WRITTEN QUESTION E-1546/98

by Cristiana Muscardini (NI) to the Commission

(19 May 1998)

Subject: Unilateral concessions in the floriculture sector

Under the new system of generalized preferences, whereby the principles applied to industrial products have been extended to agricultural products (differentiated tariff reductions depending on how "sensitive" the product is), and in accordance with the Lomé agreements with more that 70 ACP countries, increasing quantities of floricultural products are being imported into the EU at reduced rates of duty or even duty free. These privileges have presumably been granted in order to encourage economic and technological development and promote job creation in developing countries.

1. Will the Commission say whether these special import arrangements are contributing to the crisis in this sector in Europe?

2. Will it say how many jobs have been created in the floriculture sector in the countries concerned as a result of the preferences and special concessions given to them?

3. Will it ascertain whether the populations of these countries genuinely benefit from the preferences given to exports to the European Union?

4. Will it say whether in some of these countries the real beneficiaries are multinational companies with holdings in local firms, some of which are based in one of the Union's leading flower-producing countries?

5. Will it propose measures to prevent multinationals increasing their income through Community budget funds?

Answer given by Mr Marín on behalf of the Commission

(3 July 1998)

1. The preferential arrangements in question include the duty-free importation of products originating in the African, Carribean and Pacific (ACP) States, and reduced rates of duty under the system of generalised preferences (GSP). However, as a large proportion of the flowers exported by the countries benefiting from the GSP are cut flowers and as such are classed as very sensitive products, only a small reduction - 15 % of the Common Customs Tariff (CCT) - is provided for, thus limiting the impact of the GSP in this sector. A further reduction of 10 % may be granted under special incentive arrangements subject to compliance with the social standards set by the International Labour Organisation (ILO). The GSP grants countries working to combat drug trafficking (including the leading flower exporters such as Colombia, Costa Rica, Ecuador and Guatemala) a suspension of duties on the products in question. However, an exceptional provision reduces the impact for cut flowers by allowing for application of the safeguard clause for these products where a certain level of export performance, based on previous export figures for the country in question, is exceeded.

More generally, it should be pointed out that with Community flower and plant production worth a total of ECU 12 000 million imports do not play a significant role - they account for no more than ECU 900 million, i.e. 13 times less.

2. Of the countries that export flowers to the Community market, 50 are beneficiaries of the tariff preferences scheme. In 1996 their exports of ornamental plants (flowers, plants and foliage of headings 0602,0603 and 0604 of the Combined Nomenclature) totalled ECU 347 million. The same year the Community imported around ECU 157 million of these products from 47 ACP States. Tables showing the main supplier countries and their export amounts are being sent directly to the Honourable Member and the Parliament Secretariat.

The Commission does not have figures on the jobs created in this sector for the GSP and ACP countries; it only has estimates for the main exporting countries. In Colombia, the direct and indirect jobs are estimated at around 75 000 and 50 000 respectively, while in east and southern Africa the number of direct jobs is thought to be between 70 000 and 100 000.

3. and 4. Flower production has four main features compared with other export products. It is a high technology sector, where the lack of a long tradition is a major handicap to the development of quality products. It is very labour-intensive: on average, 25 to 30 workers are needed for 1 hectare of roses, compared with only 1.5 people for 1 hectare of pineapples.

The sector is also very capital-intensive owing to the investment cost for greenhouses and plant material (which is usually imported) and this restricts the capacity of family businesses. Finally, it is a free-enterprise sector without protected markets or guaranteed prices, which demands a very good knowledge of international trade. Almost all of the export channels for flowers in the developing countries were therefore originally set up with foreign capital, technologies and commercial contacts, with local enterprises developing later.

In the Andean countries, the special support scheme for the fight against drug trafficking set up in 1990 under the Community's GSP encouraged export activities and generated jobs. In addition, companies often do much to improve labour conditions through various social initiatives.

5. It should be clear from the foregoing that the measures referred to by the Honourable Parliamentarian are not appropriate to the current situation.