11 DUTY-FREE ACCESS FOR SUGAR FROM THE
WESTERN BALKANS
(26113)
14199/04
COM(04) 739
| Draft Council Regulation amending Regulation (EC) No. 2007/2000 introducing exceptional trade measures for countries and territories participating in or linked to the European Union's Stabilisation and Association process, amending Regulation (EC) No. 2820/98 and repealing Regulations (EC) No. 1763/1999 and (EC) No. 6/2000
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| Legal base | Article 133EC; QMV
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| Document originated | 26 October 2004
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| Deposited in Parliament |
10 November 2004 |
| Department | Foreign and Commonwealth Office
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| Basis of consideration |
EM of 5 January 2005 |
| Previous Committee Report |
None; but see footnote 38 |
| To be discussed in Council
| 24 January 2005 |
| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
11.1 In 2000, the Council enacted Regulation 2007/2000, which
granted duty-free access to the Community market for most agricultural
products, including sugar, from the Western Balkan countries under
the Stabilisation and Association process, aimed at revitalising
the economies of those countries. However, according to the Commission,
the high prices of sugar in the Community (typically three to
four times world prices) make it a very attractive market for
Western Balkan sugar exporters, and this has led to steep increases
in imports from that source. This in turn has resulted in the
countries concerned meeting their domestic demand from imported
sugar, which the Commission describes as being "not a sound
development in the long term", bearing in mind the need for
the countries in question to develop their economies on a sustainable
basis if they are eventually to achieve the objective of accession
to the Community. Another consideration is the discovery by the
Commission of some cases of fraud relating to origin, which earlier
resulted in a period when the relaxation of import duties was
suspended.
The current proposal
11.2 The Commission is now proposing the introduction of quotas
on imports of sugar from Albania (1,000 tonnes), Bosnia and Herzegovina
(12,000 tonnes), and Serbia and Montenegro (150,000 tonnes). It
also intends to negotiate comparable quotas with Croatia and the
Former Yugoslav Republic of Macedonia, through the bilateral Stabilisation
and Association Agreements.
The Government's view
11.3 In his Explanatory Memorandum of 5 January 2005, the Minister
for Europe (Mr Denis MacShane) says that the bulk of these imports
is consumed in Member States geographically closer to the Western
Balkans region, and that those Member States support the introduction
of quotas. On the other hand, little if any of this sugar arrives
in the UK, and the implications of the proposal are thus confined
to its effect on the Government's wider policy principles. In
particular:
- The Government favours trade liberalisation, and therefore
would see a reversion to quotas as a retrograde step.
- The current Community sugar regime is at the
root of the market distortion which this proposal is seeking to
restrict, and the UK has been a leader in discussions to remove
these distortions through substantial reform of the sugar regime,
and a move towards a sustainable system which is closer to market
realities. Commission proposals is this latter area are currently
awaited, and the Government believes that the priority lies with
this wider reform. Consequently, it does not see a justification
for bringing forward measures to introduce quotas for the Western
Balkan countries in advance of this, believing that such a measure
should only be considered as part of a balanced package.
- Free trade agreements with the Western Balkans
countries are a key part of their wider relationship with the
Community, and re-introducing supply management at this stage,
and in isolation from other changes to the sugar sector, could
send out the wrong signals about their prospects for ultimate
EU membership.
The Minister also suggests that fraud is a separate
issue which needs to be dealt with on its merits.
Conclusion
11.4 As the Minister points out, this proposal
has little direct impact on the UK, but it nevertheless illustrates
well the distortions created by the Community sugar regime, and
the continuing need for reform in that sector, a point to which
we have drawn attention on numerous occasions, most recently in
our Report of 13 October 2004.[38]
Consequently, although we see no need for further consideration
of this particular proposal, bearing in mind that the general
level of support from other Member States makes its adoption at
the Council on 24 January likely, we are drawing it to the attention
of the House.
38 (25836) 11491/04; see HC 42-xxxii (2003-04), para
2 (13 October 2004). Stg Co Deb, European Standing Committee
A, 15 December 2004, cols. 3-36. Back
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