Technical Assistance for Development of a Strategy for Alignment with

Common Market Organisation (CMO) Requirements

TR2014/AG/10-A1-01/001

This Project is co-financed by the

European Union and the Republic of Turkey

General Presentation of Trade Mechanisms

Ante Boras
15th May 2018
 Generally on EU trade policy
EU agricultural trade policy :
• multilateral agreements GATT/WTO framework
• bilateral/regional FTA agreements between the EU and third
countries.
European Commission: 90% of the additional world food demand
over the next 10-15 years is expected to be generated outside
Europe
 Free Trade Agreements
There are three main types of agreements:
• Customs Unions
– eliminate customs duties in bilateral trade
– establish a joint customs tariff for foreign importers.
• Association Agreements, Stabilisation Agreements, (Deep and
Comprehensive) Free Trade Agreements and Economic Partnership
Agreements
– remove or reduce customs tariffs in bilateral trade.
• Partnership and Cooperation Agreements
– provide a general framework for bilateral economic relations
– leave customs tariffs as they are
 OVERVIEW OF THE FTAs
"New Generation" FTAs
• EU-South Korea: applied since July 2011.
• EU-Colombia-Peru: applied since March 2013 for Peru and August 2013 for Colombia.
• EU-Central America Association Agreement: applied since 2013.

Deep and Comprehensive Free Trade Areas

• EU-Georgia: applied since 1 September 2014, and fully entered into force on 1 July 2016.
• EU-Moldova: applied since 1 September 2014, and fully entered into force on 1 July 2016.
• EU-Ukraine: applied since 1 January 2016, and fully entered into force on 1 September 2017.

Economic Partnership Agreements

• EU-Cariforum (Antigua & Barbuda; Belize; Bahamas; Barbados; Dominica; Dominican Republic; Grenada;
Guyana; Jamaica; St. Kitts & Nevis; St. Lucia; St. Vincent & the Grenadines; Suriname; and Trinidad &
Tobago): applied since 29 December 2008.
• EU-Pacific (Fiji, Papua New Guinea): applied since 28 July 2014 for Fiji and since 20 December 2009 for
Papua New Guinea.
• EU-Eastern and Southern African (ESA) sub-region (Madagascar, Mauritius, Seychelles, and Zimbabwe):
applied since 14 May 2012.
• EU- Cameroon (Central Africa): applied since 4 August 2014.
 OVERVIEW OF THE FTAs
"First Generation" FTAs
•EU-Turkey Customs Union: Association Agreement signed in 1963; final phase of the customs union completed on 1
January 1996.
•EU-Switzerland: applied since 1972.
•EU-Norway: applied since 1 July 1973.
•EU-Algeria: applied since 1 September 2005.
•EU-Egypt: applied since 21 December 2003.
•EU-Israel: applied since 1996.
•EU-Jordan: applied since 1 May 2002.
•EU-Lebanon: applied since 1 March 2003.
•EU-Morocco: applied since 1 March 2000.
•EU-Palestine: applied since 1 July 1997.
•EU-Tunisia: applied since 1 March 1998.
•EU-South Africa Trade, Development and Cooperation Agreement: applied since 1 January 2000.
•EU-Mexico Global Agreement: applied since October 2000.
• EU-Chile Association Agreement: applied since 1 February 2003.
•EU-Serbia Stabilisation and Association Agreement: applied since 1 July 2008.
 OVERVIEW OF THE FTAs
• Turkey is EU's fifth largest trading partner (during applicaton of
FTA)

• EU exports to Turkey have grown by 185%, and imports 160%.

• EU exports to Turkey have however been stable since 2014,

whereas EU imports continue to grow which has led to a decrease
in EU's trade balance from EUR 20 billion to EUR 10 billion.
 CUSTOMS UNION

CUSTOMS UNION (Turkey, San Marino and Andorra)

• Regional Trade Agreements composed of a free trade area
with a common external tariff
• The countries set up common external trade policy
• Purpose: to increase the economic efficiency and establish
closer political and cultural ties between the member
countries
 EU and WTO
European Commission negotiates with WTO on behalf of all 28 MS, assisted by Council's
trade policy committee

The WTO's main activities are:

• Being a forum for international trade negotiations
• Resolving trade disputes (Dispute Settlement)
• Setting legal rules for trade in the form of trade agreements
• Monitoring members' trade policy through the Trade Policy Review Mechanism

The EU's objectives at the WTO are to:

• keep the world’s trading system fair, predictable and based on common rules
• modernise the world's trade markets so European goods, services and investment can benefit
• follow the common WTO rules, and make sure others also play by the rules
• make the WTO more open by interacting with both non-members and other international organisations
• bring developing countries into the WTO, its decision-making, and the global economy
• reinforce the WTO's support for sustainable trade policies worldwide
 WTO and EU
The results of the WTO negotiations:
• general rules for all WTO Members
• specific commitments so-called "Schedules of Concessions„ for
164 MS of WTO

The rules and commitments binding the WTO members,

including the EU
WTO negotiations -Doha Development Agenda 2001.
The Doha Round -Doha Development Agenda 2001.
Aim is to liberase trade making it easier for Least Developed Countries (LDCs), to
integrate into the WTO multilateral system.

The main issues are:

• Reforming agricultural subsidies

• Ensuring that new liberalisation respects the need for sustainable economic
growth in developing countries
• Improving developing countries access to global markets for their exports
 WTO negotiations- Bali Package 2013
• Agreement on a permanent solution to public stockholding for food security purposes
and to refrain from domestic of public stockholding programmes for food security

• More transparency in tariff (or tariff-rate) quota administration and not to create
trade barriers for distribute quotas among importers

• To include poverty-reduction programmes -that qualify for Green Box support

(domestic support that is allowed.)

• Declaration to reduce all forms of export subsidies and to enhance transparency and
monitoring
 WTO negotiations-Nairobi Package 2015
• The elimination of export subsidies and the similar measures which significantly
distort international trade and local markets.

• Seeking to simplify the conditions that exporters from the poorest countries have to
meet

• Giving more opportunities for businesses from the poorest countries to provide
services in the WTO's 164 member countries.

• Facilitating the integration of least-developed countries' cotton producers in global

trade.
WTO commitments binding the WTO members
The WTO Agriculture Agreement has the aim to secure fairer
competition.
The Agreement covers:
• Market access — the use of trade restrictions, such as tariffs on
imports.
• Domestic support — the use of subsidies and other support
programmes that directly stimulate production and distort trade. etc.
• Export competition — the use of export subsidies and support
programmes that subsidizes exports.
 Market access
• Prohibition of agriculture specific non-tariff measures and the
tariffs for all agricultural products.

• The prohibited measures : quantitative import restrictions,

variable import levies, minimum import prices, discretionary
import licensing procedures, voluntary export restraint
agreements and non-tariff measures maintained through state-
trading enterprises and any similar measures other than customs
duties
 Domestic support
• Green Box measures: must not distort trade. They have to be
government-funded and must not involve price support
• Amber box: measures to support prices, or subsidies directly
related to production quantities
• Blue box: Amber box with conditions to reduce trade distortion
 Export competition
The obligation is to reduce:

• direct export subsidies contingent on export performance;

• sales of stocks of agricultural products trough export at prices lower than prices for same product on the
domestic market;

• producer financed subsidies such as government programmes which require a levy on all production which is
then used to subsidise the export of a certain percent of that production;

• cost reduction measures as subsidies to reduce the cost of marketing goods for export: this can include
upgrading and handling costs and the costs of international freight, for example;

• internal transport subsidies applying to exports only, such as those designed to bring exportable produce to
one central point for shipping; and

• subsidies on incorporated products in agricultural products such as wheat contingent on their incorporation in
export products such as biscuits or whiskey.
 Architecture of a “classical” CMO before the reforms

Community territory
Protected by an external common border
And a common customs tariff

Sluicegate (threshold) price

Intervention or trigger price

COMPENSATORY TAX

arrival Price of products Price support system Export Refunds

For import Buying in, private storage, withdrawal,
aid for processing,…

+ supply management system (milk quota,, planting rignts etc?)

Price on world market Price on world market
 3 FOUNDING PRINCIPLES OF MARKET MANAGEMENT

• Preference for community product

• Single prices

• Financial solidarity
 TRADE MECHANISMS
• Trade mechanisms are set of instruments for control of transfer
of goods in terms of price and quantity in order to stabilise the
common market

• Trade mechanisms are not optional as support measures for sector

• Each MS must implement these mechanisms to protect common

market
 TRADE MECHANISMS
EXPORTS
• Export licence (for monitoring)
• Export refunds (to align on world market price)
• Export taxes (rare: in case of shortage in the EC)

IMPORTS
• Import licences (for monitoring)
• Single levy system (to align on EC threshold price)
• Safeguard measures
• Tariff quota (bilateral agreements)
• System of entry prices
 PRODUCT SECTORS THAT CAN BE PUT UNDER LICENCING
REGIME
 cereals  live plants
 rice  beef and veal
 sugar  milk and milk product
 seeds  pigmeat;
 olive oil and table olives  sheepmeat and goatmeat
 flax and hemp  eggs;
 fruit and vegetables  poultrymeat
 processed fruit and vegetables  ethyl alcohol of agricultural
 bananas origin.
 wine
 LICENCING SYSTEM
LICENCE is document presenting right and obligation for IMP/EXP operation

Main features:
• Holder
• Term of validity
• Quantity
• Type of operation
• Security for operation
• Valid in all Member States
 LICENCING SYSTEM
• European Comission – seting rules

• MS issuing authority –responsible for implemention in MS

• MS Customs- responsible for controls on the spot

• Licences are foundation for all other rights (quota and export
refunds)
 LICENCING SYSTEM
COMISSION delegated powers:
• products subject to the presentation of
licence
• the cases where licence is not required
• the rights and obligations deriving from
the licence
• Special cases - of non compliance
• the issue of licence is subject to the
presentation of a document issued by a
third country
• the transfer of the licence
• additional conditions for import
• the cases and situations where the
lodging of a security is or is not
required.
 LICENCING SYSTEM
COMISSION Implementing powers : • amount of security

• format and content of the licence • the proof of fulfilment of obligations

• the submission of applications • the level of the quantity tolerance

• issuing licences + special terms • Extracting, duplicating, replacing,

• the period of validity • limiting the quantities

 Specific provision for certain product sectors
• Hops: Quality standard = EU

• Wine: rules of grape must enrichment (security lodged that

products are not vifnified or properly labeld after vinification)

• Sugar:Import licences for sugar for refining issued only to full-time max
quantities 2 500 000 tonnes/ maketing year in white sugar equ.
 Tariff Quota
• ‘import tariff quota’ means a specified quantity of goods that can be
imported during a limited period with total or partial suspension of
the normal custom duties

• Import tariff quotas opened for a period of 12 months

• The import tariff quota period may be divided into several subperiods

• Commission is in charge for opening quotas in each subperiod

 Tariff Quota
Tariff quotas
• In general, TRQs are not well utilised, or are only used for a
limited number of products.
• The exception is Israel, which is mostly filling its TRQs.
• Many Mediterranean partners face challenges exporting into
the EU market due to the EU's regulatory requirements and
standards. In many cases, the regulatory environment in
partner countries does not correspond to EU requirements.
 Export refunds
• basic products:

cereals
rice
Sugar
beef and veal
milk and milk products
pigmeat
eggs
poultrymeat

• processed goods (except meat)

• live animals - compliance with the animal welfare requirements

 Export refunds
• The same export refunds in the whole Union.

• They may vary according to:

– Type of product
– the market situation of certain markets
– obligations resulting from international agreements

• Refunds on basic products exported only on application and on presentation of an

export licence.

• The refund paid on basis of proof that:

– (a) the products have left the customs territory of the Union in accordance with the export
procedure referred to in Article 161 of the Customs Code

– (b) in the case of a differentiated refund, the products have been imported into the destination
indicated on the licence or another destination for which a refund was fixed
 Curent state of play
• All trade mechanisms are in force but this is highly protectionist set of tools for old times

• WTO negotiations had high impact on level of implementing TM–it is getting lower

• EC agreed to suspend Export refunds in 2013

• For increase of export new measures are used which are more humane -like promotion
on third country markets or similar

• As result of high speed of electronical information flow and DG-Taxud real time data
base of import and export operation status old licencing system is slow and obsolete –
the number of products under licencing system is lower
Custom duties in EU for some agricultural products 2018
• 0201 Meat of bovine animals, fresh or chilled in generally: 12,8% + from 176,8 € to 303 €/100 kg/net
weight for boneless met
• 0401 Milk and cream
– 0401 20 11 Not exceeding 3 % milk: 18,8 €/100 kg/net
– 0401 20 91 fat content 3% to 10% : 3 22,7 €/100 kg/net
– 0401 50 11 of a fat content, 10 % to 21% : 57,5 €/100 kg/net
– 0401 50 31 of a fat content, 21 % to 45 %: 110 €/100 kg/net
• 0703 20 00 Garlic: 9,6 + 120 €/100 kg/net
• 1006 30 Semi-milled or wholly milled rice: 175 €/t
• 1101 00 Wheat flour: 172 €/t
• 1212 91 20 Sugar beet: 23 €/100 kg/net weight
• 1509 Olive oil : from 122,6 €/100 kg/net to 134,6 €/100 kg/net weight
Custom duties in EU for some agricultural products 2018
• 1701 99 10 White sugar : 41,9 €/100 kg/net
• 1701 13 10 Cane sugar For refining 33,9 €/100 kg/net
• 2003 10 – Mushrooms of the genus Agaricus: 18,4% + 191 €/100kg/net
• 2204 Wine of fresh grapes: 32 €/hl to 12,1 €/hl.
• 0802 nuts:1.6 % to 5,6 %
• 0803 90 10 Bananas Fresh. 117 €/1 000 kg/net
• 0804 20 90 figs Dried. 8 %
• 0810 Other fruit, fresh-berries 12,8% - 8,8%
Under entry price regime:
• 0805 Citrus fruit, 0806 Grapes, 0808 Apples, pears and quinces, 0809 Apricots, cherries,
peaches, nectarines, plums and sloes, 0702 Tomatoes, 0707 00 Cucumbers, 0709 10 00
Artichokes, 0709 93 – – Pumpkins
EU external trade – position on global market
EU external trade – import by product category
EU external trade – import by product category
EU external trade – main export destinations
EU external trade – main import origins
EU and Turkey-export
EU and Turkey-import
EU28 agri-food exports – top 20 destinations
EU28 agri-food imports – top 20 origins
 This publication has been produced with the financial assistance of the European Union

The contents of this publication is the sole responsibility of NIRAS IC Sp. z o.o. and can in no way be taken to reflect
the views of the European Union