the additional costs this will entail, if the long term commercial benefits of organic sales are to be secured beyond 2021. The scope for these kinds of parallel ‘unilateral’ EU and UK actions and policy initiatives needs to be fully exploited if the commercial disruptions to ACP triangular supply chains are to be minimised. Read more “EU joins UK in rolling over recognition of organic certification throughout 2021”

South Africa’s Poultry Sector on the Road to Recovery as Stricter Trade Regime Applied

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Summary
According to analysis from the United States Department of Agriculture, Foreign Agricultural Service, the South African poultry meat sector is recovering following a post drought recovery of maize crops which has lowered feed costs, agreement on a Poultry Sector Master Plan and the application of new trade policy measures designed to provide relief from low cost poultry imports. However, there is a hole in South Africa’s poultry sector trade policy arising from the de facto effect of EU-South Africa trade agreements. These exclude EU exporters form general tariff changes and profoundly undermine the effectiveness of the anti-dumping and safeguard measures nominally allowed under these agreements. This situation is compounded by legal loop-hole challenges from the EC of South African safeguard measures, which if upheld would seriously undermine the development dimension of EU trade agreements with sub-Saharan African trade partners. Read more “South Africa’s Poultry Sector on the Road to Recovery as Stricter Trade Regime Applied”

Effective Engagement with Expanded Freight Forwarding Sector Seen as Critical to Future UK/EU Border Clearance Operations

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Summary
The UK government is urging businesses to use the services of freight forwarders and other customs intermediaries, to facilitate the smooth functioning of post Brexit UK/EU border clearance operations. However, the NAO reports the necessary expansion of the customs intermediate sector has simply not occurred and is unlikely to take place until the second half of 2021 at the earliest. This will see both rising costs and shortages of customs intermediaries, which could slow down border clearance operations. The resulting delivery delays could strip value out of ACP short shelf life product triangular supply chains. Urgent action is needed to secure the services of customs intermediaries for ACP trading operation along triangular supply chains in 2021. Unfortunately, given the surging demand for the services of customs intermediaries such actions may already be too late. Read more “Effective Engagement with Expanded Freight Forwarding Sector Seen as Critical to Future UK/EU Border Clearance Operations”

EU27 Poultry Sector Surprisingly Resilient in Face of Covid-19 Challenges, But Brexit Challenges Could See Expanded Export Drive to ACP Markets

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Summary
The EU poultry meat sector has proved surprisingly resilient to Covid-19 trade and market disruptions. While both EU imports and exports have fallen, exports of poultry meat to the main sub-Saharan African markets have risen dramatically.  This role of sub-Saharan African markets as “markets of last resort” raises concerns about the impact of a ‘no-deal’ or ‘Thin FTA’ outcome to the Brexit process on international trade in poultry meat given the scale of current mutual EU/UK trade (1.2 million tonnes per annum). There are fears ACP markets could be targeted should this EU/UK trade be disrupted. This could then disrupt established or emerging African poultry sectors. ACP governments will need to prepare for these likely export surges, in a context where the EU’s new Chief Trade Enforcement Officer will be increasingly seeking to remove current trade restrictions on EU poultry meat exports, where these violate trade agreement commitments. Greater transparency in trade statistics on EU poultry exports to developing country markets could facilitate operationalising EU policy coherence for development commitments, particularly if a ‘window’ were opened through which the concerns of local ACP poultry producers could be made known. Read more “EU27 Poultry Sector Surprisingly Resilient in Face of Covid-19 Challenges, But Brexit Challenges Could See Expanded Export Drive to ACP Markets”

Uncertainties Arising from Unresolved Future EU/UK Trade Issues Generate Contract Negotiation Challenges for ACP Exporters

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Summary
There area host of Brexit related uncertainties overhanging the negotiation of ACP-UK supply contracts for 2021, which threaten to increase costs to such an extent as to erode the profitability of a range of ACP exports to the UK market. ACP short shelf life product exports along triangular supply chains are likely to be most severely affected. The currency issue will also affect direct ACP exports. How these short-term issues are dealt with, could carry long term implications, especially for small scale ACP exporters. Public policy interventions to support Codes of Conduct for dealing with the distribution of additional costs, based on the principles enshrined in the EU UTP directive, could usefully be launched. In the EU, traders in short shelf life products would appear to have a long term vested interest in short term burden sharing initiatives; otherwise ACP exporters will be compelled to seek out new direct routes in serving UK markets. Read more “Uncertainties Arising from Unresolved Future EU/UK Trade Issues Generate Contract Negotiation Challenges for ACP Exporters”

Growing Importance of Raising the Farm Gate Price of Cocoa to the Elimination of Child Labour in Cocoa Supply Chains Recognised, but Strong Headwinds Faced

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Summary
While proportionally the use of child labour has not increased in line with the expansion of cocoa production, data suggests some 1.56 million children continue to be employed in the Ghanaian and Ivorian cocoa sectors. NGOs campaigning on child labour issues have condemned 20 years of failure and criticised the focus on public relations rather than substantive solutions. The persistent nature of the challenge faced has been recognised, as has the central issue of net farm gate prices. While the LID payment initiative has been welcomed, a major four-fold increase in farm gate prices is held to be necessary to ‘move the dial’ on the use of child labour in cocoa farming in West Africa.  Currently the benefits of the LID payment are dwarfed by losses arising from cocoa market price volatility. Getting to grips with the net farm gate price issues, in ways which ‘move the dial’ on the use of child labour, can be seen as the critical issue to be addressed in the coming months in drawing up EU ‘due diligence’ regulations related to the cocoa sector. Read more “Growing Importance of Raising the Farm Gate Price of Cocoa to the Elimination of Child Labour in Cocoa Supply Chains Recognised, but Strong Headwinds Faced”

The Prospect of UK Port Chaos Could Open Up Opportunities for the UK Government to Fulfil Its Policy Commitment to Ensuring Continuity in Trade With Developing Country Partners Within the Brexit process

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Summary
With some UK ports already facing unacceptable delays in unloading ships and with the BPA warning of the ‘impossible’ demands for the implementation of new import controls in 2021, setting in place border clearance systems to facilitate the continued smooth flow of ACP fresh food and plant products to the UK via  ports of landing in the EU would appear a ‘no brainer’. The establishment of  a “Green Corridor” system for the border clearance of products where necessary phytosanitary and safety controls have been caried out upon entry to the EU, and duty-free/quota -free access is enjoyed to both the EU and UK market, would appear a simple means of easing pressure on UK ports. What is more, it would simultaneously fulfil the Uk governments policy commitments to ensuring ‘continuity’ in trade with developing country partners within the Brexit process. Read more “The Prospect of UK Port Chaos Could Open Up Opportunities for the UK Government to Fulfil Its Policy Commitment to Ensuring Continuity in Trade With Developing Country Partners Within the Brexit process”

Signed Cote d’Ivoire-UK EPA Leaves Major Triangular Supply Chain Issues Unaddressed

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Summary
The UK-Cote d’Ivoire EPA includes commitments which are ambiguously formulated, and which fail to clearly accommodate changes since the initial drafting of the EU EPA text in 2007 as well as evolving intra-regional trade arrangements in West Africa. Particular concerns arise over the apparent retro-active nature of the bulk of Ivorian tariff phase down commitments,, which would result in  the elimination of tariffs on the bulk of its imports from the UK from the date of entry into force of the UK-Cote d’Ivoire EPA (or even from the date of its provisional application).  This would be both extremely unusual and unreasonable and needs to be clarified in light of the provisions of Article 13(a) and wider intentions of the agreement to replicate the situation at the date of lapsing of the applicability of the EU agreement to the territory of the UK, prior to the entry into force of the agreement. There are also major shortcomings in how the agreement deals with the future functioning of Ivorian triangular supply chains, which in some sectors account for the bulk of Ivorian sales on the UK market. The most serious issues are faced in cocoa product and preserved tuna supply chains, but with phytosanitary import control and broader border clearance and logistical issues also being faced in the tropical fruit sector. The agreement also lacks forward looking provisions on rules of origin, which in light of the continued right of UK producers to use EU inputs as if they originate in the UK, should allow the automatic use of any African input in goods produced in Cote d’Ivoire, without any loss of originating status and preferential access. Such forward looking rules of origin would encourage greater value-added processing in Cote d’Ivoire and support and promote the development of intra-African supply chains. The only means by which such an agreement can be considered minimally adequate is if it allows continued duty-free access to the UK market, but defers implementation of reciprocal commitments, until all outstanding issues of concern have been addressed.

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