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June 2002

Name protection

20 May 2004

 In March 2002 the EU submitted a proposal

 to the WTO to protect the geographical designation of origin of

 570 products, including 'Proscuitto di Parma', 'Roquefort' cheese

 and 'Bayrisches Bier'. This proposal has been put forward to prevent

 what the EU sees as 'piracy' of products produced by traditional

 methods. According to the EU this practice results in unfair competition

 and a degradation of the value of the name through the production

 of inferior products. The proposal is put forward under the TRIPS

 agreement, with countries and producers having six months within

 which to object to the registration of these names and products.

 This move will effectively give geographical indicators the same

 status as trademarks.

Editorial comment

 ACP producers should carefully scrutinise this list to see if the
 right to use any name in which they currently have a production
 interest is affected.

A qualified 'yes' to reform

20 May 2004

 Commissioner Fischler reiterated the

 EU's approach to reform at a meeting on March 11th 2002 with Stuart

 Harbinson, the new Chair of the agricultural negotiations in the

 WTO. He pointed out that the EU would say 'yes' to more market opening,

 provided it is done in a way which enables everyone to benefit from

 new market opportunities and protects geographical indications such

 as 'Roquefort' cheese or 'Parma' ham against usurpation of names;

 'yes' to reductions in forms of export assistance, which is already

 subject to WTO disciplines, provided other forms of export subsidies

 are similarly disciplined and reduced; and 'yes' to reductions in

 trade distorting support, provided that WTO members remain free

 to ensure that their farmers can continue to meet the wider goals

 and expectations of society, such as environment or food safety.

Editorial comment

 The EU's approach to WTO negotiations is conditional upon progress

 in related areas and an acceptance of new ways of promoting wider

 agricultural and rural development objectives. The EU rightly points

 out how, prior to the initiation of CAP reform (in the 1989-91 period),

 EU farm expenditure for price support and export refunds accounted

 for 90.7% of the farm budget, and how, as a consequence of the process

 of CAP reform, these trade distorting forms of assistance will have

 fallen to only 21.3% of the CAP budget by 2006, with 78.7% of the

 budget going to less trade distorting or non-trade distorting forms

 of assistance.

However it needs to be borne in mind that

 the notion of less trade distorting is a relative concept. In the

 cereals sector these less trade distorting forms of aid have nevertheless

 allowed EU production to increase 26% in response to a 50% decline

 in average cereal prices. This is not a normal supply side response

 to price declines. Thus it can be seen that even less trade distorting

 forms of aid have profound effects on production decisions in the

 EU.

Update on WTO negotiations

20 May 2004

 An updated document on the state of WTO

 agriculture negotiations was released by the WTO Information and

 Media Relations Division in April. This document clearly summarises

 the issues. It reviews the phase 1 discussions and the proposals

 received on export subsidies and competition; export restrictions

 and taxes; market access; domestic support, and the treatment of

 developing countries.

It also summarises the phase 2 discussions on:

 tariff quota administration; tariffs; amber box domestic support;

 export subsidies and export credits; state trading enterprises;

 export taxes and restrictions; food security and food safety; rural

 development; geographical indicators; green and blue box domestic

 supports; special agricultural safeguards; environment; trade preferences;

 food aid; consumer information and labelling; the development box

 and single commodity dependent and small island states and other

 issues.

Timetable agreed

20 May 2004

 A timetable has been proposed for conducting

 the Agriculture Committee negotiations. In order to meet the March

 2003 deadline for establishing the key negotiating principles for

 a final compromise farm trade deal, the following schedule is envisaged:

2002  
June 17-20th

Meeting on export subsidies

 and restrictions;

September 2-4th Meeting on market access;
September 25-27th Meeting on domestic support;
November 18-20th Follow up meeting;

By December 18th Circulation

 of overview paper.

2003  
January 22-24th

Comprehensive review of overview

 paper, followed by first draft modalities document;

 February 24-28th

Comments on first draft modalities

 document, followed by redrafting of modalities document;

March 25-31st

Meeting for consideration of

 final text.

This provides the framework in which attempts

 will be made to reconcile the positions of the 126 member governments

 that submitted proposals in their initial negotiating positions.

OECD review

20 May 2004

 The OECD has published a review of the

 impact of agricultural trade liberalisation. It compiles information

 on average tariff levels, the use of tariff rate quotas, export

 subsidies, and export credits by selected OECD countries for temperate

 zone agricultural products. It looks at the effects of further trade

 liberalisation of agricultural markets over the medium term. It

 points out that the current use of export subsidies is already at

 lower levels than those agreed during the Uruguay Round and that

 further elimination would have only a modest effect on commodity

 prices (except for dairy products). It also highlights how export

 credits have been used to distort trade. It concludes that disciplines

 are necessary to avoid even greater use of all forms of export support.

 The OECD argues that further progress in agricultural trade liberalisation

 will require strengthening the disciplines already in place and

 addressing weaknesses which have been identified.

Winners and losers

20 May 2004

 The FAO has released an 8 page analysis

 of the winners and losers in the agricultural sector following the

 Uruguay Round. Points highlighted include:

  • The increase in domestic support in OECD
     countries from an average of US$ 298 million in 1986-88 to US$
     327 million in 2000;
  • Export subsidies have been reduced on several
     products but remain high, particularly for meat, dairy and cereals;
  • Agricultural tariffs remain high and complex;
  • Protection rates in agriculture are still
     high and market access terms have not improved much;
  • The expected benefits of higher and more
     stable world prices have not materialised;
  • Exporters under preferential arrangements
     have experienced an erosion of the value of these preferences;
  • Some developing countries have experienced
     import surges in various products which have reportedly damaged
     their import competing sectors.

Rhetoric and reality: Critique of the Commission's approach to EPAs

20 May 2004

 Two southern African MPs have launched

 a booklet entitled "Beyond the Rhetoric of Economic Partnership

 Agreements". This has been published to coincide with the debate

 in the ACP-EU Joint Parliamentary Assembly on the Cape Town Declaration.

 The booklet critiques the European Commission's current approach

 to the forthcoming ACP-EU negotiations. It highlights how, in southern

 Africa, ACP-EU trade preferences have stimulated a considerable

 expansion in exports of products where margins of preference are

 significant, slowing down the trade marginalisation of the region

 arising from declining prices of traditional exports.

It questions whether economic partnership agreements

 (EPAs), as currently conceived, will provide effective support to

 the structural transformation of ACP economies. The authors call

 on the EU to ensure that no ACP country is left worse off in terms

 of access to the EU market as a result of any new trading arrangements.

 Indeed they want the EU to improve access for ACP exports to the

 EU market and suggest establishing closer consultations on how to

 ensure EU food safety without creating new obstacles to ACP exports.

The authors question whether, in the light of

 past practices and experience, current EU arrangements for the management

 of aid are capable of addressing the many supply side constraints

 that inhibit internationally competitive production in ACP countries.

 They ask for a complete review as a prelude to the establishment

 of comprehensive programmes of assistance.

The booklet notes that moves towards free trade

 with the EU will have an impact on government revenues in some ACP

 countries. The authors claim that the EU has a responsibility for

 assisting ACP countries given that its current proposals for economic

 partnership agreements will intensify the challenges faced. Future

 negotiations should therefore include discussion on programmes of

 support for fiscal reform.

The booklet notes with concern the absence of

 any reference to the effect of the EU's common agricultural policy

 on ACP economies. It calls for discussion of these issues, including

 how best to minimise the negative effects of the CAP, in the forthcoming

 negotiations.

The authors highlight the importance of conducting

 future trade negotiations in an open, transparent and inclusive

 manner, so as to ensure that concerns about poverty eradication

 and sustainable development remain at the forefront of detailed

 trade negotiations.

Editorial comment

 This booklet provides an alternative view of Commission proposals

 for fundamental change in ACP-EU trade relations. It raises important

 issues that are specific to the economic circumstances facing ACP

 countries and relates these to the wider evolution of the EU's trade

 and agricultural policies.

Three-pronged approach to EPAs

20 May 2004

 In a press release to accompany the announcement

 of the Commission's approval of draft negotiating instructions for

 the forthcoming ACP-EU trade negotiations, Commissioner Lamy highlighted

 how the Commission's approach was based on the belief that the past

 experience of ACP-EU trade co-operation had been a failure. Non-reciprocal

 trade preferences had done nothing to prevent the erosion of the

 ACP's share of the EU market and the decline in foreign investment.

 Against this background Commissioner Lamy highlighted the three-pronged

 approach to be adopted involving:

  • a 'markets for policies' deal in which access
     to the EU market will be offered in exchange for the adoption
     of development friendly policies, including a real commitment
     to regional market integration;
  • the adoption of flexibility within WTO rules
     to allow a staggered approach and sectoral exceptions to the opening
     of ACP markets;
  • the provision of technical assistance geared
     to improving investment performance through more effective use
     of 9th EDF resources.

The Commissioner denied that EPAs were designed

 to force ACP countries into the WTO system and emphasised that they

 are intended as instruments of development. EU Development and Humanitarian

 Aid Commissioner Nielsen said that EPAs would "put the interests

 of developing countries at the heart of global trade".

8 new Leader + programmes

20 May 2004

 Between March 22 and 27th 2002 approval
 for a further eight Leader + rural development programmes was announced
 to the total value of Euro 269.4 million. Over 50% of the funds
 made available came from the EU budget for rural development, around
 22% came from private sector sources whilst the remainder came from
 local or national authorities in the member state concerned.

Region Total million Euro EU Contribution million Euro Private Sector million Euro
Germany      
Baden Wurtemburg 22.30 10.20 1.95
Hesse 23.40 8.20 7.00
Italy      
Apulia 45.80 25.76 11.45
Molise 17.70 8.24 6.76
Campania 34.80 23.63 3.34
Basilicata 30.30 17.00 7.58
Calabria 42.50 21.23 14.16
Sardinia 52.60 26.84 8.70
       
Total 269.41 141.10 60.94

EU criticises US farm bill

20 May 2004

 In a May 1st press release, EU Agriculture

 Commissioner Fischler criticised the new US farm bill as an unfortunate

 development, pointing out that "at a time when all developed

 countries have accepted the direction of farm support away from

 trade and production distorting measures, the US is doing an about

 turn and heading in the opposite direction". The Commissioner

 pointed out that as a result of the new bill the "US WTO ceilings

 for production distorting expenditures will be breached". Commissioner

 Fischler argued that the new US farm bill would result in over production

 and "act as hidden export subsidies and depress domestic prices

 to block out imports". Commissioner Fischler contrasted the

 US policy with the EU policy which, he argued, was reducing production

 distorting support and increasing the focus on "food safety

 and quality, rural development, and environmental services for society

 at large."

Editorial comment

 The current dispute with the US highlights the dangers posed to

 ACP agriculture under the various reform programmes under way in

 the EU and the US. Commissioner Fischler, in condemning the US policy,

 chose his words carefully. EU policy is reducing what it terms 'production

 distorting support', that is to say aid to price support and is

 increasing less trade distorting forms of aid (direct aid to farmers)

 and aid to rural development (including financial assistance to

 greater value added processing). However in the sector where this

 is most advanced (cereals) this has not reduced EU production. On

 the contrary, despite an average 50% decline in cereal prices EU

 production of cereals has increased around 26%. Thus even the shift

 to less production distorting forms of aid has led to significantly

 larger volumes of EU production than one would expect. If, against

 this background, the US is increasing production distorting forms

 of aid, this can only be disastrous for those commodities on which

 ACP countries depend for exports and in which the US has a production

 interest.

EU farm income trends

20 May 2004

 Despite CAP reform driven price reductions

 and BSE and FMD induced price declines in the beef sector, EU real

 agricultural income per worker rose by an estimated 3.3% in 2001.

 This increase was due to an increase in real agricultural income

 (+1.2%) on the one hand, and a continued reduction in the volume

 of agricultural labour input (-2.0%) on the other. Real agricultural

 incomes were up in all member states except Luxembourg with the

 strongest growth rates in Denmark (+12.3%), Portugal (+11.8%), Austria

 (+10.9%), Germany (+9.9%), Ireland (+7.8%) and Belgium (+5.3%).

Editorial comment

 Clearly CAP reform involving substantial price reductions does not

 mean poorer EU farmers. However, it does mean poorer ACP farmers

 as the returns on CAP products exported to the EU decline in line

 with the price reductions introduced through administrative reforms.

Directives, discussions, decisions

20 May 2004

 In April the European Commission adopted

 a recommendation for Council Decision encompassing draft directives

 for the negotiation of economic partnership agreements with ACP

 countries. These draft negotiating directives are now under discussion

 with EU member States, primarily under the auspices of the Article

 133 Committee, which deals with external trade relations of the

 EU.

The explanatory memorandum to the recommendation

 for a Council Decision dealt with:

  • the relationship of economic partnership
     agreement negotiations to the wider objectives of the Cotonou
     Agreement;
  • the proposed content of economic partnership
     agreements;
  • the principles which should guide the establishment
     of economic partnership agreements;
  • the relationship to WTO rules;
  • the need to support regional market integration
     amongst ACP countries;
  • how the concept of differentiation is to
     be applied, particularly with reference to least developed countries;
  • the overall objectives of economic partnership
     agreements both with reference to trade relations and the wider
     economic and social development of ACP countries.

The draft negotiating directives set out:

  • the relationship to the Cotonou Agreement;
  • the proposed scope of economic partnership
     agreements;
  • how negotiations on trade in goods are to
     be dealt with;
  • the scope and how negotiations on trade in
     services are to be dealt with;
  • the scope of negotiations on trade related
     areas;
  • how payments and capital movements are to
     be dealt with;
  • the institutional framework for negotiations;
  • the structure and organisation of negotiations.

Overall the most important points are that:

  •  EPAs are to be subject to the wider development
     objectives of the Cotonou Agreement;
  • the various EPAs to be negotiated are to
     be as similar as possible;
  • the main aim of EPAs is to establish 'a stable,
     predictable and transparent framework for economic and trade relations
     between the ACP countries and the EU';
  • EPAs will involve 'progressively eliminating
     tariffs and non-tariff barriers';
  • the European Commission recognised that adjustment
     costs would be faced but felt that the necessary flanking measures
     could be financed from existing EDF instruments;
  • the trade in goods provisions of EPAs should
     by in conformity with Article XXIV of GATT;
  • the trade in services provision of EPAs should
     conform with the provisions of GATT;
  • the provisions of EPSs on trade related areas
     (investment, public procurement, standards and data protection)
     should be consistent with WTO provisions;
  • regional market integration should be supported;
  • the concept of differentiation does not imply
     LDCs would retain their rights to non-reciprocal trade preferences.
     LDCs would be expected to waive their right to continued non-reciprocal
     preferences under any region to region EPAs;
  • regional based EPA negotiations should begin
     no later than January 2003.

Editorial comment

 With specific regard to the agricultural sector a number of significant

 points emerged. The agricultural sector (and associated downstream

 value added product industries) is the major area where the EU retains

 market access restrictions. Here the Commission's final draft mandate

 is less forthcoming on issues of market access than the preliminary

 draft mandate. Initially the Commission proposed that: 'the

 Community should grant duty free access to its markets to all products

 originating in the ACP countries, as from entry into force of EPAs.'

In the final Commission-approved draft, the

 commitment on market access for ACP countries is restricted to an

 expression of belief that: 'The Community

 should further improve current access to its markets for products

 originating in the ACP countries'.

This is believed to be the result of pressure

 from DG Agriculture which is fearful that the process of CAP reform

 will not be completed by 2008 and that, as a consequence, opening

 up the agricultural sector to all ACP exports by 2008 could create

 problems for EU agriculture. Significantly, in section 3.2 of the

 actual Directives annexed to the recommendation for a Council Decision,

 while talking about how: 'EPAs shall

 build upon and further enhance the market access conditions currently

 provided under the Cotonou Agreement' for

 ACP countries this is only to be 'fixed in the course of the negotiations'.

Overall the Commission's final mandate appears

 to take a much harder line on market access than the initial draft,

 with the view being expressed that: 'trade

 liberalisation in favour of developing countries should be part

 of a new North-South partnership according to which these countries

 apply the appropriate policies'. Clearly,

 within this Commission approach, further opening up of the EU market

 is to be made conditional on ACP countries applying these 'appropriate

 policies'.

There would appear to be an urgent need for

 the EU Council of Ministers to reinstate the Commission's initially

 proposed commitment to 'grant duty free access to its markets to

 all products originating in the ACP countries, as from entry into

 force of EPAs.'

This would provide a more solid basis for

 investment in the value added food product industries of ACP countries.

 This could bring real benefits to ACP countries in the context of

 their participation in the larger integrated economic area centred

 on the EU which EPAs are designed to bring about.

From an agricultural perspective a further

 important area of the EU's negotiating instructions is the requirement

 for ACP countries to open up their economies to duty free imports

 from the EU. This needs to be seen in the context of the reform

 of the CAP which, on the basis of increased levels of direct aid

 payments to EU farmers, is making EU exports of basic agricultural

 products and value added food products more price competitive on

 overseas markets. Significantly the Commission draft negotiating

 directives make no provision for discussion of the external effects

 of CAP reform on ACP countries. This is a major shortcoming in the

 negotiating instructions from an ACP perspective. The only provision

 made is for 'appropriate flexibility . . . in the product coverage

 and the calendar rhythm of liberalisation commitments'. This being

 said, provision is made for safeguard provisions building on Article

 8 of Annex V of the Cotonou Agreement. Anti-dumping measures are

 also to be allowed in accordance with GATT/WTO rules.

Currently the only reference made to CAP

 distortions is in section 3.2 of the negotiating directives which

 states: 'In this context the parties

 will examine on a case by case basis, the potential impact of export

 refund mechanisms on the process of trade liberalisation.'

Given the importance of agricultural trade

 (36% ACP exports to the EU) to the ACP group, and the significance

 of agriculture within the production structures of many ACP economies,

 this oversight is potentially disastrous.

The common agricultural policy is being reformed

 to enhance the competitiveness of EU agricultural and value added

 food product industries on national and international markets. This

 will undoubtedly have an impact on the market conditions facing

 ACP producers of similar or competing products. ACP and EU parliamentarians

 (see next item) have called for a comprehensive assessment of the

 likely implications for ACP countries of CAP reform. They say that

 future trade arrangements should be designed to: 'fully

 take into account the impact of the internal process of reform of

 the common agricultural policy on ACP countries and seek to minimise

 adverse effects on the development of agro-based value added processing

 activities in ACP countries.'

Clearly the importance of the external effects

 of a reformed CAP on the development of ACP-EU trade relations and

 ACP economies, needs to be recognised. Provision should be made

 within the European Commission's directives for these issues to

 be addressed during economic partnership agreement negotiations.

Review of ACP-EU trade

20 May 2004

 Eurostat has produced a six page review

 of EU trade with ACP countries the headline points of which are:

  • the decline in the ACP's share in the EU
     market (from 7% in 1976 to 4% in 2000);
  • the high concentration of ACP exports to
     the EU. Imports from four countries account for 49.8% of EU imports
     from the ACP while ten account for 66.9%);
  • the dependence (43.5%) of ACP exports on
     three commodities (oil, gold and diamonds);
  • the overwhelming effect movements in the
     oil price have on the trend in total ACP exports to the EU;
  • the ACP's share of the EU market in these
     basic commodities remains constant, despite price fluctuations;
  • the ACP countries have a declining market
     share in certain basic agricultural commodities (coffee and tea);
  • the ACP countries have increased exports
     and gained market share in the categories of edible fruit and
     nuts (HS 08) and seafood (HS 03).

Editorial comment

 Although this is not made explicit in the text, it is clear that

 ACP countries have gained market share in the EU in those areas

 where high margins of preference are still enjoyed. Growth in these

 areas since 1995 has been high, 140% and 117% respectively for edible

 fruit and nuts and seafood. However these strong positive developments

 in those ACP countries that have been able to effectively exploit

 ACP trade preferences are generally swamped by the price trends

 in the dominant commodities (oil, gold and diamonds) and those traditional

 commodities where the ACP is losing market share (coffee and tea).

Mexico-EU Free Trade Area

20 May 2004

 During his visit to Mexico at the end

 of April 2002, Commissioner Lamy reviewed the progress achieved

 in EU-Mexico trade relations following the conclusion of the EU-Mexico

 Free Trade Area agreement in 2000. He highlighted how:

  • in the 1990s trade links had declined, with
     the EU's share of Mexican trade falling from nearly 11% in 1991
     to only 6% in 1999;
  • the Mexican-EU agreement had been a major
     breakthrough, since it was the quickest and most comprehensive
     agreement the EU had then signed;
  • the FTA covered trade in goods, services,
     public procurement, intellectual property and competition issues;
  • since the entry into force of the agreement
     EU exports to Mexico have increased 33% while Mexican exports
     to the EU have increased 50%;
  • the EU's share of total Mexican trade has
     increased 20%;
  • currently 82% of Mexican industrial product
     enters the EU market duty free, while duty is no longer paid on
     50% of European exports to Mexico;
  • overall Mexico is now the EU's second biggest
     trading partner in Latin America.

Overall Commissioner Lamy concluded that the

 FTA agreement had allowed the EU to establish its proper position

 in trade with Mexico 'neutralising the distorting impact of NAFTA'.

Editorial comment

 This review of EU Mexico trade highlights just what the EU is seeking

 through FTA policy with developing countries. In this case the agreement

 was primarily defensive, with the aim of neutralising the trade

 distorting effects of the NAFTA agreement. From the figures cited

 by Commissioner Lamy, it has been a resounding success, reversing

 the decline in the EU's trade position in Mexico.

EU-Chile FTA negotiations

20 May 2004

 The successful conclusion of trade negotiations

 with Chile were announced by Commissioner Lamy on April 26th. While

 details of the agreement were not released, since it still has to

 undergo the various approval processes, it was announced that the

 agreement covered all area of trade relations and went 'well beyond

 our respective WTO commitments'. The trade in goods component of

 the agreement did however cover all sectors including agricultural

 and fisheries products. The agreement also included a 'fully fledged

 free trade agreement in services', an investment agreement, a wines

 and spirits agreement, an ambitious and very wide agreement on public

 procurement, and a sanitary and phytosanitary agreement. It also

 included rules on competition, intellectual property and an ambitious

 agenda for trade facilitation.

Editorial comment

 The areas covered by the EU-Chile agreement are all areas flagged

 for negotiations under the EU negotiating directives for the forthcoming

 ACP-EU EPA negotiations. Close consideration of the scope of the

 EU-Chile agreement will provide valuable insights into the likely

 EU approach to the forthcoming EPA negotiations.

BSE compensation

20 May 2004

 The European Commission has allowed the

 authorities in Nordrhein Westphalia to extend aid to beef farmers

 to compensate for income losses arising from the BSE crisis. Normally

 such income aid is not allowed under EU rules. However it was felt

 that the exceptional circumstances created as a result of the BSE

 crisis justified such aid payments. While the total payment announced

 on March 12th was relatively small (Euro 1 million), this was followed

 on April 3rd by the approval of a similar national aid programme

 for French beef farmers totalling Euro 75.5 million and the approval

 on April 12th of a similar Euro 4.8 million programme for Luxembourg

 beef farmers.

Editorial comment

 Since 2000, EU beef prices have fallen by 20%. The Commission has

 estimated that two-thirds of these price declines were the result

 of the reduction in the beef intervention price introduced as part

 of the reform of the beef sector. EU beef farmers were compensated

 for these price declines by increased direct aid payments. One-third

 of the price declines however were a consequence of the BSE and

 FMD crisis, for which no compensation payments had until recently

 been made. This situation has now been changed with the various

 national schemes for which the Commission has given exceptional

 approval.

The situation of EU beef farmers is in stark

 contrast to that of ACP beef suppliers who have seen their hard

 currency earnings on exports to the EU falling between 28% and 30%

 depending on the meat cuts exported. In the case of Namibia, the

 decline in the earnings in 2001, compared to the pre-CAP reform

 period, led to income losses of around N$ 60 million. This has led

 southern African beef exporters to call for the introduction of

 a series of compensatory trade measures including:

  • abolition of the remaining 8% agricultural
     levy charged on ACP beef exports, which currently costs ACP beef
     exporters around Euro 0.1 per kg of exported beef;
  • a broadening of the beef product range
     which can be exported within the scope of the beef protocol, allowing
     the export of higher value products and reducing dependence on
     declining commodity markets;
  • reform of the licensing arrangements to
     allow greater flexibility to respond to market signals.

These are the kind of issues which could

 usefully be taken up by the ACP group with the European Commission

 in order to ensure that ACP countries retain benefits from their

 preferential trade relationship with the EU despite reform of the

 CAP which is eroding the market value of existing trade preferences.

A mountain of meat and bone meal

20 May 2004

 Following the extension of the 'temporary'

 ban on the use of meat and bone meal (MBM) in all animal feed, the

 EU is facing a massive MBM disposal problem. Although the capacity

 exists to incinerate and dispose of EU production of MBM, this capacity

 is insufficient to cope with the 1.1 million tonne backlog which

 now exists. This mountain is unlikely to be removed soon, given

 the decreasing use of MBM in animal feeds worldwide which has occurred

 in the wake of the BSE crisis.

Rosy future for French fruit farmers?

20 May 2004

 The Commission has approved a French

 national scheme to provide Euro 74.5 million in aid over a four

 year period for uprooting old trees and replanting fruit orchards

 with new varieties. Farmers will be given:

  • Euro 5,335 for every hectare grubbed
  • Euro 8,384 per hectare of apple trees replanted
  • Euro 6,097 per hectare of peach/nectarines
     trees replanted

Editorial comment

 In South Africa, changing consumer tastes for apples saw a major

 crisis in the deciduous fruit industry which now faces major problems

 of restructuring. French farmers facing similar problems can now

 receive extensive assistance to facilitate restructuring in line

 with consumer preferences. This will give French farmers a competitive

 edge over deciduous fruit producers in South Africa.

EU blames Brazil for low sugar prices

20 May 2004

 In response to Brazil's threat of a WTO

 action against the EU sugar regime, the European Commission has

 accused Brazil of being responsible for recent low world sugar prices.

 Speaking at the Agra Europe Outlook Conference, Lars Hoelgaard,

 the Director for Crops in DG VI, pointed out that "Brazil has

 been expanding its own production of sugar dramatically over the

 last ten years" and was now looking to increase its exports

 to an estimated 12 million tonnes from between 2 to 3 million tonnes.

 He maintained that Brazilian production is "clearly outstripping

 the increase in demand and depressing prices and that's creating

 a further imbalance". In contrast, the Commission has highlighted

 how its own export policy for sugar is entirely within WTO rules.

Editorial comment

 The EU's sugar export may be entirely within WTO rules but this

 is largely because the rules were structured to accommodate the

 5 to 6 million tonnes which the EU has been exporting to the world

 market in recent years, despite the EU being one of the highest

 cost sugar producers in the world.

Sugar market news

20 May 2004

 In April the SKILS sugar news site reported

 that EU sugar stocks were beginning to fall, with a 12% reduction

 expected to translate into a 20% reduction in exports. This would

 remove around 1 million tonnes of refined sugar from the world market.

It also reported that Ethiopia was expecting

 to export 15,000 tonnes of sugar to the EU market under the EBA,

 while the Kenyan government was claiming to have negotiated an increase

 in its 10,000 tonnes annual EU sugar quota, by receiving quotas

 other suppliers had relinquished.

Tighter import controls?

20 May 2004

Addressing the European Parliament Committee

on the FMD epidemic, EU Commissioner for Health and Consumer Protection,

David Byrne, highlighted how the source of the infection had been

contaminated swill which contained illegally imported materials.

This means the EU will be looking for ways to tighten controls on

imports from third countries.

Editorial comment

Ironically, although the contamination arose from illegal imports

of meat products, the EU is placing emphasis on tightening up controls

on the legally conducted trade in meat products. It is difficult

to see how this will address the problem of illegally imported meat

products. However it is likely to increase the costs of exporting

to the EU.

Re -examining residues

20 May 2004

There has been an alarming increase in

cases of imported foodstuffs, from the Far East in particular, containing

residues harmful to health. The Agriculture Council, meeting on

March 18th, discussed the need to re-examine the criteria used in

the EU to assess the effectiveness of residue checks applied by

third countries.

Editorial comment

Increased checks on residues could increase costs to ACP suppliers

as they have to tighten up their controls to check for substances

which, in many cases, have no role in production in ACP countries.

CAP emphasis on safety

20 May 2004

Food safety and the promotion of quality

food production are now central objectives of the CAP said Commissioner

Fischler when addressing the CIAA European Food Summit on April

12th 2002. The EU's new emphasis on rural development was seeing

incentives provided for the development of quality food products

which required new investment. This new focus on rural development

measures is seen as an important means of making European agriculture

more competitive. This needs to be seen against the background of

the growing importance of value added food products in EU exports

of food and agricultural products. Over the last 10 years, EU exports

of processed food products have more than doubled, while commodity

exports have increased by less than half.
Taking up this theme, EU Commissioner for Health

and Consumer Protection, David Byrne highlighted how this new EU

approach to food safety called for the uniform application of rules

and a truly level playing field within the internal market. He highlighted

how the EU's approach was not one of regulation for regulation's

sake, but a genuine desire to reduce risks to animal and consumer

health. Against this background he dismissed allegations that the

EU's new emphasis on food safety was simply disguised protectionism.

Overseeing the new Europe wide system would

be the European Food Safety Agency whose job it would be to provide

independent scientific advice in support of national food authorities.

Editorial comment

The modification of existing arrangements to allow the uniform application

of rules across the EU could create problems for third country suppliers

who have previously been supplying individual national EU markets.

For example, the introduction of zero tolerance of Citrus Black

Spot, a fungal growth periodically affecting citrus production in

ACP countries, may well be a direct consequence of the harmonisation

of EU regulations to allow the uniform application of regulations

from the Baltic to the Mediterranean. This is now threatening the

commercial profitability of citrus exports from southern Africa

to the EU. Commissioner Byrne insists that all food safety measures

are taken solely on the basis of food safety concerns. How they

are applied in practice may come to constitute unnecessary barriers

to ACP exports to the EU. This is an area where careful monitoring

will be required and where clear and transparent consultative mechanisms

will need to be set up, perhaps allowing recourse to the objective

and independent scientific assessments of the EFSA.

Food safety to everyone's taste?

20 May 2004

A USDA Foreign Agricultural Service review

of developments in EU food safety regulations noted that as EU food

safety regulations evolve, imported products could come under increasing

scrutiny, in some cases requiring new or additional documentation.

However the view was expressed that if the new regulations increase

consumer confidence, and are uniformly applied, then all suppliers,

including third country suppliers, will benefit.

Editorial comment

ACP suppliers will need to keep a record of the cost increasing

effects of new regulations in order to assist ACP governments in

taking up the issue of ensuring that genuine EU food safety concerns

do not become new regulatory barriers to trade.

TNI report on the launch of the Caribbean-EU EPA negotiations

16 September 2004

The May 2004 edition of Trade Negotiations Insights includes a review of the launch of the Caribbean-EU EPA negotiations by Junior Lodge, the Brussels representative of the Caribbean regional negotiating machinery. The paper reviews the preparations for negotiations in the Caribbean and the structure of negotiations.

It also reiterates the major challenges faced in the Caribbean negotiations, namely how to:

  • enhance real market access;
  • increase flexibility under WTO rules;
  • link effective development-assistance programmes with the phasing-in of tariff reduction commitments.

There should be ‘a twinning’ of EPA negotiations and discussions on the successor to the ninth EDF. Key areas of concern to Caribbean negotiators include:

  • fiscal-revenue losses;
  • erosion of tariff preferences;
  • the impact of duty-free access for EU exports on domestic production.

The Caribbean can draw extensively on its trade-negotiating experiences with other trade partners, and although the region will negotiate the actual agreement, each individual country will need to operationalise its implementation. The paper places considerable emphasis on mobilising non-state-actor involvement in the negotiating process at a variety of levels.

The four negotiating phases are collapsed conceptually into two blocs: identifying priorities and preparing for negotiations; and negotiating trade-liberalisation commitments. The importance of completing regional-integration processes before opening up to the EU is emphasised, as is the importance of finalising a WTO agreement before assuming any market-access obligations vis-à-vis the EU.

The paper argues that the launch of regional negotiations strengthens the need for proper coordination at the all-ACP level so that the latter can contribute valuable advice without undermining the sovereign decision-making of any ACP region. There are, for instance, shared ACP concerns over the EU stance on dispute settlement and the non-execution clause, and questions as to why an infringement by one country should lead to sanctions being applied to all regional partners. There are many potential benefits from ‘the pooling and sharing of technical studies and policy considerations among ACP regions’.

Editorial comment

This paper raises important questions of substance in the EPA negotiating process and reviews practical suggestions for effective ACP coordination during the period of regional-based negotiations and mechanisms for more effective non-state-actor engagement.

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