APPENDIX 8
Memorandum by the Food and Drink Federation
The Food and Drink Federation (FDF) is the voice
of the UK food and drink manufacturing industry. Our industry:
— is the UK's largest manufacturing
sector with an annual gross output of over £69 billion;
— employs some 500,000 people or around
14% of the UK manufacturing workforce;
— purchases two-thirds of the UK's
agricultural produce;
— is the world's fourth largest importer
of food and drink products with £21 billion worth being imported
annually, of which 66% comes from EU members and 19% from developing
countries; and
— exports around £10 billion worth
of food and drink products.
FDF members look to the Doha Development Round
of WTO negotiations to produce further trade liberalisation and
a fairer and clearer set of multilateral trading rules. FDF's
two primary sugar processor members would like to highlight the
complex and sensitive issues raised by trade liberalisation in
the sugar sector.
For FDF members, the key area of the negotiations
in which we wish to see progress is agriculture. However, discussions
on non-agricultural market access, non-tariff barriers to trade,
sanitary and phytosanitary measures, trade facilitation, and trade
disputes are also of interest. To achieve meaningful improvements
in the trading opportunities for processed food products FDF members
recommend that:
AGRICULTURE NEGOTIATIONS
Negotiators must ensure that balance is maintained
between the three pillars of the Agriculture Agreement and that
there is a coherent approach in the treatment of processed products
and their component raw materials.
Market access
— The chosen tariff reduction formula
must create real and substantial improvements in market access
opportunities for processed food and drink products. No tariff
lines should be exempt from reduction commitments. FDF members
do not have a pre-determined view of how many tariff reduction
bands there should be or which reduction formula should be used
within each of the bands. The formula should look to eliminate
tariff peaks and reduce tariff escalation as both hamper the growth
of trade in higher-stage processed products. The introduction
of tariff caps would be sensible so long as a limited number of
exceptions were allowed. Nuisance or very low tariffs should be
eliminated.
— Negotiators must take care when defining
"Special" and "Sensitive" Products to ensure
that these categories do not become so broad so as to negate the
key objective of providing substantial improvements in market
access. We suggest that Sensitive Products should be defined at
the 8-digit level.
— The main objective of the tariff
simplification negotiations should be to ensure that all tariffs
are transparent. There is nothing inherently opaque about a mixed
tariff and therefore we do not believe that these should be eliminated
as part of the negotiations. The permanent conversion of specific
duties into ad valorem equivalents should not be required as this
would penalize traders of certain high value products.
— We acknowledge that the EU's Meursing
Table could usefully be made more transparent. However, import
tariffs for these processed products must continue to take into
account the relative volume, and cost on the EU market, of each
product's component parts. This will be necessary to ensure that
European manufacturers are not unfairly disadvantaged on the domestic
market. We would advocate that a single formula should be created
to calculate specific tariffs for the 52 products involved. The
new tariffs should be bound and reduced from a level which reflects
the protection currently provided.
— Tariff rate quotas should be replaced
with tariff only regimes wherever possible. Where this is not
feasible, quotas should be expanded, in-quotas tariffs reduced
or eliminated, and systems of quota administration simplified
and standardised. Bidding and auctioning systems for quota allocation
and complex licensing arrangements should be avoided as they create
commercial uncertainty and additional costs.
— FDF members want to operate on a
level playing field and are therefore concerned that EU market
access openings must not be seized by third country processors
which do not adhere to environmental, food safety and social standards
required by the European consumer. Nor must they be seized by
processors which benefit from subsidized investments in production
facilities and/or subsidised raw material prices.
FDF members' specific market access objectives
— FDF members would like to see significantly
lower EU import tariffs on butter and milk powders; beef, lamb,
pigmeat and poultry; eggs; honey; coffee; maize, barley, husked
and broken rice; navy beans; dried fruit and nuts; and oil products.
These tariff cuts would help to put some downwards pressure on
the EU's relatively high raw material prices. FDF's sugar processors
would like sugar to be treated as a Sensitive Product in the negotiations.
Sugar users would not as they are looking for lower domestic prices.
— FDF members' exports consist primarily
of quality, value-added goods, such as breads, pastries, cakes
and biscuits; tea; confectionery; and breakfast cereals. We are
primarily interested in improving access arrangements for our
exports in the US, Canada, the European Free Trade Agreement states,
the Middle East and East Asia.
Export competition
— The timing and manner in which Non-Annex
1 export refunds are phased-out will be critical to the maintained
competitiveness of the EU's food and drink manufacturing industry.
These refunds are compensation for high domestic raw material
prices, and therefore the EU must ensure that reductions in NA1
export refunds are accompanied by the necessary internal market
reforms, including reductions in domestic market prices and significant
improvements in the EU's Inward Processing Relief system. Subsidy
reductions must be balanced with market access concessions and
must apply to the subsidy element of equivalent export competition
instruments used by other countries. FDF members would support
a staged phasing-out of export refunds, with those for the most
sensitive sectors being phased-out last.
Domestic support
— Substantial reductions in all forms
of trade-distorting domestic support—amber box, blue box
and de minimis—must be an outcome of the negotiations.
A redefined blue-box must not allow third countries to "box-shift"
and therefore avoid making substantial reductions in trade-distorting
domestic support. In our view, US counter-cyclical payments should
not be eligible for the blue box.
Special and differential treatment
— Negotiators should develop objective
criteria for differentiating between advanced- and less-advanced
developing countries in the WTO. Special and differential treatment
(SDT) provisions should be targeted in a graduated fashion and
made available to countries depending on their level of need.
In order to facilitate North-South and, perhaps more importantly
South-South trade, developing countries should be required to
make reductions in import tariffs commensurate with their level
of development in the agriculture and food sectors. This will
be key to achieving a development friendly outcome of the negotiations.
Geographical indications (GIs)
— The extension of protection to food
products is not an FDF priority.
NON-AGRICULTURAL
MARKET ACCESS
(NAMA)
— FDF members look to these negotiations
to eliminate residual import tariffs on seafood, fish and fish
products for secondary processing. Remaining import quotas should
be eliminated wherever possible and where this is not feasible,
quotas volumes should be expanded significantly.
NON-TARIFF
BARRIERS TO
TRADE
— Traditional market access barriers
are often not the most important inhibitors of developing countries'
trade potential. Non-compliance with health, hygiene, food composition,
traceability and rules of origin requirements often hinders or
severs trading relationships. Assistance must therefore be made
available to help developing countries in particular to understand
and comply with relevant third-country standards. Officials should
continue to monitor standards' developments in third countries
to ensure that new polices are necessary and do not represent
unjustified barriers to trade.
SANITARY AND
PHYTO-SANITARY
(SPS) MEASURES
— The existing Sanitary and Phyto-Sanitary
Agreement is a sound document which need not be re-opened or re-interpreted.
Officials must be vigilant and ensure that trade bans imposed
for SPS reasons are scientifically justified. Expeditious removal
of illegitimate bans is a priority.
TRADE FACILITATION
— Increased harmonisation and simplification
of customs procedures and documentation will benefit both developed
and developing countries by reducing administrative costs. Improved
transparency of information is necessary and third countries must
receive adequate prior notification of any relevant regime changes.
— FDF members would support:
— the introduction of national single window
communications environments;
— improved co-ordination and communication
between national and supranational authorities involved in trade;
— consolidation of existing "trusted
trader schemes";
— standardisation of, or increased consistency
in, inspection charges; and
— WTO scrutiny of national border protection
initiatives to ensure they do not become technical barriers to
trade.
— Financial and technical assistance
should be provided to help developing countries to implement the
new Trade Facilitation Agreement.
TRADE DISPUTES
— Whilst outside the remit of the Doha
Development Round, WTO members should consider ways to resolve
WTO trade disputes without resorting to the imposition of retaliatory
sanctions which often create "innocent victims". Irrespective
of whether the EU wins or loses a WTO case, the domestic food
and drink industry frequently suffers as the target of retaliatory
sanctions. These sanctions either increase raw material prices
or reduce export competitiveness.
For more information please contact the FDF
Manager of International Trade and CAP.
The Common Agricultural Policy and EU import
tariffs ensure that UK food and drink manufacturers pay comparatively
high prices for key raw materials.
FDF members would urge the Commission to accept
ambitious tariffs cuts as part of the Doha Development Agenda
in order to put some downward pressure on these raw material prices.
Without significant price cuts, the UK manufacturing industry
may continue to downsize and move offshore. Especially as preferential
trade agreements proliferate and export refunds are eliminated.
FDF members could not agree upon representative
EU and world market prices for sugar. FDF's sugar processors would
like sugar to be treated as a Sensitive Product in the negotiations.
Sugar users would not as they are looking for lower domestic prices.
UK Processed Food and Drink Exports to
Non-EU Countries in 2004
UK food and drink exports consist primarily
of quality, value-added goods. We are primarily interested in
improving access arrangements for our exports in the US, Canada,
the European Free Trade Agreement states, [21]the
Middle East, East Asia and Russia.
UK Imports of Food with Processing Potential
from Non-EU Markets in 2004
The EU seldom imposes high import tariffs on
products that cannot be produced within the EU, such as certain
fruits and vegetables, oils, coffee and tea. Tariffs on more sensitive
products, such as meat and dairy, are often prohibitively high
and imports are only possible within tariff quotas.
21 EFTA States-Iceland, Lichtenstein, Norway, Switzerland. Back
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