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.
On 16th October 2020 representatives of the UK and Cote d’Ivoire governments signed an Economic Partnership Agreement aimed at ‘maintaining existing arrangements.’ The UK government argued ‘the agreement allows businesses to trade as freely as they do now, without any additional barriers or tariffs – and provides a firm foundation from which both sides can further deepen our trading relationship and pursue common interests’. It was highlighted how ‘total UK trade with Côte d’Ivoire was £401 million in 2019’, with the main UK imports from Côte d’Ivoire being cocoa beans and cocoa preparations (£192 million), and edible fruit and nuts, mostly bananas (£22 million). It was estimated the UK market accounted for ‘23% of total exports of cocoa butter from Côte d’Ivoire, as well as 6% of bananas’ (1).
Direct Ivorian Exports to the UK in 2019 Where Duty Free Access Enjoyed and the Future UK MFN and projected GSP Treatment
| € | UK MFN | GSP° | GSP+° | Comment | |
| Cocoa Beans (1801) | 109,959,394 | 0% | 0% | 0% | No change |
| Cocoa Butter (1804) | 103,135,803 | 6% | 3% | 0% | Reduced |
| Cocoa Paste (1803) | 23,125,044 | 8% | 5% | 0% | Reduced |
| Banana (0803
– 080390 – 080310 |
19,205,229 |
£95.00/tonne 16% |
£95.00/tonne 16% |
£95.00/tonne 16% |
Currency Conversion |
| Mangoes (080450) | 2,143,901 | 0% | 0% | 0% | No change |
| Preserved Tuna (1604) | 1,430,282 | 20% | 17% | 0% | Reduced |
| Pineapples (080430) | 1,302,221 | 4% | 1.5% | 0% | Reduced |
| 0ther fruit & nuts (08119095) | 845,800 | 14% | 5% | 0% | Reduced |
° Assumes the same ratio of Standard GSP to MFN duties is applied by the UK (with rounding down) as currently applied by the EU.
Source: UK Global Tariff: Search Engine, https://www.check-future-uk-trade-tariffs.service.gov.uk/tariff?q=070410&n=25&p=1
According to Minister for International Trade, Ranil Jayawardena, the agreement formed part of the UK governments ‘commitment to supporting developing countries by reducing poverty through trade.’ It is maintained the agreement will ‘underpin trade in processed cocoa and bananas’ through providing tariff free market access to Britain, thereby supporting jobs and economic development in Côte d’Ivoire’ as well as ‘guaranteeing access for British consumers’ to these products.
A review of the provisions of the agreement signed however, reveals significant ambiguities in the commitments entered into which both fail to clearly accommodate changes to the EU-Cote d’Ivoire EPA text since the initial drafting in 2007, as well as evolving intra-regional trade arrangements in West Africa. The limited commitment at the core of the negotiations to replicating the lapsing agreement at the date of the UK’s departure from the coverage of the EU agreement means an opportunity has been lost for framing a forward-looking agreement with Cote d’Ivoire.
For example, we find Cote d’Ivoire’s tariff reduction commitments are based on the initial 2008 interim EU EPA concluded 12 years ago. This is somewhat bizarre, since while the Cote d’Ivoire ‘stepping-stone’ EPA was concluded and signed in November 2008, it was not ratified by the Ivorian Parliament until August 2016, with it provisionally entering into force on 3rd September 2016. According to announcements by the government of Cote d’Ivoire liberalization of tariffs on imports from the EU would only start from 1st January 2019 (see companion epamonitoring.net article ‘Cote d’Ivoire: EPA Implementation in the Context of EU’s West Africa EPA Strategy’, 24 January 2019).
In contrast annex 2 of the concluded Cote d’Ivoire-UK EPA, de facto commits Cote d’Ivoire to a retractive removal of tariffs on imports from the UK which would result 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.
It is unclear whether Article 13(a) of the UK-Cote d’Ivoire EPA which provides for any amendment to the EU-Cote d’Ivoire EPA made prior to the 31st December 2020 to be incorporated into the UK-Cote d’Ivoire EPA automatically amends Annex 2, so as to apply the revised EU-Cote d’Ivoire tariff reduction schedule to the UK-Cote d’ Ivoire EPA. This is implicit given the aim of the agreement is to replicate the effects of the existing agreement at the date of the lapsing of the coverage of the EU agreement to the territory of the UK. However, there are complications linked to the process of adopting the ECOWAS common external tariff in the revised EU-Cote d’Ivoire EPA which creates ambiguity in regard to the tariff level from which the phase down process should be initiated.
It would appear necessary for the Government of Cote d’Ivoire to secure clarifications on the application of these ambiguous commitments in the core area of its tariff phase down commitments before the entry into force of these reciprocal tariff elimination commitments, which have profound implications for Ivorian trade integration commitments.
These ambiguities are politically significant and could carry implications in the context of the efforts to conclude similar such UK trade agreements with the governments of Ghana and Kenya, which in the case of Kenya needs to be seen in the context of its membership of the East African Community Customs Union.
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Annex 2 Côte d’Ivoire shall liberalise products originating in the UK imported into its territory. For this purpose, it shall establish four product groups: A, B, C and D. The tariff dismantling schedule shall be as follows: · For Group A products, liberalisation shall take place between 1 January 2008 and 31 December 2012, i.e. over a period of five years. · For Group B products, liberalisation shall take place between 1 January 2013 and 31 December 2017, i.e. over a period of five years. · For Group C products, liberalisation shall take place between 1 January 2018 and 31 December 2022, i.e. over a period of five years. · Group D products shall be excluded from liberalisation. STEPPING- STONE ECONOMIC PARTNERSHIP AGREEMENT between Côte d’Ivoire, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part |
Similarly, the cumulation provisions of rules of origin set out in the agreement while replicating in full the UK’s right to use EU sourced inputs as if they originated in the EU, continues to place administrative obstacles in the way of the use of inputs from across Africa. This is despite the progress made since 2008 in establishing an African Continental Free Trade Area, and UK policy commitments to supporting intra-African trade integration.
Indeed, in some instances intra-African cumulation under the rules of origin is explicitly prohibited. Article 7 of Protocol 2 declares ‘the cumulation provided for in this Article shall not apply to…(b) materials originating in the Republic of South Africa which cannot be directly imported into the United Kingdom duty-free and quota-free.’ In addition to the obstacles this creates in supporting trade integration with sub-Saharan Africa’s most advanced industrial economy, it raises the question: would Ivorian processes be allowed to use South Africa inputs which are subject to TRQs under the UK’s Continuity Agreement with South Africa (e.g. low cost sugar for use in value added cocoa products)?
Not surprisingly the government of Ghana, which now hosts the Secretariat of the African Continental Free Trade Area, has problems with this approach which places obstacles in the way of the development of intra-African supply chains and includes a schedule for tariff reductions wholly at variance with Ghana’s revised EU-Ghana EPA tariff reduction commitments.
At the end of 2019, the government of Ghana agreed with the EC revised tariff phase down commitments on imports from the EU. This involves the commencement of tariff reduction commitments in the first quarter of 2020 (with it being unclear whether this went ahead given Covid-19 linked disruptions) and their completion by 2029 (see companion epamonitoring.net article ‘Ghana prepares for EPA implementation with finalisation of its revised tariff offer’, 19 December 2019). This is a far cry from replicating the initial steeping stone commitments agreed in 2008.
The objectives of the UK-Cote d’Ivoire stepping-stone agreement are stated as being:
‘(a) to allow the Ivorian Party to benefit from the enhanced market access offered by the UK under this Agreement, pending the conclusion of a comprehensive EPA.
(b) to lay the foundations for the negotiation of an EPA which will help to reduce poverty, promote regional integration, economic cooperation and good governance in West Africa and to improve West Africa’s capacities as regards commercial policy and trade-related issues;
(c) to promote the harmonious and progressive integration of West Africa into the world economy, in accordance with its political choices and development priorities.
(d) to strengthen the existing relations between the Parties on the basis of solidarity and mutual interest.
(e) to create an agreement which is compatible with Article XXIV of GATT 1994’ (2).
In light of these objectives, the question arises as to what happens in terms of the tariffs applied by Cote d’Ivoire to imports from the UK under the stepping-stone agreement pending the conclusion of a comprehensive EPA with West Africa? Will there be an instant removal of all tariffs on Group A and Group B products and a partial removal of tariffs on Group C products from 1st January 2021? If so, how can such a course of action be reconciled with regional trade integration objectives in West Africa and the UK government’s long-standing commitment to supporting African regional trade integration?
This issue of the consistency of the commitments the UK has sought to include in the Cote d’Ivoire-UK EPA and the UK’s regional trade integration policy commitments was recently raised by the Labour Party’s shadow trade minister, Gareth Thomas, in a letter to the Secretary of State for International Trade Liz Truss (3).
These African regional trade concerns do not appear to have been addressed in the UK-Cote d’Ivoire EPA, with the primary objective of UK negotiators being to ensure no discrimination emerges against UK exporters compared to competing EU27 exporters. This is addressed in article 13, which states in part:
‘Côte d’Ivoire shall apply customs duties to products originating in the UK and imported into its territory that are no less favourable than those applicable to goods originating in the EU under the EU-Côte d’Ivoire Stepping Stone EPA immediately before the EU-Côte d’Ivoire Stepping Stone EPA ceased to apply to the United Kingdom so as to ensure that imports from the UK are treated no less favourably than products originating in the EU imported into its territory’ (2).
Clearly, as part of the process of re-fitting the EU EPA with Cote d’Ivoire and within the framework of the UK being open to modifications to only a ‘limited number of areas in which clarity is required’, the focus has been on addressing issues of primary concern to the UK. this has for example included addressing trade issues arising under the Northern Ireland protocol of the UK/EU Withdrawal Agreement (4). What has remained singularly unaddressed in the UK-Cote d’Ivoire ‘negotiations’ is the wider trade and supply chain issues arising for Ivorian exporters as a result of the UK’s withdrawal from the EU customs union and single market; issues which will become particularly acute in the event of a no-deal UK departure.
These issues are of most immediate concern in the banana and preserved tuna sectors, but in terms of the scale of commercial activities involved are of greatest importance in the cocoa sector.
| Comment and Analysis
– Introductory Comments These triangular supply chains have been developed over the last 20 years in order to exploit the commercial opportunities generated by the creation of the European single market (from border free trade, through airline market liberalisation, to a fully liberalised EU-wide haulage industry), with this having brought considerable commercial benefits to Ivorian exporters in serving the UK and other EU market. These benefits will be lost on trade with the UK from 1st January 2021 and will require fundamental adjustments to a range of Ivorian exporters supply chains. The loss of these benefits and the new much higher costs which will be generated either under any likely EU/UK trade agreement or a no-deal UK departure, need to be assessed at the product by product level, most notably for bananas, tropical fruit, preserved tuna and value added cocoa products, for all of which different issues will be faced as a result of the culmination of the Brexit process. – Bananas A loss of such duty-free access would have severely undermined the UK market position of Ivorian banana exporters, since they would have faced standard import duties from 1st January of £95 per tonne, or some 9.5 pence per kg (since there are no tariff preferences under GSP or GSP+ schemes for bananas). From having a tariff advantage of €75 per tonne over $ banana exporters, Ivorian banana exporters would have faced a tariff disadvantage of €39 per tonne. This situation would in all probability have driven Ivorian banana exports off the UK market. Fortunately for Ivorian banana exporters this outcome has now been avoided. In addition, the Ivorian banana supply chain faces far fewer challenges than other fruit and vegetable supply chains. It is highly integrated, with the main exporting company running its own shipping vessels to its own schedule and having taken steps to ‘Brexit proof’ its supply chain. This includes shifting the main port of disembarkation in the UK from Portsmouth to London Gateway on the north bank of the Thames, which has good onward rail connections to distribution centres across the UK (5). This effectively side-steps the potential port clearance and road haulage issues which will emerge from 1st January 2021. This needs to be seen in a context where the Portsmouth port authority has suggested it is singularly unprepared for the UK’s departure from the EU (6). – Tropical Fruit Of much greater concern for Ivorian tropical fruit exporters is the potential disruptions to trade into the UK market along supply chains which ship via initial ports of landing in EU27 member states. These concerns are particularly acute in the face of Covid-19 air freight disruptions, which have reduced the commercially viable options for air freight shipment open to Ivorian tropical fruit exporters since March 2020. Overall 84% of all Ivorian pineapple exports to the EU28 are shipped to France and Belgium, while 82% of Ivorian mangoes and guavas are exported to the EU28 via the Netherlands, France and Belgium from where these are distributed across Europe, including to the UK (with for pineapples only 6.7% by volume and 7% by value and for mangoes only 10.6% by volume and 6.8% by value being directly shipped to the UK). It is likely that a higher volume of Ivorian tropical fruit exports enters the UK market via initial port of landing in the EU27, than are directly exported to the UK. This is despite the volume exported directly to the UK having increased dramatically in the past 5 years (up from 0% for pineapples and 1.6% for mangoes of total exports to the EU28 in 2012). These triangularly traded tropical fruit exports will inevitably face additional costs for onward shipment to the UK market from 1st January 2021, with this situation being seriously compounded if acute road haulage disruptions are experienced along EU/UK roll-on/roll-off routes from 1st January 2021. The additional costs and value losses along these Ivorian triangular supply chains are likely to be particularly severe in the event of a no-deal UK departure from the EU on 31st December 2020. With these disruptions potentially driving these Ivorian products off the UK market. Cote d’Ivoire Trade to the UK and EU28 Main Products: The Scale of the Triangular Supply Chain Complications
Source: EC Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm This needs to be seen in a context where both UK and EU exporters of short shelf life products are looking to ‘pause’ cross border EU/UK trade in the first weeks and even months of 2021, given the projected severity of transportation disruptions (see companion epamonitoring.net article, ‘If Negotiations Fail No Deal Trade Effects Likely to be Felt in Final Weeks of 2020, 10th November 2020). This also needs to be seen in a context where the former head of the UK government’s Brexit department, Philip Rycroft has warned ‘the country remains dangerously ill prepared’ for its departure from the EU customs union and single market. (see companion epamonitoring.net article, ‘With No Deal Brexit Preparation Underway in UK and Serious Challenges Faced ACP Exporters Will Need to Look to “Brexit Proofing” Their Supply Chains’, 29th October 2020) – Preserved Tuna While preserved tuna is not as vulnerable to port and transportation disruptions as short shelf life products, it could easily be caught up in rules of origin issues, in which case tariffs of 20% could be faced. This is a particular danger if there is no UK/EU trade deal which maintains duty free EU/UK trade in fisheries products. It would critically hinge around documenting the originating status of the product (something which has not bene an issue to date), the extent of repackaging which takes place in the EU27 member state prior to onward trade to the UK and the specific rules of origin provisions on preserved tuna products included in the UK-Cote d’Ivoire EPA. Against this background, unless rules of origin issues in onward trade in preserved tuna are identified and addressed, these existing Ivorian supply chains used to serve the UK market could be disrupted. This could then require a reorientation of shipping arrangements or even potentially a redefinition of commercial partner relationships. Either way the concluded UK-Cote d’Ivoire EPA does little to preserve continuity in current Ivorian exports destined for the UK market in the preserved tuna sector. – Value Added Cocoa Products While the UK DIT has argued the UK market accounts for 23% of total exports of cocoa butter from Cote d’Ivoire, the reality is that over the past 15 years the UK cocoa processing sector has been ‘migrating’ to the EU27, in a context where countries like Cote d’Ivoire have been moving into more value added cocoa products exports (cocoa paste and cocoa butter). This has taken place mainly in association with EU27 based companies, who then onward trade to the UK. Indicative of the current scale of the triangular trade in value added cocoa products is the fact UK direct imports account for only 7.9% of total EU28 cocoa bean and value added coco product imports, despite the size of the UK cocoa based food product market. This has only been partially impacted by the repatriation of cocoa bean processing to the UK which has been underway since 2016. Ivorian cocoa beans, cocoa paste, and cocoa butter exports to the EU28 and UK 2015-19 – tonnes
Source: EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm Any application of UK MFN tariffs on imports of value-added cocoa products from EU27 member states would generate additional costs which would be likely to rebound in the form of lower prices for Ivorian cocoa producers. This would sit uneasily with the UK’s commitment to ensuring continuity in Ivorian exports to the UK market within the Brexit process. – Overview With similar substantive trade issues arising in regard to any future agreement between the UK and Ghana, where for cocoa products direct exports to the UK are even less developed than is the case for Cote d’Ivoire, the current UK-Cote d’Ivoire EPA can scarcely be seen as an adequate ‘model’ for a ‘rolled over’ EPA with Ghana. In the Ghanaian case, this is exacerbated by the inconsistencies between the provisions of the ‘rolled over’ EPA and Ghana’s pan African trade policy commitments and aspirations. Substantive adjustments are needed to bring an outdated EU text into line with the evolving trade realities faced 12 years later. The inadequacies of the modifications made to the existing text would appear to make the ‘rolled over’ EPA wholly inappropriate as the basis for the kind of forward-looking trade relationship the UK is looking to build in the post Brexit period. Similar triangular supply chain issues arise in regard to Kenyan exports destined for the UK market, where the issue of the future basis for access to the UK market remains unresolved (3). The only basis on which such ‘rolled over’ EPAs can be considered even minimally adequate is if the reciprocal commitments entered into by the concerned African governments’ remain unimplemented until such time as outstanding issues are fully resolved (including in regard to compatibility with the African trade integration agenda), while existing duty free-quota free access to the UK market is automatically and unconditionally extended from 1st January 2021. Of course, the issue of implementation of Cote d’Ivoire’s tariff reduction commitments can be deferred indefinitely since the signed agreement only enters into legal effect once it has been ratified in Cote d’Ivoire. Deferral of domestic ratification in Cote d’Ivoire, would quietly lay to rest the regional concerns arising from any attempt to implement the reciprocal tariff reduction commitments set out in the ‘rolled over’ agreement. |
Sources:
(1) Gov.uk, ‘The United Kingdom and Côte d’Ivoire sign Economic Partnership Agreement, 15 October 2020
https://www.gov.uk/government/news/the-united-kingdom-and-cote-divoire-sign-economic-partnership-agreement
(2) ‘Stepping-Stone Economic Partnership Agreement between Côte d’Ivoire, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part’, announced 16 October 2020.
(3) Guardian, ‘Labour urges UK trade secretary to end delays over Kenya and Ghana deals’, 2 November 2020
https://www.theguardian.com/politics/2020/nov/02/labour-urges-uk-trade-secretary-to-end-delays-over-kenya-and-ghana-deals
(4) Letter from United Kingdom to Cote d’Ivoire.
(5) DP World London Gateway Port
https://www.londongateway.com/port/the-port
(6) Portsmouth.co.uk, ‘Portsmouth port can’t afford Brexit border check upgrades, transport boss warns’, 29 October 2020,
https://www.fpcfreshtalkdaily.co.uk/single-post/portsmouth-s-port-can-t-afford-brexit-border-check-upgrades-transport-boss-warns