10. IMPORT DUTIES ON CEREALS
(a)
(24118)
15535/02
COM(02) 731
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Draft Council Decision on the conclusion of an Agreement in the form of an exchange of letters between the European Community and the United States of America relating to the modification of concessions with respect to cereals provided for in Schedule CXL annexed to the GATT 1994.
Draft Council Decision on the conclusion of an Agreement in the form of an exchange of letters between the European Community and Canada pursuant to Article XXVIII of GATT 1994 for the modification of concessions with respect to cereals provided for in EC Schedule CXL annexed to the GATT 1994.
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(b)
(24119)
15537/02
COM(02) 732
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Draft Council Regulation amending Regulation (EC) No. 1766/92 with regard to the calculation of import duties on certain cereals.
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| Legal base: | (a) Articles 133 and 300(2) EC; qualified majority voting
(b) Article 37 EC; consultation; qualified majority voting
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| Documents originated: | (a) and (b) 11 December 2002
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| Deposited in Parliament: | (a) and (b) 20 December 2002
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| Department: | Environment, Food and Rural Affairs
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| Basis of consideration: | EMs of 13 January 2003
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| Previous Committee Report: | None
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| To be discussed in Council: | (a) 17 December 2002
(b) Following consultation with the European Parliament
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| Committee's assessment: | Politically important
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| Committee's decision: | (Both) Cleared, but further information requested
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Background
10.1 Under the Community's cereals regime, import duties
for all cereals are calculated on the basis of the difference
between US commodity exchange quotations (which, after allowing
for such factors as transport costs, are taken as representative
of world prices) and a figure equal to 155% of the Community's
intervention price. Last year, price rises on the US market triggered
a reduction in the Community levy, which in turn led to a surge
in low-priced imports from other countries, particularly Russia
and Ukraine. Because the existing arrangement forms part of the
schedule of concessions agreed by the Community in the World Trade
Organisation (WTO) Uruguay round, any proposals for change are
subject to the procedures laid down in Article XXVIII of the GATT,
which provides for consultations with the principal suppliers
of the commodities concerned. Consequently, in order to address
the resulting market situation, the Commission was given a mandate
by the Council in July 2002 to consult the United States and Canada
(Russia and Ukraine are not WTO members).
The current document
10.2 The outcome of those consultations is contained
in these documents, which comprise respectively Council Decisions
on the conclusion of agreements between the Community and the
United States and Canada, and a draft Regulation which would amend
the relevant Community legislation.[25]
The essential element of the agreement is that the present variable
levy system would for medium and low-quality wheat and for barley
be replaced by a new system of tariff rate quotas (TRQs). These
would involve, with effect from 1 January 2003:
- a TRQ of 2.98 million tonnes of medium and low-quality wheat
with a fixed duty of _12 per tonne (of which 572,000 tonnes is
reserved for the USA, and 38,000 tonnes for Canada), with all
imports outside the TRQ attracting the WTO bound duty rate of
_95 per tonne;
- a TRQ of 50,000 tonnes for malting barley and 300,000 tonnes
for other barley, with rates of _8 and _16 per tonne respectively:
all other such imports would attract the bound WTO rate of _93
per tonne.
For all other cereals, the current system for calculating Community
import duties would remain unchanged.
The Government's view
10.3 In his Explanatory Memoranda of 13 January 2003,
the Parliamentary Under-Secretary of State at the Department for
Environment, Food and Rural Affairs (Lord Whitty) says that the
UK regards the agreements reached with the United States and Canada
as satisfactory, and — as foreshadowed in a letter he sent
us on 10 December — voted in favour of their adoption at
the Agriculture and Fisheries Council on 17 December 2002. He
adds that, although Russia and Ukraine were not party to the consultations,
the TRQs will be open to them on Most Favoured Nation (MFN) terms,
and the Commission is exploring with both the possibility of country-specific
quotas.
10.4 The Minister also points out that the agreements
with the USA and Canada maintain the existing arrangements for
imports of high-quality wheat and maize into the Community, which
is the major interest for the UK. He adds that the higher duty
rates for lower-quality grains implied by the TRQ system are intended
to stabilise market conditions, but should not result in any significant
price increases. He therefore concludes that there are unlikely
to be any substantial risks, benefits or costs to UK industry,
but that new implementing rules would be simpler than the existing
arrangements, He also points out that the changes have been welcomed
by most sectors of the UK industry.
Conclusion
10.5 We have noted these developments with interest,
and, since their impact within the UK seems likely to be limited,
we are clearing the documents. However, in doing so, we think
it right to register two points.
10.6 First, to the extent that consumers might have
benefited from a higher volume of lower-priced imports, the speed
with which the Community has acted to preserve market stability
provides an interesting insight into priorities within the Council.
Secondly, given the deal which has been struck with the USA and
Canada, it is important that agreement should be reached with
Russia and Ukraine, particularly if there was any suggestion that
failure to do so could lead to retaliatory action. We would therefore
be glad if the Minister could keep us informed of the outcome
of the negotiations with those two countries.
25
Council Regulation (EEC) No. 1766/92 OJ No. L.181, 1.7.92,
p.21. Back
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