Sugar prices set to rise if no deal Brexit, shows Government Tariff Reference Document

Mar 15 2019

Industrial sugar costs will rise if the UK leaves the EU without a deal on 28 March, as a result of a new post-Brexit tariff regime announced by Government.

 

New post no deal Brexit tariffs increase EU sugar import costs

 

Industrial sugar customers across sectors such as food and beverage, pharmaceuticals, brewing and baking are facing an increase in the cost of some raw materials if the UK leaves the EU on 28 March without a deal.

On 13 March, the Government has published its new tariffs, The Customs Tariff (Establishment) (EU Exit) Regulations, potentially leaving only two weeks for businesses to prepare for the prices changes. And the tariffs are likely to remain in place for only one year, possibly resulting in another tariff and price change end-March 2020.

Tariff cost to industry of £37.5m annually

 

The new €150/t levy on imported white refined sugar for direct consumption, applied because the UK is a deficit sugar market requiring approximately 250,000 tonnes of sugar imports each year, will increase industrial sugar processing costs.

A price increase of this magnitude, which could turn into an annual £37.5m cost rise across the industry, cannot be absorbed by the supply chain, so will be passed on to sugar buyers. This will result in a minimum increase of €150/t for white sugar imported from EU countries.

However, as I write this, MPs have decided that leaving with no deal is not an option and the prospect of an extension is looking possible, adding to uncertainty. An extension could mean this latest tariff notice is irrelevant, but it may be a good indication of what trade negotiators will be seeking out of future trade deals.

Ragus produce a wide range of Pure Sugar products at its world-leading sugar manufacturing site in the UK, including sugars, refiner’s syrups, treacle and Molasses. Ragus’ manufacturing site produces hundreds of tonnes of sugars and syrups each day, all manufactured to the highest quality to ensure customers’ specifications are met.

 

What will be the sugar import tariffs post a no deal Brexit?

 

Should the UK leave on 29 March without a deal, and day-by-day the outcome is looking increasingly unlikely, the new tariffs and resulting price changes will apply after 28 March.

The tariffs on sugar imports into UK for direct consumption will be:

• White refined sugar: €150/t, which is a special tariff as UK is a deficit market
• Raw Cane Sugar €419/t, the default WTO tariff
• Molasses: currently €0/t
• Glucose Syrup: €200/t

Tariffs on sugar imports for refining into white sugar will be:

• Raw Beet Sugar: €339/t, the default WTO tariff
• Raw Cane Sugar: €339/t, the default WTO tariff

The UK would continue trade preference agreements with LDC/LPAs that have existing EU trade agreements.

Who will pay for the sugar tariff increases?

 

In conclusion, the import of white refined sugar to supply the deficit UK market, which is approximately 250,000 tonnes, will go up by €150/t, if imported from the EU, but reduce to €150/t if imported from outside the EU.

Realistically, though, this sugar will come from within the EU. The consequence of this will be that the UK supply chain won’t absorb the resulting additional £37.5m cost of this sugar coming from the EU.

As a result, the UK white sugar market price is likely to increase by a minimum €100/t post-Brexit.

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Brexit blog 2: Will UK sugar price volatility improve post-Brexit?

Mar 07 2019

Post-Brexit tariff-free deals with non-EU countries should reduce UK sugar prices and help calm a volatile market. But only if markets function properly.

Why is the UK sugar price so volatile?
Sugar prices in the UK when buying in sterling fluctuate extensively. For example, over the last 12 months, for some buyers the price of sugar in the UK has changed by 35%. A 35% increase in raw materials costs is a huge deal for our customers, such as brewers, bakers, confectioners, food and beverage producers and pharmaceutical companies.

Sugar is bought and sold within the EU using euros. So, if you are buying in sterling from a euro supplier, the UK price volatility is driven by the euro-sterling currency fluctuations, known as the Unofficial Sugar Conversion Rate, or USCR. The USCR can change every 14 days, depending on underlying exchange rates. If the euro-sterling exchange rate is more than 1% different when compared to the rate two week’s previously, the USCR will change.

UK sugar buyers must then add another €20 per tonne to ship sugar across the Channel – UK prices are always higher than those in continental Europe. In addition, UK buyers and end consumers pay more for sugar cane derived products because of EU tariffs, as I’ve discussed previously.

What can reduce sugar price volatility?
There are dozens of sugar cane producing nations outside of Europe – 80% of world sugar production is by sugar cane producing nations. Theoretically, so many suppliers spread geographically around the world manages risk, as the chances of massive under or over supply are reduced. This level of competition should keep prices down.

This is only in theory. There are, in fact, only two major producing nations: Brazil and India. Nearly half of all sugar production in Brazil ends up being used for ethanol production to fuel vehicles.

India is the largest consumer, so if domestic production is poor, then India not only won’t export, but may well buy up surplus global production. The unique features of these two largest players impact significantly on global sugar market prices and price volatility.

Why has UK sugar cane consumption declined in the last decade?
Because of our history and our existing close ties with many commonwealth nations that are also sugar cane producers, the UK is Europe’s largest consumer of sugar cane derived sugar products. Approximately 25%, or 450,000 tonnes each year, of the sugar we consume is from sugar cane.

Before 2006, the ratio of UK sugar beet consumption versus sugar cane was 50:50, so we imported over a million tonnes of sugar cane each year for UK consumption. Then, in 2006, the EU introduced a 36% cut in prices paid to sugar producers generally, cane and beet. The result of this was huge investment by European sugar beet farmers to improve productivity and output. This massive increase in EU grown tariff-free sugar beet has meant that sugar cane imports have declined.

As I highlighted in my previous blog, How will a no deal hard Brexit affect the UK sugar industry?, if the UK leaves the EU without a deal, or a deal which enables the UK to negotiate its own trade deals with non-EU sugar producers, we should have access to global markets and not be so reliant on the EU’s sugar beet production.

But, as you’ve seen so far, the global sugar market is not quite so simple.

The UK leaves the EU with no deal or a deal allowing third party trade agreements
In a perfect post-Brexit world, the UK can negotiate trade deals with sugar cane producing countries with low or no tariffs. These multiple sources of supply should result in low and stable prices to fill the gap between the UK’s domestic sugar beet supply for white sugar, currently 1.4m tonnes, and current domestic demand of 2m tonnes. Trade deals should also drive down the current cost of sugar cane imports, artificially elevated because of EU tariffs.

But the UK’s sugar market functions as an oligopoly, which means there is limited competition because there are only a small number of refiners. Two to be precise: one sugar beet refiner dominating the market and one that imports sugar cane for refining into white sugar.

Naturally, businesses don’t want prices to go down, and, with so few producers, it is possible for a dominant supplier to effectively dictate sugar prices, whatever deals and fixed prices we negotiate with non-EU sugar producers.

As a result, we are unlikely to experience the full benefits of a post-Brexit world in which we can import tariff-free sugar.

What happens if the UK does a tariff-free Brexit deal with the EU?
Should the UK negotiate a deal that includes remaining in the customs union and single market, little is likely to change. That’s because the UK will continue to take its sugar supplies mainly from domestic sugar beet production and it is reasonable to assume low or no tariff sugar beet imported from the EU.

Sugar cane will continue to be imported but will remain subject to some form of tariffs, quite possibly the same levels of between €90 and €419 per tonne currently in force. The benefits of global tariff-free sourcing from multiple suppliers won’t be realised and the price-volatile USCR will remain.

Back in the early 1990s, we used to set our prices for our customers annually, as the sugar market was relatively stable. Whatever the outcome for sugar post-Brexit, that’s a market state we’d like to see returning so our customers don’t experience huge fluctuations in raw material costs during the year. Such a situation may be possible if the UK can negotiate the right Brexit deal followed-up by free-trade agreements with sugar cane producing nations.

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Brexit blog 1: How will a no deal hard Brexit affect the UK sugar industry?

Feb 28 2019

Could reverting to WTO rules after a hard Brexit mean lower costs for UK sugar buyers? In theory, yes. But in practice the UK sector’s oligopoly structure means prices could actually increase.

Brexit means the EU no longer negotiates trade deals for the UK
A no deal Brexit means the UK’s sugar industry reverts to World Trade Organization (WTO) rules and tariffs with the European Union (EU) and the 67 countries with which the EU has trade agreements. It also means the UK can negotiate its own bilateral trade deals with other ‘third countries.’

Sugar trade agreements with sugar producing third countries – those outside the EU – have been negotiated by the EU since the UK joined the European Economic Community, the forerunner to the EU, in 1973. Now the UK can negotiate directly with these countries and secure its own terms and tariffs.

To my knowledge, however, sugar is not on the Department of International Trade’s (DIT) radar and has not been part of trade deal discussions with third countries yet. But if we want to sell UK exports tariff free to countries such as Australia, then Australia will want something in return, such as the opportunity to sell its sugar to us, tariff free.

As I discussed in my blog Tariffs on Sugars Explained, tariffs have a huge influence on pricing, increasing the market price by between €90 and €419 per tonne if current rules are applied. So, at the risk of stating the obvious, in theory both producers and buyers globally will benefit from no or low tariff deals.

And the UK is a sugar-deficit market, i.e. we don’t generate enough sugar to supply our demand, and we don’t produce sugar cane at all. Therefore, unless wheat suddenly becomes much less profitable for UK farmers, we will always import some of our sugar. Especially as the UK is one of the largest consumers of speciality sugars based on sugar cane because of its colonial past.

Will sugar buyers benefit from zero tariff bilateral post-Brexit trade deals?
Continuing to use Australia as an example, it currently supplies China’s growing demand for sugar cane. Striking a zero tariff trade deal means Australia could divert its sugar cane exports to the UK.

That’s great for business buyers and consumers. Confectioners and bakers, for example, could see good quality sugar products derived from cane entering the portfolio mix. In theory this would force the price of sugar down because increased tariff free sugar cane exports from Australia, and other non-EU producers, broadens supplier choice for buyers and incentivises cane growers to increase production.
Sugar
 
I’ve used the word ‘in theory’ twice so far. A tariff free trade agreement with multiple ‘third countries’, including Australia, Jamaica, Brazil and the many other non-EU sugar producing nations should both stabilise and reduce the global commodity price of sugar.

But when you examine the realities of the European and UK sugar markets, this is unlikely to happen. The EU’s trade quotas and tariffs, alongside the UK’s sugar market oligopoly dominated by only two players, means normal market forces won’t work.

This will be the topic of my Brexit blog part 2, publishing next week. Check our blog page or follow us on LinkedIn, Twitter or Facebook to be notified when this is published.

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Tariffs on sugars explained

Feb 22 2019

Breaking down the complex and often confusing world of EU sugar tariffs. What will they mean post-March 29?

What are international trade tariffs?
According to the World Trade Organisation (WTO), tariffs are “customs duties on merchandise imports”. Essentially, a tariff or customs duty is a tax on imported products, usually levied at the border or any other point of entry, such as a port or airport.

So, let’s say you want to buy a car from the USA and import it. There’s a whole range of complicated factors determining how much import duty you pay, but for a reasonably priced modern car the UK’s tax and customs agency, HMRC, will demand a 10% duty in addition to 20% VAT on top of the car’s value.

Why do countries impose tariffs on imports? Generally, tariffs are imposed for two reasons:

1. To protect a domestic industry from global competition by making imported goods more expensive

2. To generate tax revenue.

While the UK is part of the EU, imports, including sugar, from EU counties have no tariffs. But if you import sugar from outside the EU, when the UK leaves the EU you will probably pay import duty and it could double the cost of your sugar, if there is no deal with the EU 27.

How EU sugar tariffs work
As the UK is currently part of the EU, we’re subject to EU rules. That will change after Brexit, but we don’t yet know how.

The rules on sugar tariffs depend on several variables, such as the country of origin of the raw material – sugar cane or sugar beet – who produces it, a mill or refinery, and whether it is for direct consumption or additional refining. Getting it correct is important because getting it wrong can be expensive: tariffs vary between €419 and €90 per tonne.

The basic tariff for importing direct consumption sugar into the EU is €419 per tonne. So, every tonne of sugar imported from a non-EU country costs an extra €419. Raw sugar imported into the EU is to be further refined into white sugar attracts a tariff of €339 per tonne.
Pure sugar produced by Ragus. Ragus is one of the world's leading pure sugarmanufacturers. It sources raw sugar from across the world to manufacture sugars, syrups and special formulations from its advanced UK factory. Ragus ships its sugars globally, delivering on-time and in-full to customers across the brewing, baking, confectionary, and pharmaceutical industries
 
Except not every non-EU country pays the above tariffs. The EU also has what it calls its preferential tariff structure. The import duty for raw sugar is only €98 per tonne if imported from a ‘CXL’ country, which includes Australia, Brazil, Cuba and India. But only for sugar destined to be refined into white sugar.

Least Developed Countries (LDC) and African, Caribbean and Pacific (ACP) countries trading under Everything but Arms (EBA) have unrestricted, tariff-free imports of raw sugar into the EU.

If things weren’t complicated enough, if a mill outside of the EU is producing raw sugar which it sells as, for example, brown sugar for direct consumption, then it pays the full €419 per tonne tariff.

My message to you – don’t try this at home!

How is a sugar mill different from a sugar refiner?
Another complication when trying to work out what tariffs apply to sugar is whether it has been produced by a sugar mill or a sugar refiner. If you look at the different tariffs above, this distinction is more than just semantics; it has a major impact on the tariff.

A sugar mill crushes, or mills, sugar cane, extracting the juice from the cane which is then boiled down into crystalline brown sugar. Molasses is left as a by-product of the process.

Pure sugar produced by Ragus. Ragus is one of the world's leading pure sugarmanufacturers. It sources raw sugar from across the world to manufacture sugars, syrups and special formulations from its advanced UK factory. Ragus ships its sugars globally, delivering on-time and in-full to customers across the brewing, baking, confectionary, and pharmaceutical industries
 
What will Brexit mean for sugar tariffs
Imports and exports between EU member states while the UK is part of the EU are tariff-free. Imports into the UK, such as sugar cane, from non-EU countries attract duties, as I’ve explained above.

When the UK leaves the EU, there could be several outcomes for sugar duties, depending on whether there is a deal, or the UK leaves without a deal. We will be discussing the possible outcomes for international trade in sugar in our next two blogs, so make sure you visit our blog page next week or follow us on Twitter or LinkedIn.

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Decrease in Global Sugar Production As Sugar Prices Rise

Jan 24 2019

Market Position
The 2018/19 sugar beet harvest is entering its tail end and attention is now turning to the 19/20 sugar crops for both beet and cane. Prices are still low following the huge surplus of 2017/18 and the smaller surplus of 18/19, although prices are now at a two month high as the 19/20 crop is predicted to be in deficit, a result of smaller planted area in the EU, India and Thailand. Global sugar prices are slowly heading towards 15 c/lb which would entice Brazilian millers to allocate more cane to sugar production. El Niño weather pattern is predicted for the Northern Hemisphere this winter, creating an early end to rains in Brazil and drier conditions in Asia. Global sugar production for 2018/19 is estimated to fall by 15.5 mln tonnes to 185.3 mln tonnes as a result of a downward revision of the crop outlook in Brazil, European Union and India. This compares with the record of 200.8 mln tonnes produced in 17/18. The global sugar beet production for 2018/19 will decrease to 43.2 mln tonnes, down from the record 45.7 mln tonnes last year. Global cane sugar production for 2018/19 will decrease by 11.7 mln tonnes to 143.4 mln tonnes. This compares with a record 155.1 mln tonnes produced in 17/18.

Europe
The 2018/19 northern area beet crop started with delayed planting due to snow followed by increased rainfall in early March 2018. Improved weather in April and high temperatures in May saw rapid beet development until the end of June. Subsequent prolonged dryness has consistently reduced the yield forecast for the 18/19 crop and slowed beet harvesting as farmers have struggled to lift the crop from the soil. Sugar production for the 2018/19 season is estimated at 18.4 mln tonnes, a reduction of 2.8 mln tonnes compared to the previous crop. EU producers are talking of a reduction in beet planting for the 19/20 crop to allow a draw down on stocks. White sugar exports for 2017/18 (Oct-Sept) finished at 3.6 mln tonnes, with raw sugar imports at 1.3 mln tonnes. European prices are starting to rise, in contrast to falling world market prices. In the UK the beet sugar production is forecast to reach 1.15 mln tonnes, down on last year’s 1.37 mln tonnes as a result of reduced yields. A no deal Brexit could lead to higher import tariffs in the UK of €339 per tonne for raw sugar for refining and €419 per tonne for white sugar or raw sugar for direct consumption.
Beet sugar being grown; Ragus supports all its farmers and producers with advice and support on how to optimiseefficiencies, and promote the cause of sustainable sugar production
 
Russia & Ukraine
In 2018 both Russia and the Ukraine reduced the planted area for sugar beet as a result of the cold and wet winter. Russia experienced a dry summer resulting in poor beet yields down 13% and the Ukraine achieved high beet yields but poor sucrose content. Early indications for the 2018/19 harvest is Russia producing 6.35 mln tonnes, down from 7.1 mln tonnes in 17/18 and the Ukraine producing 2.0 mln tonnes of sugar.

Brazil
Brazilian mills are watching the falling gasoline price in their domestic market, which is affecting the biofuel price. Mills will focus their attention on producing sugar, helped also with the current low fobbing prices for shipping. For the 2018/19 crop the hydrous share has been at 62% compared to last year’s 17/18 crop which was at 43%. This results in the Brazilian mills being able to add or remove close to 10 mln tonnes of sugar from the global market! Sugar exports reduced by 30% which has helped lower the world sugar surplus. The end of the 2018/19 harvest has been disrupted by heavy rains, sugar production is estimated at 30.4 mln tonnes, which is some 10.0 mln tonnes less than 17/18 production. The 2019/20 cane development will be good as the weather has been wet since August, improving soil moisture content, which was very dry in the early part of 2018. The 19/20 harvest will commence in April.

Thailand
The 2017/18 harvest was a record crop, producing 15 mln tonnes of sugar with the harvesting ending in June 2018. This amount is significantly more than the 10.3 mln tonnes produced in the 16/17 season. Sugar production for 2018/19 is expected to be slightly lower at around 14.5 mln tonnes due to a lack of rain at the tail end of the cane growing period, although the sugar yield is expected to be good. The Asian market is however seeing a decline sugar consumption as a result of governments increasing taxes on sweetened beverages.

India
Sugar production for the 2018/19 crop is likely to be 30.7 mln tonnes, which will be down on the previous crop due to a below normal monsoon in the 2018 planting season, which limited sowing of the canes as farmers will have limited access to available low ground water levels and reservoir water. This delayed the start of the harvest with early indications of lower yields. Domestic prices have remained on the floor despite government incentive payments and millers are not enthusiastic to export due to cash flow restraints, resulting in a large carry forward of stock. With general elections due in 2019, the government is taking steps to support millers so that farmers will be paid on time. Exports in 2018/19 will be lower than the 5 mln tonne target set by the government, due to a strengthening rupee and falling global prices. The amount is likely to be 2.5-3.5 mln tonnes.

Africa
African cane sugar production increased to 9.4 mln tonnes in 2017/18 after poor yields in 14/15 and 16/17. For 2018/19 it is very likely Africa will produce as much as 10 mln tonnes for the first time. South Africa is projected to produce 2.3 mln tonnes in 18/19, after the recovery of the cane yields. Mauritius reduced its forecast for the 2018/19 crop to 324,000 tonnes of cane sugar produced, down from 355,000 tonnes produced in 17/18. Mauritian production is in long term decline having halved over the last three decades.


 
Australia
Crushing of the 2018/19 crop began in late May and ended in December resulting in a reduced amount of cane crushed, although the actual sugar content was at its highest for a decade. Warm and dry weather, close to drought conditions was the main reason for the reduced amount of cane harvested. Cane sugar production for the 18/19 season is forecast at 4.9 mln tonnes which would still be up from the 4.7 mln tonnes produced in 17/18. The Trans Pacific Partnership-11 has taken effect for six countries resulting in Australia becoming the favoured origin for the majority of the 1.3 mln tonnes of Japanese raw imports over Thailand.

Mexico/USA
Wet weather has delayed the beginning of the Mexican harvest and early indications point towards a reduction in sucrose content, although it is early days for the 2018/19 cane harvest. Forecasts for the 18/19 sugar production have increased to 6.25 mln tonnes due to more planted acreage of cane. The 2017/18 harvest produced nearly 6 mln tonnes of sugar, so stocks are high with the likelihood of Mexican exports onto the world market. A smaller 2018/19 US sugar production of both beet and cane, estimated at 8.4 mln tonnes will see an increase in Mexican sugar imports during 2019. The US beet crop will be reduced as a result of cold weather impacting on the harvest. Cane sugar production for 18/19 will remain at around 3.7 mln tonnes.

China
The government’s corn support policy has led to falling prices in recent years. Farmers have switched to growing sugar beet which has increased the area under cultivation. Improvements in mechanisation and new beet varieties, coupled with modernised factories has increased beet sugar production by 56% in 3 years and China is expected to produce 1.5 mln tonnes of beet sugar for the 2018/19 season up from 1.25 mln tonnes. Cane sugar production will remain constant at around 10.1 mln tonnes. Domestic prices have fallen to a three year low, which may see a fall in cane cultivation for 2019/20.

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BREXIT: the position of the European sugar sector

Jun 29 2018

CEFS-CIBE POSITION ON BREXIT

EU beet sugar manufacturers, represented by CEFS, and sugar beet growers, represented by CIBE, regret the departure of the UK from the EU.[1]

We remain convinced that the best option to avoid disruption of EU-UK trade and of the EU sugar market itself would be for the UK to remain in the Single Market and customs union.

Given that these options seem less likely under the current UK government, we would like to highlight a number of concerns.

Beet sugar being grown; Ragus supports all its farmers and producers with advice and support on how to optimiseefficiencies, and promote the cause of sustainable sugar production

 

Transition period

CEFS and CIBE welcome the proposal of the European Commission for a status quo transition period to cover the period between the official departure of the UK from the EU in March 2019 and the entry into force of a new EU-UK trading arrangement.

We call for flexibility concerning the duration of this transition period in the light of past experience. No EU trade agreement has been concluded and provisionally applied in 21 months. Should no agreement be in place by 31 December 2020, the transition period should be extended in order to avoid a ‘trade gap’ and consequent disruption of sugar trade flows between the EU and the UK.

Future EU-UK trading arrangement

After Brexit, the UK will be a major third country export market for beet sugar from the EU-27. The UK is a deficit sugar market and depends on EU exports to meet domestic consumption. It is therefore essential that sugar producers in the EU-27 retain current access to the UK market with minimal disruption during the period of negotiation and implementation of the new trading arrangement.

The trade policy that the UK government looks likely to pursue raises risks. A reduction of duties applied to imports of raw sugar for refining would result in increased quantities of refined cane sugar on the UK market. This could prompt an increase in exports of UK beet sugar to the EU: in other words, triangular trade. We call on the European Commission to take steps to prevent this.

The current status of the UK as an EU Member State must not prejudice the discussions on rules of origin. In line with the EU’s other bilateral trade agreements, the refining of imported, third country cane sugar must not confer origin under the new trading arrangement. Non-originating sugar used in the manufacture of processed products to be traded under preference must be subject to an upper threshold by weight. Cumulation of origin must be prohibited.

The EU’s existing market access concessions

The EU’s concessions on sugar were negotiated as a bloc of 28 Member States. These concessions must be fairly divided between the UK and the EU-27 to reflect the respective import shares of each partner. This goes for the EU’s WTO (‘CXL’) tariff-rate quotas and for the bilateral quotas, most notably with Central America and South Africa.

The EU beet sugar sector cannot afford the increase in real market access for third countries that would result from maintaining the EU-28 quotas at their current level for a diminished EU. Leaving the Central America and South Africa TRQs undivided would result in an increase in real third country market access to the EU-27 of 120,000 tonnes, based on historical quota utilisation rates.

The EU sugar sector’s request

– The duration of the transition period must be as long as necessary in order to avoid any disruption of trade between the EU and the UK. Maintaining current EU-27 access to the UK market – and vice versa – is a priority for the members of CEFS and CIBE.

– After Brexit, the UK will be a major third country market for beet sugar from the EU-27. It is therefore essential that sugar producers of the EU-27 retain the current access to the UK market without disruptions.

– If keeping the UK in the customs union is not viable, the EU must put mechanisms in place to ensure that it is not a victim of triangular trade in sugar.

– The EU’s existing market access concessions must be fairly shared between the EU and the UK. This goes for the EU’s WTO (‘CXL’) quotas, as well as for those bilateral quotas with partners such as Central America.

– Strict rules of origin are essential for any EU-UK free trade agreement. This means, in line with the EU’s other free trade agreements, refining must not confer the origin.[2] In addition, processed products traded between the EU and the UK must be subject to upper weight thresholds for the amount of non-originating sugar that may be used in their manufacture. Cumulation of origin must be prohibited

– The European Commission, Parliament, and Member States must take Brexit into account in the context of ongoing and upcoming trade negotiations with Mercosur, Mexico, and Australia. The EU must henceforth engage in free trade negotiations as a Union of 27, not 28, Member States.

[1] CEFS’ UK membership did not participate in the formulation of this statement and as such should not be assumed to have agreed or disagreed with its content.

[2] In customs terms, this means that the manufacture of products falling under HS heading 1701 must be subject to at least a change in tariff heading in order to benefit from bilateral preferences.

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