After


Securing Economic Interests

Edwin Laurent, Lorand Bartels, Paul Goodison,
Paula Hippolyte and Sindra Sharma
After
Brexit…
Securing ACP Economic Interests

Edwin Laurent, Lorand Bartels, Paul Goodison,
Paula Hippolyte and Sindra Sharma
Edwin Laurent, SLC, CMG, OBE: Director of the Ramphal Institute.
Lorand Bartels, PhD, Reader in International Law in the Faculty of Law and a
Fellow of Trinity Hall at the University of Cambridge
Paul Goodison, PhD, GDC Partners, Belgium
Paula Hippolyte, Consultant, ITID Consulting
Sindra Sharma, PhD, Lead Researcher Ramphal Institute

First published by Rila Publications Ltd in 2017
Design, Typesetting and Printing by:
Rila Publications Ltd, Rila House, 73 Newman Street, London W1T 3EJ
www.rila.co.uk

ISBN 10: 1-899839-15-1
ISBN 13: 978-1-899839-15-5

British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library

Copyright:
Text © 2017 by The Ramphal Institute
Design and layout © Rila Publications Ltd, London, 2017

All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior permission of both the
copyright owner and the above publisher.

The Ramphal Institute
22 Kingsway, London, WC2B 6LE, United Kingdom
tel: 44 (0) 207 848 1892. www.ramphalinstitute.org
E-mail: edwin.laurent@ramphalinstitute.org
Registered Charity no. 1117152. Registered Company no. 5822913

4
Acronyms
ACP: African Caribbean and Pacific Group
AFDB: African Development Bank
AU: African Union
EuroMed: Euro-Mediterranean partnership
Brexit: The UK’s withdrawal from the EU
FTA: Free Trade Area
CARICOM: Caribbean Community and
GDP: Gross Domestic Product
Common Market
GNI: Gross National Income
CDB: Caribbean Development Bank
GSP: Generalised System of Preferences
CETA: Comprehensive Economic and Trade
Agreement (EU-Canada) HMG: Her Majesty’s Government (UK)
DAC: Development Assistance Committee IMF: International Monetary Fund
of the OECD
ITC: International Trade Centre
DFID: Department for International
LDC: Least Developed Country
Development (UK)
MFN: Most Favoured nation
DFQF: Duty free and quota free
NGO: Non-Governmental Organisation
EAC: East African Community
OCTs: Overseas Countries and Territories
EBA: Everything but Arms
(EU)
ECOWAS: Economic Community of West
ODA: Official Development Assistance
African States
OECD: Organisation for Economic
EDF: European Development Fund
Co-operation and Development
EEA: European Economic Area
PIFS: Pacific Island Forum Secretariat
EEC: European Economic Community
SADC: The Southern African Development
EPA: Economic Partnership Agreement Community
ERDF: European Regional Development SDGs: Sustainable Development Goals
Funds ESA Eastern and Southern Africa.
TEU: Treaty of European Union
(EPA Group)
TPP: Trans-Pacific Partnership
EU: European Union
TRQ: Tariff rate quotas
EU 28: All members European Union
including the UK TTIP: The Transatlantic Trade and
Investment Partnership
EU 27: Members of the European Union
without the UK WTO: World Trade Organisation

5
Foreword

This paper follows extensive research and consultation into how the UK’s
withdrawal from the European Union (Brexit) will affect trade and economic
relations with the Africa Caribbean and Pacific (ACP) Group of countries.

When UK voters decided to leave the European Union on the 23rd June 2016,
they would understandably have been guided by what they thought best for their
country; but withdrawal will have major and far reaching consequences; way
beyond the UK. ACP countries are among those expected to be most affected.
Therefore, it would be essential for them to have as clear an understanding as
possible of the precise implications of Brexit so that they could seek to avoid or
minimise any negative consequences and identify and capitalise on opportunities
that arise or which they might create.

This publication has been prepared for the ACP Secretariat by a team from the
Ramphal Institute, a not-for-profit organisation which bears the name of Sir
Shridath Ramphal as it continues his pioneering work to advance sustainable
development, global justice, social equity and good governance. It seeks to
expand and share knowledge and understanding in these fields that will contribute
to better informed international debate among policy makers and the public.

The threats that Brexit can pose to ACP economic interests are real and should
not be underestimated or ignored. A united Group that pursues a well-informed,
comprehensive and effective strategy, will enhance the prospect of achieving its
shared objectives and prospering in the post-Brexit era.

It is hoped that the issues highlighted in this book will provide a valuable initial
contribution to the ACP as it develops its strategy.
Edwin Laurent
Director
The Ramphal Institute
London
Content

List of Figures............................................................................................................................................. 10

List of Tables............................................................................................................................................... 10

Executive Summary.................................................................................................................................. 11

Introduction................................................................................................................................................. 16

Background and Context........................................................................................................................ 18
Leaving Europe.................................................................................................................................. 19

The Brexit process.................................................................................................................................... 20
Expectations for the UK economy............................................................................................. 24

Implications for ACP countries after Brexit................................................................................... 27
Development cooperation............................................................................................................. 27
UK development policy................................................................................................................... 29
Other consequences of Brexit for ODA................................................................................... 33
Proposals for the ACP..................................................................................................................... 33

Trade............................................................................................................................................................... 35
The EU Framework for Trade relations between
the UK and the ACP......................................................................................................................... 35
Importance to the UK of exports to ACP countries........................................................... 37
Importance to the ACP of exports to the UK........................................................................ 39
ECOWAS........................................................................................................................................ 41
EAC................................................................................................................................................. 41
Central Africa EPA Signatories........................................................................................... 42
SADC EPA Signatories........................................................................................................... 42
Eastern and Southern Africa (ESA) EPA Signatories................................................ 43
Pacific EPA Signatories.......................................................................................................... 43
Caribbean EPA signatories................................................................................................... 44
Understanding ACP Trade............................................................................................................. 45

8
Possible different UK-EU trade relationships post Brexit........................................................ 47
Implications for ACP countries................................................................................................... 47
UK-EU customs union............................................................................................................. 47
UK-EU FTA................................................................................................................................... 49
The WTO option......................................................................................................................... 50
Compensation from the EU for the loss
of the UK from the epa?........................................................................................................ 53

What might happen to ACP trade....................................................................................................... 55
Renewing Preferential Arrangements...................................................................................... 57
EBA................................................................................................................................................. 57
GSP................................................................................................................................................. 58
UK-ACP FTAs.............................................................................................................................. 60
Necessity for avoiding any disruption
or hiatus in trade flows................................................................................................................... 62
Requirements to safeguard acp trade
and economic interests.................................................................................................................. 63
Recommendations and a plan of action.................................................................................. 65

Conclusion.................................................................................................................................................... 68

Annex 1......................................................................................................................................................... 70
EAC.......................................................................................................................................................... 72
Central Africa EPA Signatories................................................................................................... 73
SADC EPA Signatories.................................................................................................................... 74
ESA EPA Signatories....................................................................................................................... 75
Pacific EPA Signatories................................................................................................................... 76
Caribbean EPA signatories........................................................................................................... 77

Annex 2......................................................................................................................................................... 78
Visualising Data................................................................................................................................. 78

Annex 3......................................................................................................................................................... 81
Overview of Economic Partnership Agreements................................................................ 81

Annex 4......................................................................................................................................................... 84
Address by Baroness Kinnock.................................................................................................... 84

9
List of figures
Figure 1:
2015 GDP (Nominal) in the EU..........................................................................9
Figure 2:
Original and Revised Economic Growth Forecasts..........................................14
Figure 3:
Depreciation of Pound Sterling.......................................................................14
Figure 4:
Principal destination of UK exports of goods and services 2010-15..............22
Figure 5:
UK Export to Partners (2014)...........................................................................22
Figure 6:
ACP Export to the UK.......................................................................................23
Figure 7:
Brexit Models...................................................................................................32
Figure 8:
UK exports to partner countries from 2010 to 2015......................................49
Figure 9:
ACP Aggregate Breakdown..............................................................................49
Figure 10:
Five Year Bar Chart – UK Imports....................................................................50
Figure 11:
Business Investment and GDP Growth............................................................50

List of tables
Table 1:
Top 20 recipients of UK Bilateral ODA in 2014................................................17
Table 2:
Top 20 Recipients of UK Core Funding
to Multilateral Organisations in 2014..............................................................18

10
Executive Summary
The UK’s withdrawal from the EU, Brexit as it is commonly referred to, will see the
EU losing its second largest economy or 17% of its GDP and the UK ceasing to
apply all EU treaties to which it is party. There will be major consequences for ACP
countries because a substantial portion of the development assistance provided
by the UK is via the EU and trade with the UK is conducted within the regulatory
and institutional framework of the EU.

What happens after Brexit will be determined by a range of variables including
some that cannot be predicted with any certainty. The ACP countries need to be
ready with strategies for safeguarding their interests and minimising damage to
their economies and capitalizing on any opportunities that might arise or which
they can create. For this, they will require collective action that extends beyond the
traditional ACP-EU framework for consultation and engagement.

The UK Government is set to invoke Article 50 of the Treaty of European Union in
the early part of 2017. This will commence a two-year period of negotiation on
the terms of withdrawal. Until the UK has actually left the EU it is not permitted to
engage in formal trade negotiations with third countries (including with the ACP).

Most predictions are that Brexit will negatively impact on the UK economy, and
currency markets have already anticipated this by devaluing the pound sterling.
The combination of those two factors will reduce the attractiveness of the UK
as a market for ACP goods and services, and a provider of remittances, tourism
expenditure and development aid.

Development Cooperation

Brexit will result in the loss to the EDF of its third largest contributor that is putting
in nearly €4.5 billion to the 11th EDF. The UK is also a major contributor to the
EU Development Budget. ACP countries will need to ensure that they continue to
receive at least the same quantum of aid and that it is disbursed in line with their
development priorities.

11
After brexit...

Trade

Upon leaving the EU, the UK will be free, both to apply whatever import duty
rates it wishes as long as they do not exceed those that currently exist, and to
replace the EU wide trade regime that it operates with one of its own and directly
negotiate trade agreements. Exports to the UK are substantial for all ACP regions
and for many countries. This totals US$12.3 billion. Much of this trade is governed
by preferential arrangements, EPAs, GSP and EBA, which help keep exports viable
and competitive where high import tariffs are levied, from which ACP countries
are often exempted. For the UK, its exports to the ACP are very important, US$8.3
billion in 2015, even though many individual ACP country markets are not large.
In 2015 almost 40% of the UK exports to ACP countries took place under EU
preferential trade agreements, which will most likely fall away with Brexit, placing
UK exports at a disadvantage in terms of the tariffs applied compared to their
EU27 competitors.

There are different possible trading relationships that the UK can have with the EU
after Brexit, the only one that would be likely to permit the automatic continuation
of the current trading arrangements with the ACP would be a Customs Union. This,
however, is unlikely to materialise. Other more likely arrangements could see an
FTA or some less comprehensive trading arrangement with the EU. If no agreement
is reached the UK would not enjoy full access to the single market and customs
union, and trade with its former EU partners on the basis of WTO rules (hard-Brexit).

Aims for ACP post- Brexit

1. Ensure that the quantum of development assistance received is at least as
much as would have been disbursed in the absence of Brexit and that it is
in line with ACP countries’ priorities.

2. That the ACP countries’ trading positions in the UK are safeguarded and
any hiatus to trade is avoided which, otherwise, would be very damaging
to their economies. Consequently, duty and quota-free (DFQF) and other
favourable access terms to the UK market, currently provided under the
EBA, EPA and GSP must continue and the preferential margins that help

12
Securing ACP Economic Interests

ensure the viability of ACP exports to the UK be preserved. Specifically,
the ACP should seek a political commitment from HMG that it will, upon
Brexit, continue without interruption to:

a. offer EBA and favourable GSP concessions to eligible ACP countries

b. provide DFQF for countries currently exporting to the UK under EPAs.
(This will be a transitional arrangement to permit time for negotiating
and concluding WTO compatible FTAs, which might be based on the
existing EPAs with the EU).

c. apply tariffs at existing rates, on third country imports of products of
export interest to the ACP.

Elements of a Strategy

As a group, the ACP is in a much better bargaining position than any of its
members or regions, given the total value of UK exports to the countries that are
also major suppliers of many important mineral products and commodities and
host to substantial UK investment. In addition, such a large group of countries
has considerable potential international political authority and influence. It needs
to show that its role and significance is more than just an economic cooperation
vehicle with the EU but a valuable and credible international political partner
and ally on issues of mutual interest. For the ACP countries this will require the
following:

1. Adopt a common position and strategy for advancing ACP interests post-
Brexit.

2. ACP authorities, including their High Commissioners and Ambassadors
in London, actively engage with and lobby HMG, not only in formal
governmental meetings but also in other interactions with parliamentarians
and officials.

13
After brexit...

3. Actively engage with the media and supportive organisations to help ensure
favourable public attitudes to safeguarding ACP interests, post-Brexit.

Conclusion

Brexit poses serious threats to ACP economic interests, which should not be
underestimated or ignored. The ACP will have to rapidly mobilise all available
resources and engage with allies to vigorously and coherently pursue its shared
interests. As a group ACP countries are of considerable economic importance to
the UK. It therefore would be in the UK’s own interests to safeguard and cultivate
its substantial trade and investment with those countries.

The ability to effectively prepare and organise for and deal with Brexit will be a
major test of the solidarity, coherence and maturity of the ACP Group and its
ability to successfully address modern day challenges.

After Brexit: Securing ACP Economic Interests

The United Kingdom (UK) is set to withdraw from the European Union (EU), Brexit
as it is commonly referred to, and as soon as this happens all EU treaties will
cease to apply to the UK. The loss of the second largest economy in the single
market which accounts for 17% of EU GDP will have major consequences for ACP
countries because much of their economic engagement with the UK is within the
framework of the latter’s membership of the EU:

1. The ACP countries’ trade with the UK is governed by EU treaties and EU law.

2. The ACP countries will lose the substantial UK contribution to the European
Development Fund (EDF) and the EU Development Budget.

Understanding the precise impact of withdrawal and how it will proceed and, on
that basis devising and implementing a strategy to safeguard and advance ACP
interests will be essential.

14
Securing ACP Economic Interests

Brexit poses challenges for the ACP of unprecedented
magnitude and severity. However, effectively
addressing them will require collective action that
will need to extend beyond the traditional ACP-EU
framework for consultation and engagement.

15
Introduction
The 23rd June 2016 referendum set the United Kingdom on a path to leave the
European Union. Whilst the choices made by voters would have been according to
what they wished for the future of their country, the UK’s withdrawal (Brexit), will
have major consequences for the rest of the world, in particular the ACP group
of countries whose trade and economic relations with the UK and Europe have
been intricately linked for over 40 years. Not all of the consequences though are
predictable since they will be influenced by various factors including the terms of
Brexit and the policy choices of the UK and the EU as well as the responses of the
markets.

What is not in doubt is that the UK’s withdrawal from the EU single market and the
resultant regulatory and organizational changes will have foreseeable and undeniable
consequences. These will stem from changes in the provision of development finance
and to the ACP countries’ continued ability to access the UK market on a viable
basis. Changes are expected in terms of the UK’s and EU’s demand for imports,
market prices, provision of development assistance, remittances and spending by
their tourists. Then there will be commercial consequences resulting from changes
in the business climate and changing levels of prosperity in the UK and the EU which
could have secondary impacts on the domestic market.

As shown in the pie chart (Figure 1), the UK is the second largest economy in
the EU accounting for 17% of total GDP. It is also the fifth largest economy in
the world. The regulatory and the direct and indirect economic consequences of
Brexit will undoubtedly be far reaching for all parties: the UK itself, the rest of the
EU, the global economy and the ACP.

The challenge facing ACP countries is to safeguard their interests and ensure
that any damage that they suffer is kept to a minimum and that they position
themselves to make the most of post-Brexit opportunities that arise or which
they can create. To do this, ACP countries will need a full understanding of the
implications and consequences of Brexit, the processes that will be involved and
the various options and policies that might be pursued by the UK and the EU. This
understanding will provide the ACP with the foundation for devising and pursuing
optimal policies and strategies for advancing their interests.

16
Securing ACP Economic Interests

Figure 1: 2015 GDP (Nominal) in the EU

This publication will seek to provide an understanding of the direct and indirect
consequences of Brexit and place it in its policy context. It will focus on the
implications for development cooperation, trade and regulation. It will consider
the various alternatives scenarios for the future relations between the UK and the
EU and explore the importance to both the UK and to the ACP of their economic
and commercial relationships, notably, in development cooperation and trade.
This will be followed by recommendations regarding strategic options that the
ACP might adopt and pursue.

Whilst the consequences of Brexit will be determined
by a range of variables, including some that cannot be
predicted with any certainty, ACP countries will need
to devise strategies for safeguarding their interests
and minimising any damage to their economies, as
they position themselves to make the most of any
opportunities that might arise or which they can
create.

17
Background and Context
Upon joining the European Common Market in 1973, the UK ended the
Commonwealth preferential trading arrangements. Its membership of the Common
Market and later the Single Market in 1993, has since then precluded the UK from
setting or negotiating its own tariffs or trade regime. The EU collectively handles
these matters.

From the outset, with the signing of the first Lomé Convention in 1975, ACP
countries enjoyed duty and quota-free (DFQF) access for most of their products
exported to the EEC and later the EU. The system, enabling qualified duty and
quota-free (DFQF) access for the ACP, was renewed in subsequent Lomé
Conventions, and then, with the help of a 2001 WTO waiver, for seven years
under the Cotonou agreement. This system, which remained largely unchanged,
was non-reciprocal in that ACP countries did not have to provide in exchange, free
access to their markets for imports from the EU. Preferential ACP trade under the
Cotonou Agreement ended in 2008, when it was replaced by reciprocal Economic
Partnership Agreements (EPAs), the Generalised System of Preferences (GSP)1
and the Everything But Arms (EBA) initiative2. Other exports from the ACP that
are not covered by any of these trading arrangements are on an MFN3 basis; in
other words, import duties are charged according to whatever is stipulated in the
EU’s WTO approved schedule.

The other important collective engagement is in the area of development
cooperation. The EU is a leading international donor of aid and a development
partner that is active in all aspects of development and humanitarian assistance.
It has a substantial budget line for development and also operates a European
Development Fund (EDF) of €30.5 billion for the period 2014-2020, the

1. The GSP is a system permitting developed countries to charge reduced or zero duties on
selected imports entering their markets from developing countries that fall within eligible
and specified categories.
2. The arrangement, introduced by the EU in 2001, for the removal of import duties and
quotas on most products imported from LDCs.
3. The Most Favoured Nation Principle (MFN) is the basis on which WTO Members trade with
each other in the absence of preferences for instance under the GSP or an EPA.

18
Securing ACP Economic Interests

11th EDF. This is funded by voluntary contributions from Member States and is
exclusively for the ACP and the OCTs4.

Unlike trade, however, development cooperation is not an area of exclusive
EU competence. Brexit will nonetheless have immediate implications for ACP
countries since, although the UK disburses the bulk of its development budget,
60%, on a bilateral basis, it is also a major contributor to the EU budget (estimated
at €8.3 billion in 2015) and contributes 15% to the 11th EDF. These payments
would cease once the UK withdraws. Consequently, unless the remaining 27
Member states make up the shortfall, Brexit will substantially reduce the total
volume of finance available to the EU for financing development.

Brexit will cause upheaval for the ACP countries
because a substantial portion of the development
assistance provided by the UK is via the EU and their
trade with the UK is conducted within the regulatory
and institutional framework of the EU.

Leaving Europe
Unlike much of continental Europe, the UK, with its particular history and view of
its position in the world, has never wholeheartedly embraced integration. Ever
since joining the EEC in the early 1970’s there has always been some antipathy
to the concept in certain political and public quarters. In more recent years, this
crystalised into a political movement seeking a referendum that would directly ask
the electorate whether the country should remain in the EU. After many years of
campaigning it was held on the 23rd June 2016 and a majority voted to leave.
Although the decision was only advisory, given the political context, including the
commitment of the Government to leave the EU, ACP countries should operate on
the premise that Brexit will happen and therefore plan and act accordingly.

4. The non-independent overseas countries and territories of the EU.

19
The Brexit process
The following sets out a legal analysis of the Brexit process according to the
provisions of Articles 50 (1) and (2) of the Treaty on European Union (TEU).

Formally, the Brexit process will begin when the UK, having decided to withdraw,
notifies the EU of its intention. This will be in accordance with Articles 50(1) and
(2) of the Treaty on European Union.5 Once such a notification has been made, the
EU is obliged to negotiate and conclude an agreement with the UK ‘setting out the
arrangements for [the UK’s] withdrawal’. these arrangements will cover matters
such as pensions and residency rights for UK and EU-27 nationals by the other
party respectively.

If an agreement is reached, the EU treaties cease to apply to the UK as of the date
of entry into force of that agreement, or unless the agreement specifies another
date. But if no such agreement is reached, then the EU treaties cease to apply to
the UK as of two years from the date of the Article 50 notification. This imposes a
de facto deadline for reaching agreement.

There is the theoretical possibility of extending the two-year period, but this
requires unanimity among all other EU Member States, which may be difficult to
obtain, and in any case from their negotiating perspective it is unlikely that they
would agree to extend the deadline.

5. There is presently some uncertainty as to the constitutional aspects of this process, which
may delay the Government’s stated intention of notifying the EU by the end of March 2017,
but that is of little concern for present purposes. It is unlikely that a notification would not be
given at least within some months after March 2017 due to pressure from the government
to this effect, and an absence of serious resistance to the overall result within parliament.
Less important, early notification is also desired by the EU-27 and its Member States. There
is also some uncertainty as to whether a notification, once given, can be withdrawn; the
following is based on the assumption that it either cannot or will not be withdrawn.

20
Securing ACP Economic Interests

The withdrawal agreement does not itself cover economic issues such as trade,
but Article 50(2) states that it ‘shall take account of the framework for [the UK’s]
future relationship with the Union.’ This clearly includes the economic relationship
between the UK and the EU. However, there is debate on whether this means that
the terms of that relationship can be negotiated during the two-year period, or
only afterwards.

Also, as far as the UK’s third-country trade relations are concerned, there is an
unsettled question concerning the ability of the UK to commence negotiations
with third-countries during the two-year period. The difficulty is that the UK
remains a full EU Member State during this period and as such, would ordinarily
be precluded from negotiating an agreement in the areas of EU competence, such
as the common commercial policy, as to do so ‘could jeopardise the attainment of
the Union’s objectives’ (Art 4(3)(3) TEU, as interpreted.

The question is whether such negotiations pose the same threat to the attainment
of the EU’s objectives if the resulting agreement only takes effect after the
UK has already left the EU. For most third countries, this question is of lesser
importance, because they appear to be waiting for a UK-EU free trade agreement
to be negotiated before commencing their own negotiations with the EU. This
may be due to pressure from the EU, or to a desire to know about the expected
competition from EU products in the UK market, or to understand the market for
UK downstream products using their components in the EU. For ACP countries,
these reasons may be outweighed by the advantage of preserving – or even
improving – their market access in the UK market as soon as possible.

Clearly, it would be more convenient for both the UK and the EU to be able to
negotiate an economic agreement in parallel with the withdrawal agreement. A
strong legal argument can also be made in favour of early negotiations, on the
basis that the reference to the ‘framework’ implies that the existence of such
a framework – which could take the form of an agreed framework – cannot be
precluded during the two-year period. On the other hand, there is no obligation
on the part of the EU to negotiate any such agreement if it chooses not to do so.
In that event, trade relations between the UK and the EU would be on WTO terms.

21
After brexit...

The UK Government is set to invoke Article 50 of the
Treaty of European Union in the early part of 2017,
this will commence a two-year period of negotiation
on the terms of withdrawal. Until the UK has actually
left the EU it is not permitted to engage in formal
trade negotiations with third countries (including
the ACP).

22
Securing ACP Economic Interests

Expectations for the UK economy
Brexit will have massive consequences for the UK’s economic growth and its
demand for imports and provision of development aid and remittances.

Goldman Sachs6 estimates that during the 18 months following the vote, Brexit
will see a cumulative drop of 2.75% in UK GDP due to increased uncertainty and
deteriorating terms of trade. Reconfiguration of the economy and a reallocation of
resources will be necessary as the UK emerges from a 40-year relationship shaped
by access to the single market. In the process leading up to and immediately after
the triggering of Article 50 the UK economy could find itself in “stormy seas”. The
economic and policy uncertainty during this period of reconfiguration could drag
down investment7 and drive the economy into recession8.

Figures 2 and 3 show the revision of the IMF forecasts for UK economic growth
and the sharp devaluation of sterling as the market anticipates and prepares for
that eventuality.

6. Goldman Sachs (2016, June). Podcast Episode 41: Brexit – After the Vote. http://www.
goldmansachs.com/our-thinking/podcasts/episodes/06-28-2016-huw-pill.html
7. With an estimated fall in FDI inflows of 22% according to: Bruno, R., Campos, N., Estrin,
S., & Tian, M. (2016). Technical Appendix to ‘The Impact of Brexit on Foreign Investment
in the UK’ Gravitating Towards Europe: An Econometric Analysis of the FDI Effects of EU
Membership. Centre for Economic Performance.
8. Zenghelis, D. (2016, August). Building 21st Century Sustainable Infrastructure (Part
1): Time to Invest. Policy Brief. Grantham Research Institute on Climate Change and the
Environment and Centre for Climate Change Economics and Policy.

23
After brexit...

Figure 2: Original and Revised Economic Growth Forecasts9

Figure 3: Depreciation of Pound Sterling10

9. Source: International Monetary Fund, 2016
10. Source: International Monetary Fund Exchange Rate Archives

24
Securing ACP Economic Interests

One of the immediate aftermaths of Brexit was seen in the weakened currency. If
inflation increases (projected at 3%), the value of the pound could drop further
or stabilise at a lower level. For countries that depend heavily on UK aid, such as
Sierra Leone and Ethiopia, this could mean the levels of assistance that they are
able to receive might fall.

The depreciation of the pound also negatively impacts remittances. In 2015
US$24.8 billion in remittances was sent from the UK to other countries, of this
US$16.4 went to developing countries with Nigeria being one of the biggest
recipients (US$3.72 billion).

Most predictions are that Brexit will negatively impact on the UK economy and
the currency markets have already anticipated this by devaluing the pound
sterling. The combination of these factors will reduce the attractiveness of the UK
as a market for ACP goods and services and a provider of remittances, tourism
expenditure and development aid.

25
Implications for ACP
Countries After Brexit
Development cooperation
Brexit will have immediate implications for ACP countries’ development
cooperation even if, as has already been mentioned, this is not an area of exclusive
EU competence.

The ACP benefit from the EU’s Development Budget and the European
Development Fund (EDF). The latter is exclusively for them and the OCTs11.
The 11th EDF (2014-2020) is set at €30.8 billion. The UK is the third largest
contributor to the EDF behind Germany and France, providing nearly €4.5 billion
or 15% of the total. The UK also makes a major contribution, estimated at €8.3
billion in 2015, to the EU’s overall budget, which provides the finance for the EU’s
Development Budget line.

The current context of development cooperation is one of transition and instability
that poses its own challenges. These include changes in the classification of aid
beneficiaries, the realignment of international development cooperation to the
new Sustainable Development Goals framework, ongoing international economic
and financial crises and austerity, and the political demand for greater value for
money from Overseas Development Aid (ODA).

Brexit will result in the loss of the UK’s contribution to the EU development budget
and, more pertinently to ACP countries, the EDF. Change is inevitable and since the
referendum, the UK has already suspended certain previously agreed payments
under the European Regional Development Funds (ERDF).

11. The EU’s Overseas Countries and Territories

26
Securing ACP Economic Interests

Will the changes though necessarily signal a loss to the ACP? That will depend
very much on the EU’s and the UK’s policy choices.

Regarding EU funding for the ACP post Brexit, the 11th EDF, which runs to 2020,
is already set so ACP countries should continue to receive the total committed
amount even if the UK leaves before then. Of course, the ACP Group will need to
be vigilant to ensure that disbursement is actually effected.

Given the two years for Article 50 negotiations, the earliest possible date for
Brexit will be in 201912 which will be just months before the end of the life of
the 11th EDF. The ACP’s major concern will be whether the remaining member
States will agree in future EDFs to make up for the substantial UK contributions
that will be lost. There is ongoing discussion as to whether in future the EDF should
be brought into the EU budget, which would then call for mandatory rather than
voluntary contributions. This would have its own implications depending on any
changes in the volumes of resources that would be available to the ACP and any
simultaneous adjustments to policy and management.

12. Since the UK Government has indicated that it will trigger Article 50 by March of 2017, the
country will not exit until negotiations end in 2019.

27
After brexit...

UK Development Policy

The other factor that will affect outcomes for the ACP would be UK development
policy. Will there be any change in overall policy in the run-up to or post-Brexit?
The UK will no longer contribute to the EU’s Development Fund and the EDF, but
will it maintain overall aid levels, redirecting and disbursing the funds via other
multilateral agencies or doing so bilaterally?

Firstly, it is likely that the UK will maintain its 0.7% of GNI aid target. It is a leading
player in global development cooperation and was the first G7 country to meet
the international 0.7% of GNI target. In 2014 it disbursed the second largest
amount of development assistance among OECD DAC countries.

DFID: The UK manages its development cooperation principally via the
Department for International Development (DFID). The continued commitment to
development was reaffirmed by the new UK Secretary of State for International
Development, Hon. Priti Pattel who stated that UK development aid will be
invested in the UK’s national interest, “while keeping the promises we’ve made to
the world’s poorest people. Successfully leaving the European Union will require
a more outward looking Britain than ever before, deepening our international
partnerships to secure our place in the world by supporting economic prosperity,
stability and security overseas.”

It of course will be important for the ACP to engage with the UK government
(HMG) to help it appreciate that its aid can also serve a more fundamental and
valuable purpose than securing the UK’s “place in the world”. Instead, it can
support economic growth, and sustainable development that will transform lives
and reduce poverty making the world more prosperous and secure.

28
Securing ACP Economic Interests

The UK particularly through DFID has a direct presence in all ACP regions and
in several other countries. It also contributes to and supports specific African
Union-led operations in some ACP countries such as Somalia, under the African
Peace Facility. The bulk of its aid though, 60%, is bilateral while the remainder
is channeled through multilateral agencies like the IDA and EU. Most of the
UK’s multilateral ODA was spent by DFID, which accounts for 86.2% of total
UK multilateral ODA. The remaining 13.8% of UK aid was provided by other
agencies like the Department of Energy and Climate Change and the Foreign and
Commonwealth Office.

Policy areas: Those policies that have hitherto been the hallmark of UK
development cooperation will doubtlessly continue to be promoted to the extent
that they have direct bearing on the UK’s vision of itself as a global player and
where the UK believes that it has greater expertise and can have the best impact.
These include poverty reduction, security, humanitarian aid, climate change and
disaster risk reduction, good governance, education, wealth creation, extractive
industries, migration and the SDGs.

Priority countries: One should expect continued differentiation in UK
development cooperation both in policy and practice. Its emphasis has been on
‘countries most in need’ or LDCs, or vulnerable countries, though just as with the
EU, it’s policies will also be very influenced by its own priorities and interests.

29
After brexit...

Table 1 sets out the 20 largest recipients of bilateral aid which account for 80.8%
of the total.

Table 1: Top 20 recipients of UK Bilateral ODA in 201413
£ £
 Rank Country Rank Country
million million
1 Ethiopia 322 11 Kenya 135
2 India 279 12 Syria 130
3 Pakistan 266 13 Somalia 124
4 Sierra Leone 238 14 Nepal 112
5 Nigeria 237 15 Zimbabwe 104
6 Bangladesh 208 16 Zambia 91
7 Afghanistan 198 17 Mozambique 84
8 South Sudan 167 18 West Bank & Gaza 83
Strip
9 Congo, Dem. 167 19 Uganda 82
Republic
10 Tanzania 149 20 Yemen 82
ACP countries are highlighted in red.

Intermediaries and Partners: The UK can be expected to continue to work
closely with trusted multilateral and regional partners, though it has a definite
preference for the bilateral approach. The principal agencies through which it
disburses funds are, the World Bank, UN agencies, African Union, AFDB, CDB
and RECs. Aid is also channeled through NGOs in several African countries;
sometimes as an extension of UK’s development cooperation arm and promoters
of UK shared values.

Table 2 shows the main multilateral organisations through which the UK disburses
development assistance.

13. Source: DFID Statistics on International Development, 2015

30
Securing ACP Economic Interests

Table 2: Top 20 Recipients of UK Core Funding to Multilateral Organisations in
201414
Rank Multilateral £ share Rank Multilateral £
organisation million of total organisation million
1 International 1,641 33.5% 11 International 66
Development Finance Facility for
Agency Immunisation
2 European 816 16.7% 12 United National 55
Commission – Development
Development Programme
Share of Budget
3 European 328 6.7% 13 Global 53
Commission – EDF Environment
Facility Trust Fund
4 Global Fund to Fight 285 5.8% 14 International Fund 51
AIDS, Tuberculosis for Agricultural
and Malaria Development
5 Strategic Climate 274 5.6% 15 Asian Development 50
Fund Fund
6 Global Alliance 269 5.5% 16 World Food 50
for Vaccines and Programme
Immunisation
7 African 207 4.2% 17 United National 48
Development Fund Children’s Fund
8 Clean Technology 112 2.3% 18 UNITAID 40
Fund
9 Private 74 1.5% 19 CGIAR Fund 38
Infrastructure
Development Group
10 Central Emergency 69 1.4% 20 United Nations 37
Response Fund Relief and Works
Agency for
Palestine Refugees
in the Near East

14. Ibid

31
After brexit...

Other consequences of Brexit
for ODA
If the UK economy shrinks and the value of sterling remains low or falls further,
0.7% of GNI will represent less money and therefore reduce the UK’s budget for
development. Also, a low exchange rate, will lessen the purchasing power of even
the same number of pounds sterling provided as aid.

The loss of the UK’s perspective and influence will undoubtedly affect the direction
of future EU development policy. This might not necessarily be in ways that the
ACP would have wished since the UK has often been an advocate and strong
supporter of various causes adopted by the ACP such as the attainment of 0.7%
GNI as ODA and climate change mitigation and adaptation support.

Proposals for the ACP
The ACP countries collectively need to ensure that, despite Brexit and the ongoing
changes, they continue to receive at least the same quantum of aid and that it is
disbursed in line with their development priorities. Specifically they should:

• Engage with the UK to ensure that European Development and EDF
contributions that would have gone to the ACP will now be diverted
principally to the ACP, its countries and regions, as opposed to donor
agencies.

• Seek confirmation from the EU that there will be no change in its
development cooperation commitments post-Brexit.

• Seek support from the UK and collaboration with it to advance shared
development cooperation goals in multilateral fora, where international
development policy is being debated and determined, such as the UN and
its agencies, OECD (DAC committee) , World Bank, G7 and G20 among
others.

32
Securing ACP Economic Interests

Brexit will result in the loss to the EDF of its third
largest contributor that is putting in nearly €4.5
billion to the 11th EDF and is a major contributor to
the EU Development Budget. ACP countries will need
to ensure that, they continue to receive at least the
same quantum of aid and that it is disbursed in line
with their development priorities.

33
Trade
Immediately on Brexit, the UK will be free, firstly, to apply whatever import duty
rates it wishes, as long as they do not exceed those that currently exist, and
secondly to replace the EU wide trade regime that it operates with one of its own.
It will also have an independent voice and vote in the WTO and be free to directly
negotiate trade agreements. Its operations would of course have to conform with
WTO rules and norms including MFN principles.

In order to understand what this might mean for the ACP and what would be its
optimal strategy, it is essential to appreciate the regulatory basis on which ACP
countries currently trade with the UK and its importance to them as well as the
possible alternative post-Brexit arrangements and the considerations that will
underlie the negotiations.

The EU framework for Trade relations
between the UK and the ACP
Much of ACP exports to the UK is enabled by three preferential arrangements,
the Economic Partnership Agreements (EPAs), the standard Generalised System
of Preferences (GSP) and the GSP based Everything But Arms (EBA) initiative.
These have helped keep many ACP exports viable and competitive because high
tariffs are maintained on imports which ACP exporters do not have to pay. These
products include sugar, beef, bananas, tobacco, certain vegetables and other raw
and processed agricultural products and fish and fisheries products. Many of the
tariffs and non-tariff measures which provide ACP exporters with preferences are
intimately linked to the EU’s common agricultural policy. This makes the future
trajectory of the UK’s agricultural policy and agricultural trade policy a matter of
considerable importance to the ACP.

34
Securing ACP Economic Interests

Everything But Arms (EBA)

• 4
0 ACP countries can export to the EU under the EBA, which is a non-
reciprocal trade arrangement that grants full duty and quota-free access
to the EU market, for all products except arms and ammunitions. (It should
be noted that half of these LDCs are also participants in EPA processes
which have established or will establish reciprocal preferential trade
arrangements with the EU).

Economic Partnership Agreements (EPAs)

• The 49 ACP countries (including 20 LDCs) that have concluded (or are
in negotiations to conclude) WTO compatible economic partnership
agreements, with trade preferences and duty and quota-free access for
their exports to the EU, (except for South Africa where TRQs15 apply
across a range of products), and for the EU tariff elimination commitments
from the ACP partners. The status of EPAs with ACP partners is presented
in Annex 3

Generalised System of Preferences (GSP)

• The remaining ACP countries currently export or will shortly export
under GSP tariffs, including most non-LDC Pacific island ACP members
(which have marginal exports to the EU); Congo Brazzaville, Gabon and
potentially Nigeria if it does not sign and ratify the West African EPA. This
extends what the European Commission describes as “generous tariff
reductions” to beneficiary developing countries, involving the partial or
entire removal of tariffs on two thirds of all product categories. The third of
product categories not covered by the EU GSP scheme, however, includes
some important ACP export products such as sugar.

15. Tariff Rate Quotas.

35
After brexit...

Importance to the UK of exports
to ACP countries
The UK has considerable investment in many of these countries and exports
to them a considerable volume of goods and a range of financial, consultancy,
transport, insurance, medical and other services. The total value of the UK’s trade
in goods and services with the ACP group is only exceeded by that with the EU, the
US, China and Switzerland. The UK’s extensive economic commercial relationship
with ACP countries makes a major, though not sufficiently acknowledged
contribution to its own economy.

Figure 4 shows the value and destination of UK exports and Figure 5 UK exports
to partners.

Figure 4: Principal destination of UK exports 2010-1516

When services are added the ACP still retains its overall ranking.

16. Source: International Monetary Fund, 2016

36
Securing ACP Economic Interests

Figure 5: UK Export to Partners (2014)17

Whilst the volume of UK exports to most individual
ACP countries, might not be large, when viewed
collectively they are very significant with considerable
potential for further expansion. This has implications
for negotiations and the negotiation strategy to
be adopted by the ACP, since the full group will
be a stronger and more credible partner than any
individual member state or region. UK exporters
will undoubtedly have an interest in preserving and
expanding preferential access to what for them have
been lucrative markets.

17. Ibid

37
After brexit...

Importance to the ACP of exports
to the UK
The UK is the fifth largest economy in the world and this fact, combined with its
historical commercial links with many ACP countries and the various preferential
trading arrangements, has resulted in substantial and longstanding exports by
ACP countries to the UK.

In 2015 UK imports from ACP countries were worth US$12,295 million. Figure
6 shows the principal exports and the trends of the last three years.

Figure 6: ACP Export to the UK18

It will help in analysing the relative importance among ACP countries of their
exports to the UK market as a share of their trade with the EU, to classify them
by country as well as by sector, according to their dependence on the UK market.

18. Source: International Trade Centre, 2016

38
Securing ACP Economic Interests

The following classification of dependence at country and/or product level can
usefully be applied:

• exceptionally high dependence countries (above 55%
dependency on the UK market in their exports to the EU);

• high dependence countries (between a 30% and 55% dependency
on the UK market in their exports to the EU);

• an above average dependence countries (between a 15% and
30% dependency on the UK market in their exports to the EU);

• l ow dependence countries (below 15% dependency on the UK
market in their exports to the EU).

Using this first level classification we find 16 out of 49 EPA signatories have a
higher than average dependence on the UK market in terms of their exports to
the EU. The most exposed ACP countries being: St Lucia, Belize, Fiji, Seychelles,
Guyana, Jamaica, Gambia, Dominica, Mauritius, Kenya, South Africa and the
Dominican Republic. The country breakdown according to EPA region is at
Annex 1.

It should be noted that, with the exception of the Dominican Republic, all of these
ACP countries are members of the Commonwealth.

However, the key issue is less the total share of the UK in ACP exports to the
EU, than the importance of the UK market for ACP exports where high tariffs are
still applied and/or where non-tariff measures are important to market access.
For example, in the agro-food sector, the EU often maintains high levels of tariff
protection and hence duty and quota-free access granted is most significant.

Even where an ACP country may have a low dependence on the UK market in its
overall exports to the EU, there may be sectors with a high dependence or even
exceptionally high dependence on the UK market.

39
After brexit...

To properly and fully understand the ACP export data, it would be helpful to
disaggregate the figures since there are some factors that should be taken into
account which include:

a. t he extent of misleading trade statistics in the total national exports to the
EU (e.g. resulting from the re-registering of boats);

b. t he considerable amount of exported products that attract zero MFN rates
and would therefore enter duty free anyway (for example around 50% of
total South African exports to the EU would enter duty free or at very low
rates of duty regardless of the trade regime applied).

Trade falling into these two categories then needs to be factored out in order to
fully assess the overall dependency on the UK market and appreciate the value of
the preferences.

The following analysis outlines the degree of overall dependence among EPA
members, existing or acceding.

ECOWAS

Of the 16 West African countries,19 only one has a disproportionate dependence
on the UK Market, namely Gambia, with 30% of exports to the EU going to the
UK. The second most dependent country is Ghana with 11.6% of exports to the
EU destined for the UK, followed by Nigeria (10.8%), Senegal 7.9%, Ivory Coast
7.2%. For most West African countries the UK receives less than 5% of their
exports to the EU.

19. Benin, Burkina Faso, Cape Verde, Ivory Coast, Gambia, Ghana, Guinea, Guinea-Bissau,
Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo, Mauritania

40
Securing ACP Economic Interests

EAC

Of the five EAC EPA member countries Kenya, Tanzania, Uganda, Burundi, Rwanda,
two have a disproportionate dependence on the UK Market; Kenya, with 27.8%
of exports to the EU going to the UK and Rwanda with 17%. The other three
members all have less than 6% of their total exports to the EU going to the UK.

Kenya is an example of an African country with an exceptionally high dependence
on the UK market in particular sectors. Its exports to the UK of fresh and chilled
leguminous vegetables (customs classification 0708) 51% as well as other
fresh or chilled vegetables (customs classification 0709) - 79% and cabbages,
cauliflower etc. (customs classification 0704) – 85% were valued at over €100
million in 2015.

CENTRAL AFRICA EPA SIGNATORIES

Cameroon, EPA signatory in Central Africa has a less than average dependence
on the UK market, with 8.6% of exports to the EU destined for the UK market

SADC EPA SIGNATORIES

Of the 6 SADC EPA signatories; South Africa, Botswana, Lesotho, Namibia,
Swaziland, Mozambique, only one has a disproportionate dependence on the
UK market, South Africa, with 26.7% of SA exports to the EU in 2015 going to
the UK market. Mozambique comes second with 7.2% of their exports to the EU
going to the UK market. However, for specific sectors the dependence is much
higher. Thus, we find that while only 5% of total Namibian exports to the EU go to
the UK market, 65.1% of its fresh and chilled beef exports to the EU go to the UK
market and 29.5% of its exports of table grapes.

Namibia therefore provides a useful illustration of an African country with a low
overall dependence on the UK market, but an exceptionally high dependence in
specific sectors.

41
After brexit...

Namibia’s situation also underlines the value of assessing the relative importance
of the UK market vis a vis the alternative markets in the rest of the EU. In 2015
Namibia exported 3,829 tonnes of quality differentiated beef to the UK market, in
a context where the estimated size of the EU27 market for quality differentiated
beef is around 900,000 tonnes. The affected Namibian beef exports to the UK
would thus be equivalent to only 0.4% of the consumption of quality differentiated
beef in the EU27.

EASTERN AND SOUTHERN AFRICA (ESA)
EPA SIGNATORIES

Of the four ESA signatories Mauritius, Madagascar, Seychelles, Zimbabwe, two
have a disproportionate dependence on the UK market in their exports to the EU,
Seychelles (34.3%) and Mauritius (26.9%).

PACIFIC EPA SIGNATORIES

The two Pacific ACP signatories Fiji and Papua New Guinea, have a higher than
average dependence on the UK market in their exports to the EU, with Fiji (44.9%)
having a very high dependence despite the recent success in diversifying away
from the UK market.

Papua New Guinea also has an above average dependence (19.2%) on the UK
market, with 33.9% of its palm oil exports going to the UK.

Given the processing of PNGs fully certified palm oil takes place in the UK for
the whole of the EU28 market for sustainably certified palm oil, the nature of the
future UK-EU27 trade relationship will be particularly important for PNG.

42
Securing ACP Economic Interests

CARIBBEAN EPA SIGNATORIES

Eight of the 14 EPA signatories have a disproportionate dependence on the UK
market for their exports to the EU. With Belize and St Lucia having an exceptionally
high dependency, Guyana and Jamaica a very high dependency and Dominica,
Dominican Republic, Barbados and Haiti having an above average dependence
on the UK market.

In the case of St Lucia 80% of exports to the EU are in agro-food products with a
high dependence on trade preferences. In the case of Belize the figure is 73% of
total exports to the EU which go to the UK and have a high dependence on tariff
preferences provided under trade agreements with the EU. These countries thus
have an exceptionally high dependence on the UK market in terms of their overall
export trade with the EU

In other Caribbean countries, an exceptionally high dependence on the UK
market exists in particular sectors. For example, Guyana and Jamaica have a
very high dependence on the UK market for their sugar exports (100% and 84%
respectively), while St Lucia’s entire banana exports to the EU go to the UK market.
This suggests some serious adjustment challenges could be faced, depending on
the nature of the post-Brexit agricultural and agricultural trade policy pursued by
the UK.

43
After brexit...

Understanding ACP Trade
The data shows that for all the ACP regions, exports to the UK are substantial.
Much of that trade is enabled by preferential arrangements such as EPA, EBA
and GSP, which have helped keep ACP exports viable and competitive because
high tariffs are maintained on imports which the ACP products do not have to
pay. These products include sugar, beef, bananas, tobacco, certain vegetables
and other raw and processed agricultural products and fish and fisheries products.

It is argued20 that as the UK leaves the EU, third party countries can benefit
through better trade. The UK must implement trade reform in a manner that does
not undermine its commitments under the SDGs. Goal 17.11 states: “Significantly
increase the exports of developing countries, in particular with a view to doubling
the least developed countries’ share of global exports by 2020”. The ACP
countries need to urge the UK government to ensure this is not at the expense of
their long-standing trade interests.

Exports to the UK are substantial for all ACP regions
and for many ACP countries. This trade totals
US$12.3 billion. In many cases, it is governed by
preferential trading arrangements, EPAs, the GSP and
EBA, which help keep exports viable and competitive
where high tariffs are maintained on imports, which
the ACP do not have to pay. The future value of ACP
trade preferences will be strongly influenced by the
future trajectory of the UK’s agricultural trade policy
post-Brexit.

20. Anderson, M., Juden, M., Rogerson, A. (2016). After Brexit: New Opportunities for Global
Good in the National Interest. CGD Policy Paper 089.

44
Securing ACP Economic Interests

For Brexit not to damage ACP’s exports, preferential
margins must be preserved. This will require
the retention of the duty and quota free access
arrangements, as well as of the high import duties
from which ACP countries are exempted. Both are
required since, even if ACP exports continue to be
granted duty and quota-free access, reducing the
MFN rates could fundamentally undermine ACP
competitiveness on the UK market, in the particular
products of greatest export interest. Attention also
needs to be paid to other commercially significant
factors, including competitiveness, adaptability,
and market positioning strategies of ACP exporters.

ACP country markets are very important to UK
exporters, who exported a total of US$8.3 billion to
the Group in 2015, 40% of these exports took place
under preferential trade agreements established
through the EU, which will fall away for UK exporters
post Brexit.

45
Possible different UK-EU
trade relationships post
Brexit
Implications for ACP countries
As it leaves the EU, the UK will negotiate its future relationship with the other
Member States, the EU27. The nature of that eventual relationship will affect the
outcomes for the ACP countries’ and their future trade situation.

The following analyses cover various options for UK-EU trade relations and what
these mean for ACP countries, not only in economic terms, but also in terms of
the types of issues ACP countries will need to focus on in their representations to
the UK (and to some extent the EU).

UK-EU CUSTOMS UNION

One option is that the UK remains within the EU/Turkey customs union. Under
this arrangement there is unrestricted circulation of goods of whatever origin
that would be able to freely transit between the UK and the EU and vice versa.
Politically, at this stage this option seems unlikely.

The UK is a net importer of goods from the EU (£8bn deficit), but a net exporter of
services (£20bn surplus), so it is in the UK’s interests not to conclude a customs
union agreement without an accompanying services agreement. However,
the closer the trade arrangements with the EU resemble the existing situation,
the more intransigent the remaining EU Member States are likely to be in their
demands for the UK to continue permitting free movement of persons, to which
the UK is also unlikely to agree.

46
Securing ACP Economic Interests

Placing aside that this model most probably won’t be realised, one can predict
what would be the consequences for ACP states of the UK remaining part of a
customs union with the EU, based on Turkey’s experience as a non-EU Member
State in the EU customs union. Article 16 of the EU-Turkey Association Council
Decision No 1/95, which established the customs union, states that:

“With a view to harmonising its commercial policy with that of the EC, Turkey shall
align itself progressively with the preferential customs regime of the EC within five
years as from the date of entry into force of this decision. This alignment will concern
both autonomous regimes and preferential agreements with third countries.”

Turkey has fully harmonised its own GSP program with the EU’s GSP program,
including the EU’s rules of origin.21 The UK, which already is party to the
preferential customs regime and all the agreements, would be likely to enter into
an equivalent undertaking. Indeed this is a condition of free circulation of imports
within the customs union.22 This means that the UK will aim to continue its rights
and obligations under any FTAs, including the EPAs, to which it is currently a party
as an EU Member State,23 and that it will have the EU’s support in this endeavor.

There seems little reason for a third country to object to any such continuation,
and, practically speaking, all that would be required would be a formal agreement
noting the UK’s change of status to the EPA as a non-EU Member State. As for
preferential trade with ACP states, the same conclusion can be drawn.

21. Handbook of Turkey’s GSP Scheme, http://english.gtb.gov.tr/data/56deda511a79f54
9fc2a1dd4/HANDBOOK%20of%20Turkey%20s%20GSP%20Scheme.docx
22. Indeed, the exception proves the rule. In fact, Turkey has not managed to conclude FTAs with a
number of third countries with which the EU has FTAs, and it has no means of preventing products
imported to the EU under those FTAs from being deflected into Turkey in circumvention of Turkey’s
still extant customs tariff for such countries.
23. For example, Article 233 (‘Definition of the Parties’) of the Cariforum-EU EPA defines the ‘EC Party’
as ‘the European Community or its Member States or the European Community and its Member
States, within their respective areas of competence as derived from the Treaty establishing the
European Community.’ As a result, when the UK leaves the EU, it will no longer be included in this
definition, and must be taken to be excluded from the EPA.

47
After brexit...

UK-EU FTA

The EU has concluded numerous FTAs over the years, the most comprehensive,
in terms of coverage, being the Deep and Comprehensive Free Trade Agreements
(DCFTAs) with Ukraine, Georgia and Moldova. Services were excluded from the
EU-Switzerland agreements, and agriculture from the EEA Agreement.24 A key
difference between FTAs and a customs union is that FTAs have rules of origin used
to determine when products are sufficiently ‘worked’ to be considered originating
products that can benefit under the FTA. Rules of origin are unnecessary for
customs unions, insofar as they adopt the alternative model of ‘free circulation’.

If the UK and the EU enter into a similarly comprehensive agreement, it can be
envisaged that this agreement will adopt the rules of origin set out in the Pan-
Euro-Mediterranean Convention on preferential rules of origin (PEM).25 The
application of the rules of origin in this Convention to UK and EU products using
ACP inputs is deserving of further study.

Other internal aspects of such an FTA, relevant to ACP, exports can be negotiated
between the UK and the EU, but ACP countries need to ensure that this is actually
done. For example, it would be desirable to ensure that shipments to the UK
continue to be counted for purposes of determining the size of shipments subject to
SPS inspections. Beyond this, the main feature of an FTA, as opposed to a customs
union, is that its parties can operate their own tariff regimes, and conclude their own
free trade agreements with third parties. One need not be unduly concerned, from a
regulatory or duty standpoint, about products that are landed, e.g., in Rotterdam or
Felixstowe, and then exported to the UK or the EU respectively. Goods in transit are
not subject to duties in the country of first landing. Since most ACP exports have free
entry into the EU there will not be any duty payable. If on the other hand, they are
shipped to the UK after first landing in Europe, there would only be duty if the ACP
does not continue to enjoy duty free treatment in the UK.

24. The Agreement on the European Economic Area, entered into force on 1 January 1994,
and brings together into Single Market, the EU Member States, Iceland, Liechtenstein and
Norway
25. Entered into force 26 February 2013, replacing earlier similar arrangements.

48
Securing ACP Economic Interests

Nonetheless, there will be a certain degree of additional time and administrative
costs associated with transit between the UK and the EU. This increased cost
could well be significant where the ACP products are only marginally competitive.

If the UK and the EU only manage to negotiate a looser type of FTA, such as
CETA26 or the EU-Korea agreement, matters become more complex for ACP
countries. This is for four main reasons. First, the rules of origin adopted under
such an agreement will be sui generis, and are therefore much less predictable.
Second, it is more likely that the FTA will not abolish duties on all trade, with
implications for any ACP products used in the production of affected UK or EU
products (albeit duty drawbacks can be negotiated). Third, the more that the UK
regulatory regime can diverge from the EU’s, the more difficult it will be to ensure
that ACP trade to the UK and to the EU respectively can be bundled, as at present.
This has implications, inter alia, for SPS sampling, as well as administrative costs.
Fourth, the UK will not only cease to be a party to the EU-ACP EPAs, but it will be
highly unlikely that the EU and the UK would be willing to reinstate the UK as a
non-EU Member State EPA party.

THE WTO OPTION

Given the scope and complexity of the negotiations it is quite conceivable that
the UK and the EU fail to agree on a customs union agreement or FTA prior to
the expiry of the two-year negotiating period. The result, at least in the immediate
term, would be that they must treat each other as any other third country. That
means that in the immediate term the EU will impose its MFN tariff on UK products,
and the UK will impose, quite likely identical, MFN tariff on EU products.

For ACP countries, this has several implications. First, as mentioned, this could
affect trade in processed UK/EU products using ACP inputs, and therefore the
demands for those inputs themselves. Second, the reduction in competition in
each other’s markets could lead to higher prices, which could be to the advantage
of ACP countries. Probably most fundamentally, though, such a scenario would

26. EU-Canada Comprehensive Economic and Trade Agreement (CETA)

49
After brexit...

put intense pressure on the UK government to negotiate alternative preferential
market access with third countries, the results of which could have significant
implications for ACP exports, both in terms of preference erosion and of increased
competition in the UK market. ACP countries should remain alert to these risks.

A London and Brussels based advisory firm, Global Counsel that helps companies
and investors across a wide range of sectors anticipate the ways in which politics,
regulation and public policymaking create both risk and opportunity – and to
develop and implement strategies to meet these challenges. It has put out a
summary of Brexit models and provides its summarised assessment of each of
the possible scenarios (Figure 7).

Figure 7: Brexit Models27

27. Global Counsel. (2015). Brexit: the Impact on the UK and the EU. Retrieved from: https://
www.global-counsel.co.uk/sites/default/files/special-reports/downloads/Global%20
Counsel_Impact_of_Brexit.pdf

50
Securing ACP Economic Interests

There are different possible trading relationships
that the UK can have with the EU after Brexit, the
only one that would be likely to permit the automatic
continuation of the current trading arrangements
with the ACP would be a Customs Union. It is,
however, unlikely that this will be the outcome. The
other more likely post-Brexit relations will see the UK
devising its own new policy and the ACP will require
new trading arrangements with it.

51
After brexit...

COMPENSATION FROM THE EU FOR THE LOSS OF THE UK FROM THE
EPA?

Since Brexit will reduce the economic size of the EU by 17%, two main concerns
arise following the UK ceasing to be a party to the ACP-EU EPAs. First, the ACP
EPA countries will lose the valuable preferential access to this major market.
Second, as a result of losing the range of benefits including market access to
the UK, the balance of concessions negotiated with the EU-28 will change
dramatically. In essence, the concessions negotiated by the ACP side will in the
changed circumstances turn out to have been made in exchange for benefits that
are much reduced in value from what was initially expected from the EU and would
be realised post-Brexit.

There could be a case for highlighting the reduced value of current EPA trade
preferences for a range of ACP countries resulting from the departure of the UK
from the EU, and using this to argue for:

a. financial assistance to programmes of adjustment support to assist
individual ACP sectors make market adjustments consequent on the loss
of EPA preferential access to the UK market;

b. more flexible and responsible implementation of EPA commitments
(including those related to the removal of non-tariff barriers to trade and
those constraining the use of non-tariff trade policy tools), in the light of
the need for production and trade adjustments in the ACP countries worst
affected by the UK’s departure from the EU and the lapsing of existing
preferential market access.

Highlighting that the ACP’s EPA’s expectations will be curtailed, might be cited in
encouraging the EU27 to make the issue of the UK’s respect for inherited trade
obligations towards ACP countries an integral part of the Article 50 discussions or
the negotiations on future EU27-UK trade arrangements (which is likely to include
some trade concerns related to trade with third parties, given the expected EU
interest in dividing the EU28 WTO TRQs with the UK).

52
Securing ACP Economic Interests

Frustration of the ACP countries’ expectations of the EPA can constitute the basis
for denunciation of the agreement, or plausible threat to do so, in accordance with
its own terms, or termination on the basis that the circumstances in which the
agreement was concluded have changed. Article 62 of the Vienna Convention on
the Law of Treaties states relevantly, as follows:

Article 62

A fundamental change of circumstances which has occurred with regard
to those existing at the time of the conclusion of a treaty, and which was
not foreseen by the parties, [and] (a) the existence of those circumstances
constituted an essential basis of the consent of the parties to be bound
by the treaty; and (b) the effect of the change is radically to transform the
extent of obligations still to be performed under the treaty

It would be for the ACP to decide how best they might use this lever in negotiations
with the EU.

Brexit will result in the UK ceasing to be a party to
the EPAs depriving ACP EPA countries of the valuable
preferential access to this important market. This
frustration of the ACP countries’ expectations and
the changed circumstances can constitute the basis
for denunciation termination of the EPA agreement
or plausible threat to do so.

53
What might happen to ACP
Trade
Upon Brexit, the UK can have its own tariff schedules, but if the rates were to
be higher than those that it currently applies, it would need to negotiate them
in the WTO. If the changes are significant and its trading partners consider that
their exports might be harmed, this would invariably be a lengthy and exceedingly
difficult task.

EU tariffs were largely designed to protect EU-wide production and therefore the
rates are necessarily overall more protectionist than required for the UK. Hence
there have been calls from certain UK business interests and politicians to reduce
MFN tariffs. Also the Government has declared its desire to champion free trade
post-Brexit.

Eventually of course it is conceivable that the UK could seek to negotiate new
schedules in the WTO, but this could only begin after it has exited the EU. The
likelihood therefore is that MFN tariffs are unlikely to be increased immediately
upon Brexit though the UK can legally and unilaterally reduce rates.

The ACP would wish the preservation of higher tariffs on third country imports on
products of concern to them. The UK, post Brexit will pursue its own independent
trade and agricultural policy which could lead to the dismantling of those MFN
tariffs particularly where the UK has no production interest.

ACP agro-food exports tend to be among the products with the highest MFN
import duties, and consequently where the ACP’s margins of tariff preferences are
highest. Therefore, if the tariffs were to be eliminated or substantially reduced on
products of export interest to ACP countries, preference erosion would be rapid
and extensive even if their exports continue to be duty and quota free.

54
Securing ACP Economic Interests

For Brexit not to damage the ACP’s exports by undermining their competitiveness
on the UK market, preferential margins must be preserved. This will require the
retention of high import duties from which ACP countries are exempted.

Since the UK will be negotiating a range of new trade agreements, immediate
liberalisation of tariffs might not happen right after Brexit. Unilaterally discarding
some of its principal and most valuable bargaining chips, would considerably
weaken the UK’s hand in future trade negotiations. It seems likely therefore that
the UK will continue, at least for a time, with most of the EU’s common external
tariffs, even if it reduces the rates over time.

It could therefore be that existing preferences would continue to have some
value, at least for a few years. This would particularly be the case if the principle
of inherited trade obligations were applied only to countries with long standing
preferences and not under the more recently concluded EU FTAs.

Given the importance of tariffs on products of interest to ACP countries, they will
need to be alert to the prospect of preference erosion and represent their interests
to the UK before any reductions are decided upon, whether in MFN schedules or
in FTAs with third countries.

55
After brexit...

Renewing preferential arrangements

EBA

Since, according to WTO rules, the duty and quota-free access, EBA, which is
provided to LDCs as a unilateral measure, the UK would be able on its own to
grant the preferences. The UK has long been a champion of this arrangement so
re-establishing or avoiding an interruption of this trading preference should not be
a problem, since there are no WTO complications.

However, agreement with the EU27 may be needed to allow the UK to set in place
a regulation granting LDCs free access to the UK market from day one of Brexit,
in advance of their formal departure from the EU.

There is, however, an important additional dimension: namely establishing the
case for the UK undertaking such a course of action. It needs to be seen as the
UK accepting its ‘inherited’ trade obligations towards developing countries. This
is important since the notion of ‘inherited’ trade obligations could then be applied
to the broader ACP Group which has an established relationship of preferential
access to the UK market which dates back to 1975 (although the extent of this
preferential access has only been extended over time and only attained the status
of full DFQF access in 2008 – the same time as this principle was applied fully
to LDCs).

With 40 of its members being LDCs, the future application of the EBA’s duty and
quota-free treatment of imports from LDCs would be very important to the ACP.
Given the UK’s longstanding political support for LDCs and its role in getting the
measure adopted by the EU, it would seem safe to assume that the arrangement
would continue post-Brexit.

56
Securing ACP Economic Interests

The ACP should urge the UK government to make
an unequivocal commitment that from the date of
departure of the UK from the European Union, it will
immediately extend the ‘inherited’ duty and quota-free
access which least developed countries (LDCs) have
enjoyed to its markets since 2001.

GSP

The current EU GSP scheme is a three-tiered affair consisting of:

• the standard GSP arrangement, which offers substantial tariff reductions to
developing countries. Practically, this means partial or the entire removal
of tariffs on two thirds of all product categories;

• the “GSP+” scheme which provides enhanced preferences (meaning full
removal of tariffs) on essentially the same product categories as those
covered by the regular arrangement described above. Concessions
are granted to countries which ratify and implement core international
conventions relating to human and labour rights, environment and good
governance;

• the already discussed EBA arrangement for least developed countries
(LDCs), which grants duty and quota-free access to all products, except for
arms and ammunitions;

The EBA regime covers all least developed countries. Of the 16 GSP+ beneficiaries
none are ACP countries28.

28. The current GSP+ beneficiaries are: Armenia, Azerbaijan, Bolivia, Colombia, Costa Rica,
Ecuador, El Salvador, Georgia, Guatemala, Honduras, Mongolia, Nicaragua, Peru, Paraguay
and Panama, Sri Lanka (currently suspended).

57
After brexit...

The standard GSP provides for zero tariffs or tariff reductions (typically 3.5
percentage points on ad valorem duties) on a large number of both non-sensitive
and sensitive imports.

An Autonomous UK GSP Scheme

The UK could formulate its own autonomous GSP scheme, with a broader country
coverage (i.e. including EPA beneficiaries since the EPAs would no longer apply)
and deeper levels of tariff preferences. This could be unilaterally established and
would require no negotiation, though needing to comply with WTO requirements.
However, such a scheme would take some time to design and set in place.

If, however, it included duty free access (and improved rules of origin) for an
extensive range of products, such a new scheme could possibly be subject
to challenge in the WTO by a Member that considered that its rights had been
infringed.

The GSP, is of interest to non-LDCs for exports that are not covered by an EPA or
an FTA. Since the principle of support for developing countries is firmly entrenched
in HMG policy, one can safely assume that the UK will continue to operate some
such arrangement for developing countries.

Nevertheless, a UK scheme might be different than the currently applied EU
designed programmes. Whilst the schemes are informed by certain objective
economic criteria, they are also influenced by the policies, interests and the
domestic concerns of the developed country providing the preferences.

It can be presumed that for various products the UK’s domestic concerns would
be different from those of the EU. It might well switch political focus in favour
of some developing countries and categories that do not precisely reflect the
EU’s traditional focus. Secondly, the UK’s domestic economic interests are likely
to have implications for the design of its GSP scheme. For both reasons, ACP
countries have an interest in making representations to the UK government as
soon as possible on these points.

58
Securing ACP Economic Interests

The ACP should urge HMG to ensure that ACP trade under GSP is not interrupted or
disadvantaged by Brexit and that ACP interests are preserved. It is recommended
that the UK puts in place the ‘inherited’ EU GSP scheme pending possible further
review and improvement.

UK-ACP FTAS

It is first of all necessary to recall that upon Brexit, the UK will immediately cease
to be a party to the EPAs, which the country had concluded on the basis that it
was an EU Member State. This means that trade preferences between the UK and
ACP EPA parties will need to be restored in some replacement framework. For
the purposes of WTO consistency, that will have to be in the form of a new FTA.29

How can the current preferential trading arrangements, which benefit non-LDC
(and indeed many LDC) ACP countries, be preserved?

The main area where the ACP could address this issue of erosion of the value of
trade preferences would be through the conclusion of new trade agreements, which
included provisions related to the extension of adjustment support where new
trade agreements lead to the erosion of pre-existing ACP preferences. This could
be included as an integral part of any “EPA+” arrangements negotiated with the
UK, which also restores UK exporters to parity of trade treatment with their EU27
competitors.

29. A WTO-illegal unilateral discriminatory arrangement, such as Regulation 1528/2007, might
well be envisaged in the short term. Experience with that regulation shows, WTO Members
do not necessarily have an appetite for challenging every single measure deemed to be
illegal. On the other hand, experience also shows that other WTO Members might be keen to
challenge illegal measures when these are of commercial interest to them. In addition, the
UK’s legal culture is such that it is less prepared than some other WTO Members to violate
its international obligations in such a blatant manner. The result is that the UK might not be
minded to offer unilateral discriminatory preferences to EPA parties even as a short term
solution.

59
After brexit...

OPTION 1: UK ASSOCIATION WITH THE EU EPAS

One option which has been advanced is that ACP regional groupings should explore
with the EU the possibility of adding the UK as a third party to their EPAs. This it is
held would require the consent of the EU27 as well as appropriate amendments to
the final provisions of the EPA:

While this is one option which could be explored, this is very much a second-best
option since

a. it does not allow ACP countries to explore any EPA+ gains from Brexit;

b. it leaves ACP EPA arrangements vulnerable to mishandling and conflicts
within the EU/UK Article 50 and parallel/subsequent bilateral UK-EU trade
negotiations.

A course of action which would de facto subordinate ACP interests to what
happens in the difficult process of UK-EU negotiations might not be the ideal way
forward.

OPTION 2: NEW UK FTA ARRANGEMENT

The UK may opt for the negotiation of new free trade area agreements with
individual countries, existing configurations or new configurations of ACP partners.
However, it needs to be recognised that this is normally a very protracted process.
If the existing EU-ACP EPAs are accepted as a starting point, some of which took
over ten years to negotiate, the additional time and effort required for these
further negotiations would be considerably reduced.

60
Securing ACP Economic Interests

Necessity for avoiding any disruption
or hiatus in trade flows
Given the numerous other trade negotiations that the UK will be engaged in upon
Brexit, it is unlikely that new FTAs with the ACP could be rapidly negotiated and
implemented and the UK will not in any event be able to formally commence trade
negotiations until after Brexit has taken effect. Therefore, whilst on Brexit day the
preferential arrangements would cease to apply, there would not have been the
opportunity to negotiate and implement a substitute arrangement. Without the
preferential margin, certain ACP products could become too expensive and orders
would be cancelled. Trade would come to a halt with disastrous consequences
particularly for the more marginal suppliers that might have no alternative markets
and whose production might not be able to survive protracted interruption.

A two-stage approach is therefore proposed that
will avoid disrupting ACP exports to the UK, pending
the conclusion and implementation of the new
arrangements. It is recommended that the ACP
seeks from the UK Government that DFQF with EPA
countries continues on a transitional basis, pending
the negotiation and introduction of WTO compatible
arrangements.

61
After brexit...

Requirements to safeguard ACP Trade
and economic interests
Clarity and precision are essential regarding the arrangements necessary if
ACP countries are not to be harmed by Brexit and can take advantage of its
opportunities.

Firstly, with regard to development assistance the ACP would wish to ensure that
the quantum of funding received is at least as much as would have been disbursed
in the absence of Brexit and that it is in line with ACP countries’ priorities. For this
purpose, it will be necessary that:

1. the EU does not change, because of Brexit, its development cooperation
commitments to the ACP, particularly those under the EDF.

2. UK contributions intended for the ACP which were transmitted via the
European Development budget and EDF will now be diverted principally
to the ACP, its countries and regions, as opposed to going via other donor
agencies.

3. The UK supports ACP interests in multilateral fora where policies relevant
to development cooperation are debated and determined. These include
the UN and its agencies, OECD (DAC committee, as well as other
configurations), World Bank, G7 etc.

With respect to trade, ACP countries need to safeguard their long-term trading
position and avoid any hiatus to their export trade with the UK, which would be
very damaging.

It will be necessary that duty and quota-free and other favourable terms of access
to the UK market, currently provided under the EBA, EPA and GSP continue and
that preferential margins which help ensure the viability of ACP exports to the UK
are preserved.

62
Securing ACP Economic Interests

Specifically, the ACP needs an early political commitment from HMG that it will,
upon Brexit, continue without interruption to:

a. offer EBA and the favourable GSP concessions to eligible ACP countries

b. provide, on a transitional unilateral basis, DFQF for countries currently
exporting to the UK under EPAs. (This will be a transitional arrangement to
permit time for negotiating and concluding WTO compatible FTAs, which
might be based on the existing EPAs with the EU).

c. apply tariffs at existing rates, on third country imports of products of
export interest to the ACP.

63
After brexit...

Recommendations and a Plan of Action
Though essential for securing its interests, the ACP’s requirements are
considerable and the group has not hitherto been a partner to the UK even if the
UK has excellent relations with several ACP states, the majority of which belong
to the Commonwealth. Working together, though, places the ACP in a stronger
bargaining position and permits the interests of the non-Commonwealth countries
to be more fully taken into consideration. This is particularly significant given the
similarity in the economic profiles of the members of the ACP Group whether or
not they belong to the Commonwealth, which contains developed and developing
countries, and some major economies.

If the ACP is to have an impact on UK decision making it will have to demonstrate
and convince the UK of its worth as a credible and valuable international partner. It
must show that its role and significance is more than just an economic cooperation
vehicle with the EU. If the UK perceives the ACP in this limited manner, essentially
it would be an irrelevance at a time that the UK is leaving the EU.

Given the UK’s international profile and considerable interests on a range of
issues including international development, poverty reduction, combating climate
change, security and combating terrorism, it doubtlessly would wish to engage
with a partner that is credible, active, is listened to and is respected in international
fora. To be successful, the ACP would first need effective coordinating capability
and to arrive at common positions on those international issues where joint action
would be feasible and in their interests.

A group of states as large as the ACP that is coherent and can unite to forcefully
pursue agreed international objectives will inevitably be influential and an
attractive political partner to other countries and groupings.

64
Securing ACP Economic Interests

If the ACP Group is recognised as a valuable and credible international political
partner and ally on various issues and campaigns of mutual interest it would also
have greater legitimacy and authority to engage with partners like the UK on
those matters that concern trade and development cooperation interests of its
members.

A prerequisite therefore of a successful Brexit strategy will be enhancing the
effectiveness and coherence of the ACP.

The following are the specific recommendations for the ACP:

1. Arrive at a common position and strategy to be pursued, aimed at
securing and advancing ACP interests post-Brexit. This should be used
as a background brief by governments for engaging with the UK and
instructing their representatives, especially in London.

2. Actively engage with and lobby HMG, not only in formal government to
government meetings but also in other interactions with parliamentarians
and officials.

3. Most ACP countries have good working relationships with the UK
Government therefore their Ambassadors and High Commissioners in
London need to be fully involved and provided with briefings and support.
This could be facilitated initially by a half day seminar at which the
Secretary General would brief and discuss with them the impact of Brexit
on the ACP, its strategy and the role that they can play. The Group will be
encouraged to continue regular meetings to plan and coordinate lobbying
of HMG.

65
After brexit...

4. The ACP Secretariat should encourage and support a London based
technical advisory group (TAG) serviced by officials of supportive
organisations and selected experts. This will provide ongoing technical
and strategic advice to the ACP and its campaign.

5. The ACP Group and Secretariat should actively engage with the media
and supportive organisations to help ensure favourable public attitudes to
safeguarding ACP interests, post-Brexit.

6. Pursue agreement on a Memorandum of Understanding between the
ACP Group and the UK covering among other things: the redirection and
securing of funds aimed for the ACP that had previously been channeled
via the EU; the promotion of the transfer of technology and sharing of
experiences; information exchange and policy dialogue.

66
Conclusion
Whilst Brexit poses serious threats to ACP economic interests, which should not
be underestimated or ignored, the new era does not have to be disastrous if the
group mobilises all available resources and engages with allies to vigorously and
coherently pursue their shared interests.

Given how high the stakes are for the ACP, it needs absolute conceptual clarity
on both the short term and medium term challenges. This is particularly the case
with respect to safeguarding preferential margins, which would be the foundation
of the ACP’s post-Brexit “demand” in trade.

The negotiations and engagement do not have to be one-sided. ACP countries as
a group are of considerable economic importance to the UK. It therefore would
be in the interests of the UK to safeguard and cultivate its substantial trade and
investment with those countries and ensure that it retains rather than loses parity
with the rest of the EU after Brexit.

It is vital that ACP moves as quickly as possible on its Brexit campaign. The
demands on the UK authorities are exceedingly great and it will steadily become
increasingly difficult to get the attention of relevant Ministers and officials. This
situation is likely to worsen after the launch of the Article 50 process. The
campaign for securing ACP interests needs to start as soon as a plan and strategy
have been agreed. Positions and policies are being discussed both within and
outside the UK government and the ACP needs to get to and convince policy
makers and those with influence, before positions are finalised.

Unlike many previous joint ACP campaigns, this one will be very much centered
in London and will be particularly political in character. The extensive bilateral
engagements that ACP countries have with UK ministers and other representatives
in their capitals and in London can be invaluable in supporting common positions.
In addition ACP High Commissioners and Ambassadors in London must be key
participants in the campaign. Pro-active engagement in the coming months will be
vital if the ACP is not to slip off the UK’s agenda of concerns.

67
After brexit...

Simultaneously, engagement with the EU is vital in stressing the lessened value
of the EPA for ACP exporters as a result of the loss of the important UK market.

Preparing for and organising to deal with Brexit will be a major test of the solidarity
and coherence of the ACP Group and its maturity and ability to successfully
address modern day challenges.

68
Annex 1
Table 3: West African Exports to the UK and the EU (€,000)
Country 2010 2011 2012 2013 2014 2015
Benin            
EU 31,318 68,394 34,714 37,221 45,923 45,982
UK 19 17,568 72 39 199 1,160
UK % EU           2.50%
Burkina Faso            
EU 97,499 62,509 64,555 46,896 113,740 54,486
UK 283 20 65 401 1,238 1,796
UK % EU           3.90%
Cape Verde            
EU 36,152 45,992 55,156 48,075 97,249 63,563
UK 56 153 160 242 56 127
UK % EU           0.20%
Ivory Coast            
EU 3,218,722 3,191,839 3,262,248 3,293,856 3,257,528 3,685,797
UK 206,855 105,467 213,394 153,300 166,130 264,582
UK % EU           7.20%
Gambia            
EU 17,990 20,554 15,553 9,080 17,977 17,187
UK 4,589 5,722 4,683 2,538 6,699 5,156
UK % EU           30%
Ghana            
EU 1,474,689 3,480,937 3,299,994 3,378,956 2,884,926 2,394,209
UK 274,071 326,946 265,079 330,250 315,862 277,005
UK % EU           11.60%
Guinea
EU 472,081 471,910 523,426 439,385 455,335 581,972
UK 2,513 3,476 4,027 1,921 2,395 1,177
UK % EU           0.20%
Guinea Bissau            
EU 5,669 4,201 5,922 1,476 3,347 2,041
UK 8 2 67 - - 3
UK % EU           0.10%

69
After brexit...

Country 2010 2011 2012 2013 2014 2015
Liberia            
EU 444,953 311,061 274,133 530,524 366,354 408,569
UK 5,977 7,881 3,918 3,920 1,041 1,473
UK % EU           0.40%
Mali            
EU 26,786 45,257 31,823 41,926 40,644 39,632
UK 577 370 282 328 839 992
UK % EU           2.50%
Mauritania            
EU 557,146 784,726 593,984 490,619 547,002 476,025
UK 288 2,994 417 2,735 36,782 6,361
UK % EU           1.30%
Niger            
EU 196,043 285,619 463,353 597,741 389,158 497,061
UK 148 39 46 262 282 225
UK % EU           0.05%
Nigeria            
EU 14,505,452 24,403,094 33,045,405 28,678,392 28,115,354 18,364,055
UK 939,814 2,605,758 4,670,738 3,646,846 3,053,985 1,975,292
UK % EU           10.80%
Senegal            
EU 295,334 411,988 339,546 341,425 400,974 420,481
UK 15,749 29,427 26,340 31,371 36,473 33,425
UK % EU           7.90%
Sierra Leone            
EU 158,907 171,188 220,346 171,797 223,135 231,029
UK 10,156 16,744 10,132 10,194 9,548 1,412
UK % EU           0.60%
Togo            
EU 220,546 320,804 191,372 150,034 85,482 71,180
UK 871 1,024 614 2,106 1,763 2,810
UK % EU           3.90%

70
Securing ACP Economic Interests

EAC

Table 4: EAC County Exposure to the UK Market in their exports to the EU
(€,000)
Country 2010 2011 2012 2013 2014 2015
Kenya            
EU 1,112,354 1,277,016 1,234,255 1,140,176 1,167,989 1,330,249
UK 391,740 422,823 389,647 354,784 317,722 369,983
UK % EU           27.80%
Tanzania            
EU 362,258 508,299 468,905 544,622 597,135 695,608
UK 26,106 28,487 30,361 28,365 42,950 39,187
UK % EU           5.60%
Uganda            
EU 389,396 453,208 412,641 430,019 452,698 485,125
UK 13,344 16,067 17,924 20,302 19,147 21,691
UK % EU           4.50%
Burundi            
EU 28,971 46,587 42,005 31,711 21,516 38,999
UK 57 293 131 515 443 1,322
UK % EU           3.40%
Rwanda            
EU 37,315 48,178 49,136 26,766 46,870 64,423
UK 5,464 3,030 4,337 2,932 4,300 10,977
UK % EU           17.00%

71
After brexit...

CENTRAL AFRICA EPA SIGNATORIES

Table 5: Central African EPA Participant’s exports to the UK and the EU (€,000)

Country 2010 2011 2012 2013 2014 2015
Cameroon            
EU 2,009,099 2,166,289 2,115,405 2,370,316 2,150,214 1,670,517
UK 121,075 59,187 159,106 112,860 184,960 142,886
UK % EU           8.60%

72
Securing ACP Economic Interests

SADC EPA SIGNATORIES

Table 6: SADC EPA members’ exposure to the UK Market in their exports to the
EU (€,000)

Country 2010 2011 2012 2013 2014 2015
South Africa            
EU 20,421,294 21,759,968 20,510,952 15,556,914 18,512,838 19,362,935
UK 7,003,520 7,010,559 7,486,681 3,323,871 5,570,671 5,164,612
UK % EU           26.70%
Namibia            
2010 2011 2012 2013 2014 2015
EU 1,159,048 1,445,703 1,330,226 941,293 963,179 1,033,817
UK 321,275 540,217 441,059 96,198 54,845 51,933
UK % EU           5.00%
Swaziland            
EU 57,033 167,349 180,231 230,186 150,756 138,672
UK 15,134 15,445 15,986 11,483 23,306 14,358
UK % EU           10.40%
Botswana            
EU 837,891 2,922,979 3,018,708 3,441,851 1,821,930 1,503,238
UK 656,613 2,772,959 2,792,043 2,828,447 29,294 28,285
UK % EU           1.90%
Lesotho            
EU 139,307 243,390 220,872 186,589 247,449 254,537
UK 1,585 1,150 1,757 576 434 699
UK % EU           0.30%
Mozambique            
EU 1,396,242 1,323,517 1,251,008 1,332,457 1,366,373 1,435,057
UK 82,316 88,021 69,568 103,728 96,808 102,914
UK % EU           7.20%

73
After brexit...

ESA EPA SIGNATORIES

Table 7: ESA EPA Group Members’ exports to the UK and the EU (€,000)
Country 2010 2011 2012 2013 2014 2015
Mauritius            
EU 884,886 930,499 1,049,880 1,086,291 959,639 904,552
UK 71,667 279,026 301,254 288,481 246,708 243,036
2010 2011 2012 2013 2014 2015
UK % EU           26.90%
Madagascar            
EU 481,500 549,098 583,090 737,967 840,356 936,337
UK 33,796 35,344 28,958 37,190 52,559 53,807
UK % EU           5.70%
Seychelles            
EU 71,667 279,026 301,254 288,481 246,708 243,036
UK 53,512 59,490 62,956 85,824 79,913 83,348
UK % EU           34.30%
Zimbabwe            
EU 299,400 446,024 417,489 387,621 510,294 400,430
UK 33,712 66,751 23,638 40,472 34,478 46,136
UK % EU           11.50%

74
Securing ACP Economic Interests

PACIFIC EPA SIGNATORIES

Table 8: Pacific EPA participants’ exports to the UK and to the EU (€,000)
Fiji (k) 2010 2011 2012 2013 2014 2015
EU 40,358 68,323 46,113 84,779 98,838 86,475
UK 5,256 63,986 40,946 59,047 75,072 38,819
UK % EU           44.90%
PNG (k)            
EU 619,422 901,205 986,024 753,665 794,235 733,726
UK 65,369 147,498 149,361 136,994 160,936 140,925
UK % EU       19.20%

75
After brexit...

CARIBBEAN EPA SIGNATORIES

Table 9: Caribbean EPA country exports to the EU/UK in 2015 (€)
Country UK EU %
St Lucia 7,759,682 9,969,361 77.80%
Belize 112,302,658 152,553,289 73.60%
Guyana 77,594,917 226,094,411 34.30%
Jamaica 73,366,337 222,632,735 33.00%
Dominica 1,057,639 3,679,888 28.80%
Dominican Republic 191,338,857 833,859,529 22.90%
Barbados 6,806,508 38,737,240 17.60%
Haiti (LDC) 5,800,941 33,524,594 17.30%
Trinidad & Tobago 156,776,264 1,243,259,272 12.60%
Grenada 637,588 5,141,909 12.40%
St Vincent & Grenadines 979,540 10,041,760 9.80%
St Kitts & Nevis 370,151 25,870,489 1.40%
Antigua & Barbuda 2,204,602 124,569,467 1.20%
Bahamas 6,507,574 756,166,914 0.90%

76
Annex 2
Visualising Data

Here we see UK exports to partner countries from 2010 to 2015.

Whilst less than the UK’s top five trading partners ( US, Germany, France,
Switzerland, and China) exports to ACP countries still exceed Australia, Brazil,
Canada, and India.

Figure 8: UK exports to partner countries from 2010 to 201530

30. Source: International Monetary Fund, 2016

77
After brexit...

The following is a breakdown of the ACP aggregate of the same data.

Figure 9: ACP Aggregate Breakdown

Here we see UK imports from partner countries, again the ACP precedes India,
Brazil and Australia.

Figure 10: Five Year Bar Chart – UK Imports31

31. Source: International Monetary Fund, 2016

78
Securing ACP Economic Interests

The following graph shows business investment and GDP Growth projections
for the UK. Investment drops and levels off with GDP growth post Brexit in this
projection.

Figure 11: Business Investment and GDP Growth32

32. Goodwin, A., & Beck, M. (2016). The UK Economic Outlook. Institute for Fiscal Studies.
Retrieved from: https://www.ifs.org.uk/uploads/gb/gb2016/gb2016ch2.pdf

79
Annex 3
Overview of economic partnership
agreements

Region Current Status Next Steps
West Africa Two West African countries, Côte d’Ivoire and Stepping
Ghana, initialled bilateral “stepping stone (or stone EPA with
“interim”) EPAs” with the EU at the end of 2007. Ghana: the
The stepping stone EPA with Côte d’Ivoire was agreement
signed on 26 November 2008 and ratified by the will enter into
National Assembly on 12 August 2016. It entered provisional
into provisional application on 3 September application after
2016. the consent of
The stepping stone EPA with Ghana has been the European
signed on 28 July 2016 and ratified on 3 August Parliament.
2016 by the Ghanaian Parliament. Regional EPA:
Negotiations of the regional EPA were closed by After signature
Chief Negotiators on 6 February 2014 in Brussels. by the Parties,
The text was initialed on 30 June 2014, and on the agreement
10 July 2014 ECOWAS Heads of State endorsed will be
the EPA for signature. The signature process is submitted for
currently ongoing. ratification
Central Africa Cameroon signed the EPA between the EU and Meeting of EPA
Central Africa as the only country in the region Committee set
on 15 January 2009. The European Parliament for Yaoundé in
gave its consent in June 2013. In July 2014 2016
the Parliament of Cameroon approved the
ratification of the Agreement and on 4 August
2014 the agreement entered into provisional
application.
The first EPA Committee between Cameroon
and the EU took place in May 2015. It discussed
relevant issues in the implementation of the
Agreement (Rules of procedure of the EPA
Committee, Rules of origin, liberalization
timetable, etc.).
Contacts are ongoing between the region and
the EU on accession to this EPA.

80
Securing ACP Economic Interests

Eastern and In 2009 Mauritius, Seychelles, Zimbabwe and Meeting
Southern Madagascar signed an Economic Partnership of the EPA
Africa (ESA) Agreement (EPA). The Agreement is provisionally Committee:
applied since 14 May 2012. The European The fifth
Parliament gave its consent on 17 January 2013. meeting will
The inaugural EPA Committee was held in take place
October 2012 in Brussels, and the latest, fourth, on 12 and 13
meeting took place in November 2014 in December
Zimbabwe. The Customs Cooperation Committee 2016.
and the Joint Development Committee also met
alongside the EPA Committee.
East African The negotiations for the regional EPA were The ratification
Community successfully concluded on 16 October 2014. process is
(EAC) On 1 September 2016, Kenya and Rwanda ongoing
signed the Economic Partnership Agreement with Kenya
between the East African Community and the and Rwanda
EU. All EU Member States and the EU have also having signed
signed the Agreement. and Uganda,
Tanzania
and Burundi
actively
considering
signature
in the next
months. The
EAC Summit on
8 September
2016 expressed
a willingness to
move ahead as
a region.
SOUTH On 15 July 2014, the EPA negotiations were The agreement
AFRICAN successfully concluded in South Africa. This applies
DEVELOPMENT ended ten years of negotiations and produced a provisionally
COMMUNITY comprehensive agreement with the whole SADC (pending
(SADC) EPA EPA Group including South Africa. ratification by
Group The agreement was signed by the EU and the all EU Member
SADC EPA group on 10 June 2016. States) as of 10
October 2014.

81
After brexit...

CARICOM The CARIFORUM – EU EPA was signed in October approved by
2008 and approved by the European Parliament the European
in March 2009. Parliament in
The EPA joint institutions have met regularly March 2009.
since 2010: The Joint CARIFORUM-EU Council The EPA joint
(ministers) held its third meeting also in institutions
Georgetown in July 2015. The Trade and have met
Development Committee (senior officials) held regularly since
its fifth meeting in Georgetown, Guyana in July 2010: The Joint
2015 · The Consultative Committee representing CARIFORUM-
civil society held its second meeting in Brussels EU Council
on 18th/19th April 2016 (ministers)
held its third
meeting also in
Georgetown in
July 2015.
Pacific Signed by the EU and Papua New Guinea (PNG) The fifth
on 30 July and by Fiji on 11 December 2009. meeting of
The EP gave its consent on 19 January 2011. The the Trade
Parliament of Papua New Guinea ratified the EPA Committee
on 25 May 2011. On 17 July 2014 Fiji decided under the EPA
to start provisionally applying the Agreement. will take place
The fourth meeting of the Trade Committee in Brussels in
established under the EPA took place in Brussels November
in June 2015. 2016.

82
Annex 4
Address by Baroness Kinnock
Opening Address by
Baroness Glenys Kinnock of Holyhead
At the Ramphal Institute Workshop
“After Brexit: Securing ACP Economic Interests”
Tuesday 9:30 a.m. the 8th November 2016
At the Policy Institute 1st floor of the Virginia Woolf Building
King’s College London

Chair of the Ramphal Institute, Patsy Robertson, who has welcomed us so warmly
to King’s College this morning; Mr Viwanou Assistant Secretary General of the
ACP who is joining us via Skype; Dear colleagues and friends -

I am very pleased that the Ramphal Institute, of which I am proud to be a Patron, is
supporting the discussion we are having this morning and is preparing a briefing
for the ACP.

After the UK joined the EEC in the early 70’s, Sir Shridath was a leading architect
of the arrangement that forged its new economic relationship with ACP countries
- which is the Lomé Convention.

Now that it is leaving, it seems fitting that the Institute that bears his name, and
seeks to continue his pioneering work in support of the international development,
should be active as well.

This time, however, not in the creation of an ambitious and new opportunity for
trade and development cooperation, but more modestly, to help the ACP group
protect and preserve its vital interests – and to ensure that it does not find itself
being an unwitting victim of Brexit.

83
After brexit...

Today I want to compliment and to thank the authors of the brief and for putting it
together in what has been a remarkably short time.

Like all of you, I only saw the notes last night so I have only been able to skim
through them.

I can, however, confirm that the right questions are indeed being asked, and in
addition the issues which need to be grappled with are being aired.

What will happen to ACP countries that have been exporting to the UK under EPA
–or one of the other EU arrangements?

What we really, need to know is that if Brexit reduces the benefits that EPAs
provide, where exactly does that leave the ACP?

This issue is not just important for the ACP, it is definitely critical for the United
Kingdom itself.

Even though the media focuses mainly on markets like China, India, the US,
Canada and of course the EU itself, the UK’s trade, investment and other economic
relations with the ACP countries are vital to the health and wellbeing of the UK
economy.

A couple of weeks ago, I tabled a written question to the Minister in the House of
Lords, who is responsible for international trade.

I asked whether HMG intends to maintain, or improve, Commonwealth trade
with and preferential access to, the UK market, particularly in relation to critical
commodities, such as bananas and sugar after the UK leaves the EU and if so, how
exactly will that be achieved?

Unfortunately, his answer, essentially said, that the British government is
reviewing its trade policy and is forging a new role for the UK in the world which
includes our 52 Commonwealth partners.

84
Securing ACP Economic Interests

That statement, as the UK prepares to leave the EU, left me, and others absolutely
none the wiser!

It is no secret that in Parliament many of us are most concerned at the lack, both
of transparency in the Government’s approach, and of clarity over its exit strategy.

You can certainly rest assured that I will be continuing to seek clarity and clear
answers from the government on its negotiations and on its preparations.

We need to be sure, not only that the UK’s own economic interests are safeguarded,
but also that those of our long-term ACP partners are not sacrificed.

I am certainly encouraged by the High Court’s reaffirmation last week, of the
sovereignty of Parliament.

That should, at least, remind the British government of the need to be open with
us - rather than to keep us in the dark until it has invoked Article 50 and concluded
its negotiations!

The legislature would then be faced with the Hobson’s choice of accepting
whatever fait accomplit was negotiated and without the option of a real alternative.

So much hangs on the deliberations taking place here and elsewhere, and it
is particularly important that we all seek to come to credible, and realistic,
conclusions which are founded on sound, reliable analysis of the facts, rather than
sentiment, or wishful, or selective assumptions.

Let me finally wish you every success, and all the very best with your critical, and
essential, deliberations which are so important and indeed when so much is at
stake, for so many people, who understandably, fear the effects of Brexit and who
will definitely need our continued support.

85
The UK’s withdrawal from the European Union will have major and far reaching
consequences, way beyond the UK. Countries of the African Caribbean and
Pacific (ACP) Group are among those expected to be most affected since
the UK in an important development partner and total trade is substantial;
US$18.6 billion in 2015. However ACP countries’ relations with the UK
for the last 40 years have been within the EU’s regulatory and institutional
framework.

This study examines the implications for both the UK and the ACP and its
findings are expected to help avoid or minimise any negative consequences
of Brexit and identify and capitalise on opportunities that might arise or be
created.