It's All Gone Bananas (Well, Almost): The Impact of the Delayed UK- Ghana Trade Deal

The UK and Ghana signed their first post-Brexit trade deal this week, reviving the USD1.6billion trading relationship which was in force when the UK was part of the EU, all the more symbolic in the week leading up to Ghana’s 64th year of independence from the UK. The deal means an end to the uncertainty brought about by protracted discussions, according duty-free and quota-free access to the UK for the Ghanaian producers of bananas, tinned tuna and cocoa. It also affords lower tariffs to the Ghanaian market for UK electronics, chemical products and machinery from 2023. While there is a sense of relief for business continuity, the three-month hiatus in the trading relationship has been costly.

Significance – High Cost of Exports Under the Generalised System of Preferences (GSP) Scheme 

The bright blue, plastic “headscarves” adorning the neatly-rowed banana plantations in Akwamu in Ghana’s Eastern Region, caught our attention when driving past the VREL plantation a few weeks back. VREL exports some 9500 tonnes of Fairtrade bananas annually to the UK[1].  VREL was the first Fairtrade banana plantation in Ghana, becoming certified in 1996. It is joined by the likes of Golden Exotics Ltd which exports 45,000 tonnes of Fairtrade bananas annually to the UK[2], with products ending up on the shelves of UK supermarkets such as Waitrose, Sainsbury’s and the Co-op. 

Since the UK withdrew from the EU in December 2020, banana producers have been the ones who have been penalised by the high cost of exporting to the UK pending the signing of a new deal. Given that the European Partnership Agreement (EPA) no longer applied for Ghanaian exports to the UK after the latter left the EU, exports went to the UK under the Generalised System of Preferences, meaning an additional GBP95 per tonne in export tariffs to be paid by producers. For Golden Exotics this meant paying GBP17,000 in duty for its first post-Brexit consignment to the UK and for VREL, the duty paid for nine containers to enter into the UK was GBP16,000 [3].  

Outlook – Unfair Trade for Farmers

These exorbitant costs will have to be financed somehow, posing socio-economic risks, namely potential job losses and compromised job quality. VREL employs 700 workers directly and Golden Exotics has a 3000- strong workforce and both have created hundreds more jobs indirectly. Prior to the signing of the deal, Anthony Blay, a director within VREL lamented that: “The company cannot survive this level of tariffs even in the short term, putting the jobs of its 700 direct employees at risk[4]”. Furthermore, the agreement comes months after Fairtrade producers pledged to commit to instituting a living wage for workers over the next 3-5 years, but this too hangs in the balance.

With job creation being at the forefront of Ghana’s development agenda, and with both the UK and Ghana as signatories to the Sustainable Development Goals, a commitment to decent work could mean that both countries heed the call of producer organisations such as Fairtrade Africa and Banana Link. Along with producers, these organisations are calling on both governments to compensate producers for the delays and to implement the trade terms with expediency, to stem the financial haemorrhage. 

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[1]https://www.bananalink.org.uk/news/post-brexit-trade-deal-with-ghana-almost-done-but-tariffs-have-already-hit-banana-imports/

[2]https://www.graphic.com.gh/business/business-news/delay-in-post-brexit-ghana-uk-agreement-threatens-jobs-and-livelihoods.html

[3]https://www.bananalink.org.uk/news/post-brexit-trade-deal-with-ghana-almost-done-but-tariffs-have-already-hit-banana-imports/

[4]https://fairtradeafrica.net/wp-content/uploads/2021/01/Delay-in-post-Brexit-Ghana-UK-Agreement-Threatens-Jobs-and-Livelihoods.pdf

Photo by Francesco Ungaro on Unsplash