WRITTEN QUESTION P-1759/98

by Honor Funk (PPE) to the Commission

(27 May 1998)

Subject: Export refund policy in respect of barley for brewing

As a result of the COM and the raw materials prices in the EU, it is clear that exporters to third countries now need a further export subsidy to compensate for the low price of barley for brewing on world markets to which European malthouses have no access.

In practice, however, the level of refund set by the Commission totally fails to fulfil its function: for example, whereas on 13 March a refund of ECU 47 per tonne was granted for feed barley to enable it to be competitive on world markets, the refund for unroasted barley malt at that time was ECU 24,50 per tonne, and this was the highest level of refund so far for 1997/1998.

In addition, the Canadian Wheat Board is paying export subsidies to Canadian malthouses which contravene the WTO agreement, guaranteeing firms prices for brewing barley in respect of individual, non-transparent export contracts, which are significantly lower than the prices on the Canadian malt market.

1. Can the Commission see a connection between the drop in barley-growing areas and barley prices on the one hand, and its current export refund policy on the other?

2. What measures is the Commission taking to put a stop to the trade practices in Canadian malt which are contrary to the WTO agreement?

Answer given by Mr Fischler on behalf of the Commission

(24 June 1998)

The common organisation of the market in cereals makes no special distinction between malting barley and feed barley, so exports of malting barley are not treated differently. Actually, from a strictly technical point of view, any barley could be used for brewing, although on the Community market it is especially two-row barleys that are used for malt production. This fact also makes it advisable not to introduce different treatment for barleys intended for brewing as compared with feed barleys.

Community output of two-row barley has been increasing since 1995. The area under this type of barley went from 5,8 million hectares in 1995 to 5,9 million hectares in 1996, and 6,2 million hectares in 1997 (EUR 15 in all cases). For the 1998 harvest, as a result of the unfavourable weather conditions, the estimated area is 6 million hectares. With regard to the Community output of malt statistics also show an increase: 6,5 million tonnes in 1994 (EUR 12), 6,8 million tonnes in 1995 (EUR 15 as from 1995), 7,1 million tonnes in 1996, and an estimated 7,3 million tonnes in 1997/1998. The export licences for malt issued for each marketing year are also on the increase: 1,4 million tonnes in 1993/1994, 1,7 million tonnes in 1994/95 (EUR 12) and in 1995/1996 (EUR 15), and 2 million tonnes in 1996/1997 and 1997/1998 (EUR 15 in both cases).

In determining the amount of the barley export refund, only the price difference between the world market and the Community export market can be used.

The malt export refund is fixed, in practice, with a very high degree of stability for each marketing year owing to the specific practices of this type of trade. Malt exporters cover their sales on the world market by contracts concluded for one year. Up to now, the practice has been to draw most of the export licences in the period from September to December of each year, which corresponds to the period during which most export sales contracts are concluded. For this reason the validity of export licences for malt taken out during this period covers 11 months plus the month of issue.

Since this is the practice for almost all Community malt exports, most malt export licences are issued between October and December of each year and the refund applicable on these exports, consequently, is established at the same time.

As regards the practices applied to exports by certain organisations in third countries, obviously when it can be proved that a practice not in conformity with the rules of the World Trade Organisation (WTO) is being applied the Commission and the other members of the WTO can assert their rights.

So far, the trade has presented the Commission with no concrete proof of the practices of the Canadian Wheat Board in supplying Canadian maltsters with malting barley at a special competitive price which enables Canadian malt to compete with or undersell European malts of similar quality.

In conclusion, the policy applied does not seem to have a particularly unfavourable effect on European exports either of malting barley or of malt. Moreover, the Euromalt association, which represents European maltsters who export, has up to now always strongly defended the 11 - month validity of malt export licences.