WRITTEN QUESTION E-1725/97 by Ulla Sandbæk (I-EDN) to the Commission (23 May 1997)

Subject: European Union beef dumping in South Africa

Between 1993 and 1995 the volume of beef exported to South Africa from the EU increased from 7 200 tonnes to 53 300 tonnes. For each kilo of frozen beef exported the European taxpayer is charged about ECU 1.20 (until January 97 ECU 1.60), so it can be landed in South Africa at ECU 0.52 (frozen boneless beef), which is 51% below the domestic wholesale price in South Africa (1996 average). Beef production in South Africa fell by one third between 1993 and 1996 and farmers are estimated to have lost up to 40% of their incomes from livestock sold between the first half of 1995 and 1996. Neighbouring African countries, like Namibia, which traditionally supply South Africa with beef, are also affected. In March 1997 two resolutions were adopted by the ACP-EU Joint Assembly on the subject (ACP-EU 2091/97 and 2135/97). Both called on the Commission and the Council to end export refunds for beef exports to South Africa and Lesotho, on the grounds that these countries are in fact members of the SACU (Southern African Customs Union), which is a net exporter of beef.

1. On what grounds does the Commission classify South Africa as a net importer of beef, when it is a member of a de facto free trade area, SACU, which, taken as a whole, is exporting beef?

2. Can the Commission explain the relationship between the regular adjustments in the level of export subsidies to South Africa during 1995 and 1996 and the depreciation of the South African Rand during the same period?

3. Does the Commission find that the January reduction in the beef export subsidy by 20% is sufficient to ensure that competition between beef producers in South Africa, including the neighbouring countries in SACU, and European Union producers will be free and fair and reflect the comparative advantages of each of the parties, when EU beef producers continue to receive three times the total producer support subsidy compared to their South African colleagues?

4. Have the requests and appeals by the South African Government for halting subsidized EU beef exports to South Africa from 29 August 1996 and onwards, been brought to the attention of the Council of Ministers for Development and Agriculture, respectively?

5. What procedures have been followed by the relevant Directorates General in the Commission (DGVI and DGVIII) to consider whether the provisions of beef export subsidies to South Africa could be violating the principle of coherence set of in the Maastricht Treaty Article 130V?

6. What initiatives will the Commission take to ensure early identification and prevention of potential future cases of lack of cohesion between EU development policies and the common agricultural policy? How will the relevant concerned parties and institutions (affected groups, governments, the European Parliament, the ACP-EU Assembly and Council) be involved in the assessment of such cases?

Answer given by Mr Fischler on behalf of the Commission (30 June 1997)

1. The Community system of export refunds for beef is intended to bridge the gap between the relatively high prices that the traders would receive on the Community market and the lower price they would receive in the third country market. It is not a prerequisite that the third country is a net beef importer in order to be an eligible destination for exports of beef subject to refunds.

2. The level of the refunds is based on the world market price indicators expressed in dollars and the commitments taken on export subsidies under the Uruguay Round. The Commission has, since the beginning of this year, introduced a number of global reductions in the level of export refunds in the beef sector. Furthermore, the Commission has decided to regroup southern and eastern African countries with all other African, Caribbean and Pacific (ACP) countries. The combined effect of these measures is a reduction of export refunds for beef exports (frozen boneless beef) to South Africa by 35% from the level applied at the beginning of 1997 (i.e. from 1 455 ECU a tonne to 945 ECU a tonne at present).

3. Amongst the objectives of the Common agricultural policy (CAP) is ensuring a fair standard of living for Community producers. The CAP regime has, as its instruments, direct payments to producers, prices and exports refunds which bridge the gap between world prices and Community prices. The question of reconciling these objectives and instruments with comparative advantage was addressed in the Uruguay Round of negotiations. Amongst the conclusions were a limit in the volume of subsidised exports and a limit in budget expenditure on export refunds.

It must be underlined that the Community export refund system is not intended to undercut local prices. The Commission therefore invited the South African government in September 1996 to substantiate its claim of alleged dumping of Community beef on the South African market and to provide the Commission with arguments in order to take appropriate action. Up to now the South African government has not responded with the requested full report as an analytical basis to examine whether there is a case for additional reductions of refunds on beef exports to South Africa. Figures that are currently being floated are, in the Commission's view, rather speculative and cannot therefore serve as a basis for further Commission action.

4. The South African government's concerns on Community beef export refunds have not been formally discussed by the Development Council but the issue has been raised under other business by the Member States. In addition, the issue has been raised in the Agriculture Council and in the beef management committee which is composed of representatives of the Commission and the Member States.

5. The policy of export refunds as it affects the interests of certain countries is a matter of normal procedural consultation between the relevant Commission services.

6. The Commission does its utmost to ensure that there is a balance between its agricultural policies and development policies. As stated at point (5.) above, policy issues are addressed within the Commission through the normal process of inter-service consultation so that the views expressed by all related parties can be taken into account.