WRITTEN QUESTION E-1296/01

by Adriana Poli Bortone (UEN) to the Commission

(3 May 2001)

Subject: Impact of the trade policy on the Common Agricultural Policy

The EU's trade and development policies are increasingly geared towards drawing up agreements with third countries on trade concessions.

Clearly, the Community's interest lies in encouraging exports of hi-tech products of high added value, whilst in most cases the countries benefiting from the above-mentioned concessions tend to export agricultural products.

Can the Commission provide the following information:

1. the list of all unilateral tariff concessions not subject to contract (GSP), as well as the bilateral and multilateral tariff concessions currently in force;

2. the quantity of agricultural and fisheries products which may be imported under such schemes and that which is actually imported;

3. the direct and indirect burden of this on the Community budget and on the EAGGF in particular;

4. in the interests of transparency, why are these costs not entered under a specific budget heading, which would highlight the EU's openness to third countries whilst at the same time highlighting the cost to the agricultural sector of the trade policy?

Answer given by Mr Lamy on behalf of the Commission

(26 July 2001)

Trade concessions are granted by the Community to third countries as there is an economic interest for the Community to foster trade with a certain region so as to increase economic advantages for both partners. Moreover increased trade flows can contribute to the development and stabilisation of third countries and facilitate their integration into the world economy.

Implications for the Common Agricultural Policy (CAP) are always carefully considered before a decision is made.

1. EU tariff concessions currently in force:

- Generalised tariff preferences (GSP): The Community's scheme of GSP provides preferential market access to all developing countries and economies in transition. Beneficiaries of the Community's GSP are listed in Annex III of the GSP Regulation(1). This list includes 146 independent countries and 25 dependent or administered territories. To the extent that tariff preferences under the Cotounu agreement are more favourable, African, Caribbean and Pacific (ACP) countries are likely to use rather the latter. The GSP offers four different arrangements available to different countries and including different products. Preferences are expressed as a percentage by which most favoured nations (MFN) duty rates are reduced,

according to the degree of sensitivity of each product. Since 1995, all GSP preferences are granted without quantitative restrictions. Under the general arrangements, preferences tariff range from 85 % of the normal Common Customs Tariff (CCT) for very sensitive products to duty free access for non-sensitive products. The Commission on 12 June 2001 adopted a proposal for revision to the Generalised Scheme of Tariff Preferences for the years 2002 to 2004. This regulation is designed to simplify the GSP regime, restore the level of its benefits and target them more effectively in the interests of developing countries. It is also intended to improve the effectiveness of special incentives to promote core labour and environmental standards.

The special arrangements to support countries combating drug trafficking and production provide additional preferences to the countries of the Andean Community (Bolivia, Colombia, Ecuador, Peru, and later Venezuela), and of the Central American Common Market (Costa Rica, Guatemala, Honduras, Nicaragua and El Salvador) as well as to Panama. The beneficiary countries of these arrangements benefit from duty-free access for all industrial products included in the general arrangements as well as for certain agricultural exports (listed in Annex VII of the GSP regulation) not included in the latter. The Republic of Moldova benefits of the special incentive arrangements for the protection of labour rights under which additional preferences are granted. These additional preferences almost double those available under the general arrangements (see article 10 of the GSP regulation).

The Everything But Arms initiative opens the Community market duty free and without any quantitative restrictions to all least developed countries (amendment to the GSP regulation). The only exceptions are arms, which have never been included in the GSP, as well as sugar, rice and bananas, which will be liberalised for those countries over the next eight years.

- ACP Economic Partnership: The Agreement signed in February 2000 forwards non-reciprocal trade preferences awarded under Lomé for an additional eight years, during which time the Community intends to negotiate reciprocal Free Trade Agreements (FTAs) with sub groups of the ACP countries.

- Asymmetrical trade preferences for the Balkans: The Council Regulation (EC) No 2007/2000 of 18 September 2000 (subsequently extended to Serbia) provides for the extension and improvement of the Community autonomous trade preferences for Western Balkan countries. The regulation brings the duty free access of the imports of these countries to 95 %. The decision abolishes remaining tariff ceilings for certain industrial products originating in Albania, Bosnia-Herzegovina, Croatia and Serbia and improves access for agricultural products including processed agricultural and fishery products originating in these countries.

- The Europe Agreements: The Europe Agreements concluded with accession countries aim to establish a free-trade area between the Community and the associated countries, on the basis of reciprocity but in an asymmetric manner. As a result of this process, industrial products from the associated countries have had virtually free access to the Community since the beginning of 1995, with restrictions in some sensitive sectors, such as agriculture and textiles.

There are a number of other Community trade agreements containing tariff concessions, e.g. the free trade agreement with Mexico which entered into force in July 2000, the Agreements with the Mediterranean countries that foresee the gradual establishment of a free trade area with 2010 as a target date, the Trade, Development and Co-operation Agreement with South Africa which provides for the establishment of a Free Trade Area, through an asymmetric tariff dismantling over a transitorial period of 10 years for the Community and 12 years for South Africa.

More comprehensive information on bilateral and multilateral tariff concessions will be sent direct to the Honourable Member and to Parliament's Secretariat.

2. Products imported by the Member States under preferential schemes:

- Quantities imported under quota and benefiting from tariff concessions are monitored by the relevant Commission's services. In particular for sensitive products like fruit and vegetables a database providing a daily updated level of use of preferential quota is available for public consultation on Internet.

- In many cases actual imports are far below attributed quotas. This is due to various reasons related to the lack of capacity by the exporting country to comply to minimal quality requirements for selling on Community markets, but also to the weakness of the export and trading infrastructure.

- Finally, considering that the Community is at the same time the biggest importer and the biggest exporter of agricultural products, Community concessions to third countries should be appreciated in the light of reciprocal concessions given by third countries to the Community in agricultural trade. These concessions facilitate improved penetration of Community agricultural commodities on foreign domestic markets.

- For fishery products a chart is sent direct to the Honourable Member and to Parliament's Secretariat.

3. and 4. The financial impact of trade concessions in agriculture:

- In 1997 (latest figures available), the total value of agricultural imports under the GSP amounted to 9 480 million. The loss of budgetary revenue during that year was 473 million.

- The Commission has no other aggregated data regarding the cost of trade concessions to the Community budget. However, whenever a proposal for trade concessions is introduced by the Commission, an impact study is made for each traded product, in particular as regards budget costs. The financial impact is reflected in the financial appendix that is annexed to the proposal. However, the actual cost of trade concessions cannot be quantified in advance, -except for the full volume of a tariff quota concession, as it depends on the amount of actual trade that takes place under the trade regimes at preferential conditions.

(1) Council Regulation (EC) No 2820/98 of 21 December 1998 applying a multiannual scheme of generalised tariff preferences for the period 1 July 1999 to 31 December 2001 (OJ L 357, 30.12.1998, p. 1).