Summary
Spanish citrus producers are concerned the new Mercosur trade agreement could flood the EU market with frozen orange juice concentrate. This potentially impacts on frozen orange juice exporters from Belize and South African, with this being of particular concern to Belize where these exports constituted 1.3% of total exports to the EU in 2018. The conclusion of the Mercosur agreement could give added importance to exploiting the ‘rolled-over’ CARIFORUM-UK ‘Continuity Agreement’, given the potential trade disruptions which could arise from a ‘no-deal’ Brexit for the export of reconstituted orange juice and domestic EU27 orange juice to the UK.
Spanish citrus producers have warned the new EU-Mercosur trade agreement ‘will facilitate the massive arrival of cheap imports of Brazilian orange juice’. This needs to be seen in a context where Brazil is not only ‘the largest producer and exporter of orange juice in the world’, but also exports fully 95% of its frozen orange juice production, with the EU being the most important export market. The Spanish citrus management committee has for many years been ‘warning of the serious consequences that a tariff-free access of Brazilian orange juice would have on the local citrus sector’ (1).
Spanish citrus producers are particularly concerned over the dominant role just three large Brazilian firms play in the export trade in frozen orange juice. It is feared the new EU-Mercosur agreement could lead these three Brazilian giants to ‘eliminate their competition in the EU, or control it by acquiring new packing plants, as indeed they have already started to do’ (1).
There are particular concerns increased competition from Brazil could ‘take a toll on the fresh juice in which Spain has specialized’. This juice is of a higher quality and generates far higher value than the imported orange juice concentrate, which is transported to the EU frozen in huge vessels (1). The transport costs of delivering higher quality Brazilian fresh juice to Rotterdam are such that Spanish producers could soon be subject to direct competition in this high quality market component.
EU Imports of orange Juice Concentrate (CN Code 20091100) (€)
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |
| Total | 70,265,542 | 78,798,791 | 60,886,418 | 59,166,282 | 66,224,576 | 115,761,506 | 84,423,878 |
| Brazil | 8,106,137 | 9,102,063 | 9,748,126 | 11,473,252 | 13,028,729 | 14,496,723 | 14,332,752 |
| ACP | |||||||
| Belize | 935,386 | 503,867 | 643,092 | 95,776 | 1,644,375 | 2,727,354 | 2,313,924 |
| South Africa | 808,699 | 1,216,993 | 2,250,071 | 1,321,898 | 1,068,233 | 1,200,599 | 1,245,522 |
| Others | |||||||
| Mexico | 43,282,758 | 53,939,465 | 39,689,119 | 33,722,829 | 37,645,878 | 79,306,129 | 49,798,130 |
Source: EC Market Access Data Base https://madb.europa.eu/madb/statistical_form.htm
| Comment and Analysis
While the volume of ACP exports of frozen orange juice to the EU are small, for Belize these export volumes have increased strongly in recent years, as stricter EU citrus black spot controls have limited opportunities for the export of fresh oranges to the EU. This Belizean trade into the EU takes place exclusively through the Netherlands. Against this background concerns arise as to the level of increased competition the new Mercosur agreement will generate on the EU market for Belizean exports of frozen orange juice concentrate. Currently the standard third country duty for frozen orange juice imports into the EU is 33.60% + €20.60/100 kg, with a non-preferential tariff quota of 20.0% (2). Trends in Belizean Exports of Frozen Orange Juice to the EU CN Code 20091100)
Source: EC Market Access Data Base https://madb.europa.eu/madb/statistical_form.htm Were increased competition from Brazilian exports to emerge on the EU frozen orange juice market as a result of the EU-Mercosur, Belizean exporters may need to exploit the ‘rolled-over’ Continuity Agreement concluded between CARIFORUM and the UK. This needs to be seen in a context where a ‘no-deal’ Brexit is likely to see the reintroduction of import duties on reconstituted orange juice from the Netherlands and domestic EU27 orange juice production. The situation is of less immediate concern to South Africa given the relatively minor role orange juice concentrate exports play in South Africa’s overall exports to the EU. This being noted if a SACU-UK Continuity Agreement is concluded and new commercial relationships can be built up with UK companies involved in reconstituting imported frozen orange juice concentrate, South African exporters could potentially benefit from the disruption of UK imports of orange juice from EU27 member states arising from a ‘no-deal’ Brexit. |
Source
(1) freshplaza.com, ‘The Mercosur agreement leaves the juice industry unprotected, ‘Black spot’ is no longer a priority pest’, 2 July 2019
https://www.freshplaza.com/article/9122510/the-mercosur-agreement-leaves-the-juice-industry-unprotected-black-spot-is-no-longer-a-priority-pest/
(2) EC Market Access Data Base ‘EU Tariffs’
https://madb.europa.eu/madb/euTariffs.htm?productCode=2009111191&country=BR