32 Import arrangements for rice
| (26585)
9198/05
COM(05) 202
| 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 calculation of applied duties for husked rice and amending Decisions 2004/617/EC, 2004/618/EC and 2004/619/EC
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| Legal base | Articles 133 and 300(2)EC; QMV
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| Document originated | 20 May 2005
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| Deposited in Parliament | 27 May 2005
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| Department | Environment, Food and Rural Affairs
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| Basis of consideration | EM of 13 June 2005
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| Previous Committee Report | None, but see footnote
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| Discussed in Council | 20-21 June 2005
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
32.1 Following the GATT Uruguay Round negotiations, the system
under the Community's rice regime whereby import levies varied
according to the difference between the Community threshold price
and world prices was replaced by a series of fixed tariffs, operating
alongside a ceiling on the price of imported rice linked to the
intervention price.
32.2 In 2000, the Commission put forward proposals for reforming
the rice regime, which would have involved the abolition of the
intervention price system, and would thus have had major implications
for the import arrangements. In the event, these proposals were
overtaken by the more general mid-term review of the Agenda 2000
reforms, which eventually resulted in the retention of an intervention
price, albeit with the level of support reduced by 50% as from
1 September 2004. However, although this turned out to be a much
less radical change than envisaged, it nevertheless still had
an impact on imports, because of the corresponding reduction in
the ceiling prices. The Commission therefore notified the WTO
in June 2003 that the Community intended to modify the tariff
arrangements in this area, in order to safeguard the position
of its own producers, and it put forward on 7 July 2004 two documents,[131]
which reflected the agreement it had reached with
India and Pakistan on the application of fixed tariffs for husked
and milled rice. These were to apply from 1 September 2004 until
30 June 2005 (in the expectation that in the meantime an amendment
would be tabled to the basic instrument setting up the Community
rice regime (Regulation (EC) No. 1783/2003)).
32.3 However, the Commission was not at that stage
able to negotiate an acceptable agreement with two other important
suppliers (the United States and Thailand), and, in their Report
of 21 July 2004, our predecessors noted that the United States
had said that the proposed tariff on husked rice would make its
produce completely uncompetitive on the European market. They
subsequently noted on 13 October 2004 that, when the proposal
was approved by the Council, the UK had voted against because
of the lack of agreement with Thailand and the United States,
and had urged the Commission to continue negotiations with a view
to finding a mutually acceptable outcome; and they said that they
continued to be uneasy about the wider trade implications of the
failure to reach agreement with the United States, given that
some sort of retaliation was apparently being contemplated.
The current document
32.4 The Commission has now been able to reach a
satisfactory agreement with the United States (but not, so far,
with Thailand), and, in this document it is seeking the Council's
approval. The essence of the agreement —
which would also apply to imports from India and Pakistan, apart
from Basmati rice —
would maintain a duty of €65
per tonne for husked rice, but would enable this to be reduced
to €30
per tonne, according to the volume imported.[132]
It is also proposed that this agreement would be implemented
on a provisional basis with (retrospective) effect from 1 March
2005 until 30 June 2006 at the latest. The Commission is also
expected to table shortly a proposal to amend the Community's
rice regime in order to give permanent effect to these arrangements.
The Government's view
32.5 In his Explanatory Memorandum of 13 June 2005,
the Parliamentary Under-Secretary of State (Sustainable Farming
and Food) at the Department for Environment, Food and Rural Affairs
(Lord Bach) says that the Government is pleased that agreement
has been reached with the United States, and that the very real
prospect of a damaging full-scale trade dispute has been avoided.
He believes that the outcome is a fair compromise between the
interests of rice consumers and producers in the Community, and
that it will provide a breathing space in which to conclude the
negotiations with Thailand, which are still proceeding. The Minister
has also enclosed a partial Regulatory Impact Assessment, which
suggests that the difference between the impact of this proposal
and the arrangements agreed earlier with India and Pakistan is
relatively small.
Conclusion
32.6 Given the concern which our predecessors
expressed about the implications of a failure to reach agreement
with the United States on the import arrangements in this sector,
it is obviously welcome that the prospects of a damaging dispute
have been avoided, whilst at the same time providing for a reduction
in the import duty in certain circumstances. We think it right
to report this development to the House, but we are content to
clear the document.
131 (25817) 11294/04 and (25818) 11295/04; see HC 42-xxix
(2003-04), para 1 (21 July 2004) and HC 42-xxxii (2003-04), para
20 (13 October 2004). Back
132
Thus, the duty would be €30 per tonne if imports are more
than 15% below a reference level; €65 per tonne if they are
more than 15% above it; and €42.5 per tonne if they are between
those two quantities. Back
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