10 Import arrangements for bananas
| (a)
(26390)
6605/05
COM(05) 50
|
Commission Report on the operation of the common organisation of the market in bananas
|
| (b)
(26836)
12249/05
COM(05) 433
|
Draft Council Regulation on the tariff rates for bananas
|
| Legal base | (a) —
(b) Article 133EC; QMV
|
| Department | Environment, Food and Rural Affairs
|
| Basis of consideration | Minister's letter of 7 March 2006
|
| Previous Committee Report | (a) HC 38-xi (2004-05), para 1 (15 March 2005)
(b) HC 34-vi (2005-06), para 5 (19 October 2006)
|
| To be discussed in Council | Not applicable
|
| Committee's assessment | Politically important
|
| Committee's decision | (Both) Cleared
|
Background
10.1 Prior to 1993, there was no Community regime for bananas,
individual Member States continuing to operate their own, often
very different, national arrangements. However, since this impeded
the free circulation of bananas within the Community, the introduction
of the Single Market made it necessary to establish a common market
organisation. The Council therefore adopted Regulation (EEC) No.
404/93,[29] which provided
for compensatory aid for Community producers, for structural support
within the framework of rural development measures, and for rules
governing trade with third countries.
10.2 The last of these is of particular importance to the UK,
given its aim of safeguarding its traditional Caribbean suppliers
(the Windward Islands and Jamaica), and it is an aspect of the
regime on which our predecessors reported to the House at frequent
intervals as the Community struggled to maintain arrangements
which meet its own needs consistently with its obligations under
the rules of the World Trade Organisation (WTO). The upshot was
that, following changes agreed in 1998 and 2001, imports from
third countries were subject to a complex system of tariff quotas
and preferences, ACP suppliers having an annual tariff-free quota
of 750,000 tonnes, whilst other Most-Favoured Nations (MFNs) had
a quota of 2.2 million tonnes, within which a duty of €75
per tonne applied, rising to €680
per tonne once that quota had been exhausted. However, these were
to be replaced as from the start of 2006 by a tariff-only arrangement,
to be negotiated within the WTO.
10.3 Council Regulation (EEC) No. 404/93 required
the Commission to report to the European Parliament and Council
by the end of 2004 on the operation of the common market organisation,
and it duly did so in February 2005 (document (a)). This was an
essentially factual report, and, for the most part, it did not
raise any major issues for the UK. However, our predecessors noted
that Caribbean supplies to the Community had dropped by 9.6% in
the period between 1999 and 2003, and that the Commission had
highlighted an "especially marked" decrease of 51.1%
in exports from the Windward Islands. Since it has been a key
objective of the UK in this area to safeguard its suppliers in
those Islands (and Jamaica), they expressed surprise that the
Government's Explanatory Memorandum was silent on this point,
and therefore asked for its reactions to this development. In
the meantime, they continued to hold the document under scrutiny.
10.4 . The Commission's report also noted that, having
obtained a mandate from the Member States in summer 2004 for negotiations
in the WTO on replacing the current bound-specific duties and
concessionary tariff quotas, it had opened those negotiations
on the basis that the current tariff of €75
per tonne for non-ACP imports would be replaced by a bound duty
of €230
per tonne. However, a WTO arbitration panel had subsequently ruled
that this offer would not have maintained the current level of
access for the MFNs, and the Community had therefore tabled a
revised offer of €187
per tonne, coupled with a duty free quota of 775,000 tonnes for
the ACP countries (document (b)). It had also addressed the way
in which the ACP quota was divided. Hitherto, traditional suppliers
had received 89%, but the Commission had now proposed a 82%-18%
split, which it said reflected increased trade flows over the
last ten years from newer ACP suppliers, such as Belize.
10.5 As we noted in our Report of 19 October 2005,
the Parliamentary Under-Secretary of State (Sustainable Farming
and Food) at the Department of Environment, Food and Rural Affairs
(Lord Bach) had pointed out that this revised offer had not been
acceptable to the MFN countries, and that the Community had requested
a second round of arbitration. He also pointed out that the proposal
that non-traditional producers should receive a larger percentage
share had already sparked protests from a number of ACP countries
and traditional operators, and that the UK was pressing the Commission
to provide a detailed explanation for this change. In view of
this, we said that we could probably do little more than await
events, but that we would continue to hold the document under
scrutiny, pending further information on this point, and on the
response of the WTO panel to the Community's latest tariff offer.
10.6 We subsequently received from the Minister letters
of 16 November and 17 November 2005, telling us that the WTO had
ruled against the Community's offer of €187
per tonne, and that the Commission would be seeking the Council's
agreement on 21 November to a further reduction in the tariff
to €179
per tonne, which the UK would be supporting. In view of the fast-moving
nature of the negotiations, and the need for an agreement by the
end of 2005, we decided not to report these developments to the
House at that stage, but to ask the Minister to keep us informed,
particularly in the event of an agreement being reached within
the WTO.
Minister's letter of 7 March 2006
10.7 We have now received his letter of 7 March 2006,
in which he says:
"Caribbean banana production generally,
and that of the Windward Islands in particular, is at far higher
cost than that of Latin America or the major African producer
countries. As foreshadowed in my earlier letter at the end of
November the Council of Ministers approved new import arrangements
for bananas such that quotas no longer apply to imports from MFN
countries (which are now subject to an increased duty of €176
per tonne), whilst ACP imports remain subject to a quota of 775,000
tonnes on which no duty is payable.
"As part of the Council agreement it was
decided that 'at least half' of ACP imports should be subject
to a 'first come first served' (FCFS) arrangement under which
no import licences would be needed. During subsequent negotiations
on the practical arrangements, my officials sought to ensure that
Windward Islands exporters have access to sufficient licences
to avoid the need for payment of duty. Looking ahead, the WTO
waiver that allows a zero duty for ACP bananas expires at the
end of 2007 when a new mechanism Economic Partnership Agreements
(EPAs) is expected to come into effect. EPAs are being negotiated
by DTI and, where possible, the interests of the Caribbean banana
producing countries will be accounted for."
Conclusion
10.8 In the light of this further information
provided by the Minister, we are now clearing both these documents.
29 OJ No. L.47, 25.2.1993, p.1. Back
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