3 questions to… Chris Horseman, consultant on international agricultural trade policy issues
#1 Postponed to October 31st, what is the current British political situation with this delayed Brexit?
The situation in the UK remains confused, with British public opinion split right down the middle as to whether leaving the EU is the right thing for Britain to do. The resignation of prime minister Theresa May on May 24 means that it will now probably be the end of July before a new prime minister is confirmed and the UK can develop a clear policy on what to do about Brexit.
The legal position is that Britain will automatically leave the EU on October 31, with or without a deal, unless either a further extension is agreed with the EU (a distinct possibility), or the Brexit decision is revoked completely (quite unlikely).
So the political question is whether the UK should continue its efforts to try and find a compromise withdrawal agreement, or simply leave the EU without a deal and conduct its trade with the European Union on the basis of WTO schedules.
The current favourite to replace Theresa May is the former Foreign Secretary Boris Johnson, who is committed to a so-called ‘hard Brexit’ (i.e. leaving the EU with no deal if necessary). But for precisely this reason, his candidacy will be strongly opposed by those in the ruling Conservative party who believe a ‘no deal’ Brexit will be very damaging for the British economy. The forthcoming Conservative party leadership election will therefore be hard-fought, and unpredictable.
#2 What could be the impact of Brexit on UK trade policies with African nations?
The UK is keen to position itself as a ‘friend’ to Africa, given its extensive Commonwealth links with many African countries, its investment interests in many sectors, and its fundamental commitment to (relatively) open trade. The EU’s alleged ‘protectionism’ towards developing countries was often cited by pro-Brexit campaigners as a reason why the UK should leave the bloc, although in fact the EU has a well-developed (albeit incomplete) system of tariff preferences for imports from African and other developing countries, which the UK will need to replicate after it leaves the bloc.
The UK has pledged to retain duty-free, quota-free access to its market for Africa’s 33 Least Developed Countries (LDC) once it leaves the bloc. For those countries which do not have LDC status, however, the situation is more complicated.
The patchwork of regional Economic Partnership Agreements (EPAs), under which developing countries have preferential access both to the EU market and to each other’s markets, need to be “rolled over” to apply to the UK after Brexit.
So far, Britain has rolled over only one African EPA – the Eastern and Southern Africa (ESA) agreement which encompasses Mauritius, Seychelles, Zimbabwe and Madagascar.
Negotiations are still continuing with the SADC group (Botswana, Lesotho, Mozambique, Namibia, South Africa and Eswatini), while the EU’s single-country trade accords with Cameroon, Ghana and Cote d’Ivoire have similarly not yet been approved for application by the UK.
This means that if the UK were to leave the EU without any kind of customs union deal with the EU, trade with all of these countries would have to be conducted on the same terms as any other (non-preferential) country.
#3 African banana producers, especially Ghanaian, are worried about Brexit outcomes: what are the current options favored by London for this very global competitive sector?
The UK has stated that, in the event of a no-deal Brexit, it will apply a tariff of €114 per tonne on imports of non-preferential bananas – the same as the EU’s Most Favoured Nation tariff. Countries which are covered by preferential trade deals will thus retain their current tariff preferences against MFN suppliers.
However, the UK has already rolled over the terms of the EU’s trade agreement with the Andean Pact countries (Ecuador, Colombia and Peru), including the maintenance of a preferential €75 per tonne tariff on bananas from this region. These three countries accounted for 41% of UK banana imports (by value) in 2018.
Another rolled-over EPA is that with the CARIFORUM countries; this guarantees the continuation of tariff-free access to the UK market for bananas from Saint Lucia, Belize and the Dominican Republic.
Negotiations to roll over the EU-Central America trade deal, which also attracts a €75 per tonne banana tariff preference, have however yet to be concluded. The Central American countries between them contributed a further 23% of UK banana imports in 2018.
And, as things currently stand, there is also no provision for preferential access to the UK banana market for any African country which is not an LDC.
Cameroon, Ghana and Cote d’Ivoire between them account for almost 13% of UK banana imports, but they would be faced with the imposition of a €114/tonne tariff on sales to Britain, unless agreement on a rollover is reached in the meantime. This would almost certainly see them priced out of the UK market in favour of supplies from Ecuador, Colombia, or the Caribbean.
The UK has no strategic desire to alter the balance of preferences for African countries trading bananas or any other product, but such is the political and technical complexity of Britain’s Brexit project that it may end up doing just that – if only temporarily – by accident.