Select Committee on Agriculture Appendices to the Minutes of Evidence


Annex

FOOD AND DRINK FEDERATION

PRIORITY OBJECTIVES FOR THE WTO MILLENNIUM ROUND

1.  INCREASE THE ACCESS FOR MANUFACTURED FOOD PRODUCTS TO THIRD COUNTRY MARKETS

  Market access would be increased by:

    —  Further reducing third countries' operational tariffs, concentrating on the most distorting.

    —  Increasing "percentage market access" agreements granted by third countries.

    —  Assimilating small volume tariff rate quotas (TRQs) into general tariff reductions, thus achieving simplification.

    —  Agreeing rules to prevent food specific non-tariff barriers (to be addressed in the first instance under the SPS—sanitary and phytosanitary measures—code).

    —  Ensuring that the accession of significant new countries toWTO is based on liberal trading, not political grounds.

  FDF stresses that a key objective for the Round should be further reductions in tariff protection for value added food products. Solutions such as a "stand-still" or even reversal of liberalisation should be avoided. The cost of reducing barriers to exports to third country markets may be to reduce the barriers against imports from third countries. The outcome must ensure that the incentive to process food and therefore add value within the EU is maintained.

  This will enhance the existing fast growth in EU exports of processed/value-added foods:

  Growth in value of EU 12 exports 1988-97

  Agricultural commodities: +70 per cent

  Processed food products: +140 per cent

  Source: European Commission

  Increased trade in added value processed food is expected to reach 75 per cent of global agricultural trade by 2000.

  In the decade to 1996, the global market for these products grew as an additional 500 million people moved up to enjoy disposable income.

  Source: FAO/OECD

  Exports will increasingly offer new sources of growth for food and beverage companies.

2.  NEGOTIATE SOUND STANDARDS UNDERPINNING WORLD TRADE

  The SPS clause should be strengthened by making the required underpinning of "sound science" more explicit and clarifying the links between the WTO, Codex Alimentarius, Zoonotics and Plant Protection bodies.

  WTO members should agree to respect environmental, animal welfare and social standards, seeking comparable conditions of production.

3.  MAINTAIN THE COMPETITIVENESS OF EU MANUFACTURED FOOD PRODUCTS

  FDF continues to support equitable liberalisation of world trade. There must be close relationships between raw materials (from either inside or outside the EU) and value added food products, thus ensuring that the EU food industry remains competitive both inside and out. So long as EU prices for agricultural commodities are above the world level, restitutions are essential to achieve competitively priced exports. The EU should not therefore accept any further commitment to cut export refund expenditure for Non-Annex I products, either before there is a correlated reduction in the price of raw materials internally (through further CAP reform), or externally before the use of measures having an equivalent effect to export refunds (such as export credits) have been controlled.

MEANS TO ACHIEVE THE KEY OBJECTIVES

  Achieving the FDF's objectives assumes that:

    1.  There is substantial reform of agricultural policies which generate protection, including the Common Agricultural Policy.

    2.  Manufactured food products will be treated by the WTO as separate from, although closely allied to the agricultural commodities which are their raw materials.

    3.  There will be regular consultation between the EU negotiators and the food industry during the Round.

    4.  All contracting parties respect the engagements made in the WTO negotiations.

  The food and drink manufacturing industry is the largest single manufacturing sector in the UK, employing over 500,000 people. Its annual turnover is some £66 billion. The industry purchases some 70 per cent of UK agricultural produce.


 
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