Summary
New arrangements have been set in place for phytosanitary clearing of South African citrus through the port of Vigo. This is causing consternation in the financially stressed Spanish citrus sector, with calls being made for a ‘political solution’ to ease their plight. A variety of trade restrictive measures are being advanced including: the designation of a single EU port of entry to maximize the effectiveness of phytosanitary controls; EU in country inspections in South Africa; mandatory cold treatment for all imports; precautionary border closures when a maximum permitted level of interceptions occurs; and the invocation of the safeguard provisions of the EU-SADC EPA. However the commercial implications of many of these measures would lead generate fierce resistance from northern European commercial interests (traders, port authorities, supermarkets). Any pro-active use of pre-export risk assessment requirements against the South African citrus sector meanwhile would send shock waves across all ACP fruit and vegetable exporting countries are of which have weaker compliance enforcement capacities than the highly organized South African citrus sector.
In September 2019 it was announced ‘the port of Vigo will be the entry point for South Africa citrus fruit’, with some 40,000 tonnes expected to be delivered during the season. These containerized shipments will be subject to SPS controls on board ship, with this being expected to facilitate delivery. The commencement of deliveries will however overlap with the Castellon clementine season, with this heightening Spanish producer fears over growing competition from South African exporters in a rapidly evolving global citrus market which is seeing a growing role for southern hemisphere producers in price formation (1).
With the 2018/19 Spanish orange campaign being plagued by low prices which are scarcely covering production (1), there has been an intensification of calls for more effective controls on imports of citrus fruit from South Africa (2). Spanish citrus producers increasingly take the view a ‘political solution’ is needed to ease the plights of Spanish citrus producers (2).
Amongst the measures favoured by Spanish citrus producers are stricter SPS controls for the fungal infection Citrus Black Spot (CBS) and pest infection false coddling moth (FCM). Spanish producer organisations maintain there have been 73 cases of CBS interceptions and 63 interceptions for FCM over the past five years. Against this background demands are being made or all citrus shipments to take place through a single port of entry to the EU so as to achieve ‘maximum specialization in phytosanitary controls’ (3).
Trends in South African Citrus Exports to the EU Overall and by Main Country of Entry (tonnes)
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | % EU | |
| EU Total | 583,406 | 645,223 | 579,050 | 655,155 | 672,914 | 742,384 | 814,031 | |
| Netherlands | 263,179 | 305,013 | 270,973 | 313,288 | 335,311 | 373,407 | 389,001 | 47.8% |
| UK | 133,216 | 140,953 | 133,246 | 146,208 | 145,031 | 162,175 | 176,197 | 21.6% |
| Portugal | 42,565 | 44,070 | 43,811 | 59,000 | 67,494 | 82,876 | 107,306 | 13.2% |
| Italy | 43,471 | 48,480 | 48,825 | 51,057 | 49,082 | 53,695 | 68,158 | 8.0% |
| France | 26,465 | 29,117 | 23,749 | 31,234 | 18,494 | 10,092 | 13,609 | 1.7% |
| Belgium | 10,960 | 12,456 | 9,655 | 9,443 | 10,087 | 12,186 | 13,111 | 1.6% |
| Spain | 23,863 | 19,439 | 12,093 | 24 | 96 | 364 | 1,172 | 0.1% |
Source: EC Market Access Data Base
Spanish producers have also called for ‘the establishment of food safety and plant health inspections in the countries of origin’ and for the EU to apply the same SPS controls on citrus destined for juice production as for fresh citrus imports, since currently a lower level of precautionary control is applied. In addition there remain ongoing calls for the introduction of a mandatory cold treatment regime for citrus fruit from South Africa (3).
The Spanish producer organization AVA-Asaja ‘also wants an impact study to assess the consequences of the trade agreements signed by the EU with South Africa in 1999 and 2016’, given the ongoing increase in the area under citrus production in South Africa, where it is claimed ‘23 million trees have been planted between 2012 and 2016’. This call has been supported by citrus producer groups in France, Italy and Portugal, who have also endorsed calls for stricter Phytosanitary control on imports from 3rd countries, including through ‘a precautionary border closure if a certain level of interceptions is exceeded’ (4).
This growth in South Africa citrus production is confirmed by the USDA which in its June 2019 review of the South Africa citrus sector highlighted how ‘the production and export of soft citrus, lemons and limes is expected to continue its strong growth in the 2018/19 MY, based on the increase in area planted, high level of new-plantings coming into full production and improved water management techniques by farmers’.
However it should be noted this USDA analysis also highlighted the strong ongoing growth of South African citrus exports to the US and other non-EU markets. Indeed the share of the EU market in South African exports of soft citrus fell from 66% in 2016 to 54% in 2018, while the importance of the EU market for grapefruit exports fell from a 47% share in 2016 to a 40% share 2018, with even the EU share of South African exports of fresh oranges falling marginally (5).
A process of export market diversification appears to be underway in the South African citrus sector with some very strong growth in Russia and Canada (double) and China (an 8 fold increase) underway.
Nevertheless there remains increasing pressure from Spanish citrus producers ‘for the application of the safeguard clause included in the free trade agreement between the European Union and South Africa’ (1) in the citrus sector.
| Comment and Analysis
The growing focus on finding a ‘political solution’ to the crisis in the Spanish citrus sector means pressure is likely to mount for new restrictions on imports from South Africa. While there are no shortage of potential pressure points available to restrict trade calls for all citrus shipments to take place through a single port of entry to the EU are likely to be given scant consideration. Not only would this be an anti-competitive measure in the sea transportation and port sectors but it would also be likely to meet fierce competition. In 2018 ports in the Netherlands accounted for fully 62% of the value of extra-EU27 citrus imports from South Africa, valued at €332 million and 49% of total EU27 extra-EU citrus imports valued at €857 million. Probably the simplest area for the EC to respond to Spanish citrus sector demands is through the initiation of a review of the impact of the EU-South Africa trade agreements on the Spanish citrus sector. However if such an initiative went forward the EC is more likely to be inclined to favour the commissioning of an even wider report on the impact of trade agreements on the EU citrus sector. This would give the appearance of action in a way which responded to Spanish citrus sector calls, while pushing more contentious decisions on restrictive trade measures further down the line. Calls for the use of the safeguard clause under the EU-SADC EPA could also find traction in the EC, given the on-going dispute over South Africa’s application of safeguard provisions in the poultry meat sector. Perhaps of more fundamental and more wide ranging concern would be any action taken in light of the entry into force of the EU’s new plant health regulatory framework which, with the exception of bananas, pineapples, coconut, figs and dates, requires all ‘high risk’ horticultural imports to the EU to be accompanied by a phytosanitary certificate. These certificates however will only be issued for ‘high risk’ products after a full risk assessment has been carried out. Against this background the new regulation makes provision for imports to the EU being prohibited ‘unless and until a detailed risk assessment has been carried out to determine if imports are acceptable and, if so, under what conditions’.
Should the EC choose to respond more fully to Spanish citrus sector demands this would appear to be the most obvious pressure point, alongside the raising of possible safeguard action under the EU-SADC EPA. This would de facto mirror the approach the South African government has de facto used in the poultry meat sector, where SPS restrictions linked to outbreaks of avian influenza in the EU where subsequently followed by new EPA based safeguard measures. The adoption of such an approach however would be likely to send shock waves across the ACP, for if the highly organised South African citrus sector cannot satisfactorily comply with new EU plant health regulation requirements, then exports of fruit and vegetables exporters from all ACP countries would be facing the threat of market closure. This being noted the value of the extra EU import trade for citrus fruit alone, never mind all potentially affected fruit and vegetable products, is such that any move in this direction would be likely to lead to cries of outrage from the affected commercial operators in northern Europe, primarily but not exclusively in the Netherlands. Currently there is one bright spot for the Spanish citrus sector, namely the aversion of a no-deal Brexit on the 31st October and the conclusion of the EU-UK Withdrawal Agreement which effectively defers any such prospect until 1st January 2021. However while the UK’s announced temporary post-Brexit MFN tariff schedule includes zero tariffs for all citrus imports into the UK (6), allowing continued duty free access for Spanish citrus fruit, Spanish exporters would then have to compete on the same basis as all other 3rd country suppliers on the UK market. This could serve to undermine the position of Spanish citrus producers on the UK market at certain times of the year even if a free trade area agreement between the EU and UK is eventually agreed. In terms of the long term perspective for Spanish citrus exports on the UK market the best outcome would be a UK general election result which saw a new government emerge which either revoked the UK’s request to leave the EU or left the EU’s political institutions, while the UK remained part of the EU customs union and single market. This would mean the UK government would never be able to implement its announced autonomous post-Brexit MFN tariff policy and citrus exporters would continue to enjoy the margins of tariffs they currently enjoy on the UK market. |
Sources
(1) elperiodicomediterraneo.com, ‘The port of Vigo will be the entry point for South Africa citrus fruit’, 20 August 209
https://www.freshplaza.com/article/9134890/spain-the-port-of-vigo-will-be-the-entry-point-for-south-african-citrus-fruits/
(2) levente.emv.com, ‘7,000 kilos of oranges for 100 Euro in Spain’, 20 August 2019
https://www.freshplaza.com/article/9134887/7-000-kilos-of-oranges-for-100-euro-in-spain/
(3) ‘140 shipments of South African citrus intercepted because of pests since 2015’ 26 August 2019
https://www.freshplaza.com/article/9136753/140-shipments-of-south-african-citrus-intercepted-because-of-pests-since-2015/
(4) freshplaza.com, ‘Citrus contact group debates impact of commercial agreements with third countries’, 29 April 2019
https://www.freshplaza.com/article/9098208/citrus-contact-group-debates-impact-of-commercial-agreements-with-third-countries/
(5) USDA, ‘Bullish Trend in South African Soft Citrus and Lemon Exports Continues’, south Africa Citrus semi-annual report, 18 June 2019
https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Citrus%20Semi-annual_Pretoria_South%20Africa%20-%20Republic%20of_6-18-2019.pdf
(6) gov.uk, ‘The tariff of the United Kingdom’, Version 1.0, dated 8th October 2019
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/837199/Tariff_Reference_Document_8th_October.pdf