WRITTEN QUESTION E-3450/00

by Jean-Claude Fruteau (PSE) to the Council

(8 November 2000)

Subject: Liberalisation of the Community market for LDCs

On 10 October 2000, the Council welcomed a Commission initiative seeking to abolish customs duties on unlimited quantities of products from the least-developed countries (LDCs).

The proposed exemption from customs duties and quotas of all the products from the world's least-developed countries would result in the abolition of restrictions on access to the Community market for such sensitive products as bananas, rice and sugar.

With respect to those three products, liberalisation is scheduled to be carried out in three stages over a three-year period as follows:

- 20 % cut on 1 January 2001,

- 50 % cut on 1 January 2002,

- 80 % cut on 1 January 2003,

- total exemption on 1 January 2004.

If that proposal were adopted as it stands, it would have a direct and adverse impact on traditional produce from the ultra-peripheral regions and, in particular, on the overseas territories. For example, production on Réunion, which is an integral part of the European Union, is subject to much heavier welfare costs than the LDCs. If such exemption were actually introduced, my island would be placed in a very difficult situation compared with Madagascar or the Comores Islands.

What measures does the Council intend to take in order to protect Community producers of rice, bananas and sugar?

Reply

(26 February 2001)

Firstly, the Council would underline that the proposal for a Regulation to extend duty-free access without any quantitative restrictions to products originating in the least-developed countries is currently being examined by the technical bodies of the Council which deal with trade policy; a decision on this proposal will be taken by the Council at a later stage.

This proposal stems from the Community initiative to improve access to the market for the least advantaged economies, already included in the new Partnership Agreement with the ACP countries signed in Cotonou on 23 June 2000.

Article 37(9) of that Agreement stipulates that in 2000 the Community will start a process, which, by the end of multilateral trade negotiations and at the latest in 2005 will allow duty-free access for essentially all products from all LDCs.

The Council would also point out that the Community is the largest importer worldwide of products from the LDCs, and that already more than 99 % of trade with those countries benefits from duty-free access, under either the Lomé Convention or the generalised system of preferences.

As regards the provisions relating to Community producers of bananas, rice or sugar, reference should be made to the Regulations on the common organisation of the respective markets(1).

As regards bananas, the Council would point out that one of the objectives of that CMO is the marketing of Community products at remunerative prices which guarantee an adequate income to producers. This regime provides for a range of structural measures and also establishes a compensatory aid scheme for possible loss of revenue by Community producers. Furthermore, additional aid is granted for certain producing regions where average production income is significantly less than the average Community income.

In the proposal amending the CMO for bananas, which it submitted in November 1999, the Commission noted that one of the objectives of the proposed transitional regime was to enable Community banana-producing regions to make appropriate adjustments to a freer market, and that appropriate use of the resources allocated to Member States from the Structural Funds, within the existing overall objectives of the Community Structural Funds, could have an important role to play in this process.

As regards rice, the Regulation which is currently in force provides for an intervention price system for the Community which guarantees a financial safety net for producers, national base areas for which compensatory payments to producers are set per cultivated hectare with higher amounts laid down for French Guiana, as well as a separate base area for metropolitan territory; specific provisions on imports are laid down for the French overseas department of Réunion for its paddy rice and white rice supplies.

The proposal amending the CMO for rice, which the Commission submitted to the Council in June 2000 and which is still under examination, provides for the raising of the current import duty to the level of the fixed tariff provided for in the Community's GATT list. According to the Commission, this would increase Community preference.

As regards sugar, current rules provide for a system of production quotas by Member State and by category of product based on sugar, minimum prices for beet, intervention prices for sugar and specific intervention prices for sugar in deficit areas within the European Union; this scheme is intended to guarantee a stable and regular income for sugar producers and manufacturers.

Additional aid is also granted for the refining of raw cane sugar produced in the French overseas departments, with a view to restoring price equilibrium between that sugar and imported preferential sugar, for which no import tariff is applicable under the ACP scheme. To ensure optimal supply to refineries, the quantities of sugar from the overseas departments and of preferential sugar intended for direct consumption are taken into account in a Community supply estimate.

The new proposal for reform of the CMO for sugar, submitted to the Council by the Commission in October 2000, and currently under examination, aims marginally to amend the current rules; in this context, the special character of the outermost regions of the Community is in any case taken into account.

The Council will not fail to take into consideration the opinions of the European Parliament on each of the sectoral proposals mentioned above.

Furthermore, the Council can assure the Honourable Member that in deciding on the LDC proposal, it will examine the possible impact of that proposal on the Community producers concerned very closely, and will bear in mind the need to ensure consistency between the proposed liberalisation measure and the sectoral reforms which are currently under examination.

(1) Regulation (EEC) No 404/93 (OJ L 142, 12.6.1993) for bananas, Regulation (EEC) No 3072/95 (OJ L 329, 30.12.1995) for rice, and Regulation (EEC) No 2038/1999 (OJ L 252, 25.9.1999) for sugar.