Summary
Parliamentary calls are being made for the EC to revise the use of its entry price system for tomatoes, to enhance the effectiveness of this trade policy tool in the face of low-priced imports which undermine the commercial viability of EU tomato production. A similar entry price system could usefully be deployed to protect South African poultry meat producers when applying safeguard measures. This should be duly considered as part of the ongoing South African poultry sector tariff policy review.
At the beginning of April 2021, the spokesperson for the Socialist Party in the Agriculture Committee Clara Aquilera called on the ‘European Commission to correct the ineffectiveness of the EU entry price system for Moroccan tomato imports’ (1). As Clara Aquilera MEP pointed out in her written question to the EC the safeguard mechanisms ‘against trade-distorting imports’ in theory prevents ‘imports from entering the common market at prices below a safety threshold.’ However, reference prices have not been substantially revised since 1995, with, as a result, the entry price system for tomatoes now clearly failing ‘to fulfil its stated aim for Moroccan tomatoes’ (2).
She called for an updating of the reference prices, disaggregated by the different varieties of tomatoes, and a move over to a ‘system for calculating the flat-rate import value’, so as to ensure to the entry price system is effective in safeguarding the interests of European tomato producers.
In an earlier question to the EC, Clara Aquilera, MEP, highlighted how while duty free tomato imports were allowed under the EU-Morocco agreement an TRQ of 285,000 tonnes for such access had been granted, in the 2020-21 season imports of tomatoes from Morocco were exceeding the monthly quotas (3).
What is more, it was pointed out how in 2020-21 season imports into the EU of over 500 000 tonnes were expected. Questions were posed as to why the EC was not monitoring trade flows in tomatoes and why duty-free quota ceilings on tomato imports were not being enforced (3). These trends in imports were set against the serious losses in the profitability of horticultural products from Granada, Almeria and Murcia which were accumulating year on year. The MEP sought to draw a direct causal link between the decrease in production in these regions of Spain and increase in imports of tomatoes from Morocco.
| Comment and Analysis The EU entry price system is applied not only to tomatoes but some 14 other selected fruit and vegetable products. This entry price system imposes a specific duty on imports when the daily import prices fall below a predetermined seasonally varying minimum entry price. This non-tariff measure is intended to prevent the entry of products to the EU market at prices which undermine local EU production.To calculate the applicable duty under the entry price system information is compiled on the import price of the product as well as the predetermined entry price. However, since a large proportion of EU fruits and vegetable imports are paid on commission, implying that the import price is not determined until the commodity is sold in the EU markets, the EC calculates a ‘synthetic’ import price referred to as the Standard import value (SIV). The applicable SIVs, published on a daily basis by the EC are calculated from a survey of fruits and vegetable prices for each product and export origin, collated from the average of designated representative fruits and vegetables wholesales markets in all the EU member countries, less the marketing and transportation costs, and custom duties.The use of the Entry Price System gives rise to a composite duty which is made up of an ad valorem tariff and a specific duty component. Significantly, where duty free access is granted, only the specific duty would be imposed, unless otherwise stipulated.Moving over to the use of an entry price system for the application of safeguard duties to poultry meat products, could be extremely useful in combatting under invoicing and mislabelling of products to minimise duty liabilities. Indeed, the use of an entry price system could usefully be applied alongside quantitative restrictions on poultry meat imports to South Africa from the EU, with imports of poultry meat below the reference price being strictly controlled. Consideration should be given to the possible use of such a trade policy tool, as part of the ongoing South African poultry sector tariff policy review (see companion epamonitoring.net article ‘South Africa to Undertake Comprehensive Poultry Sector Tariff Review’, 13 May 2021).What is clear is that in the ongoing debate with the EU on the use of defensive trade policy tools in the poultry sector, the South African government and stakeholders should repeatedly refer to the EU’s own trade policy practice in sensitive agri-food sectors. |
Sources:
(1) Agrodigital.com, ‘MEP demand the EC updater the EU entry price system for Moroccan tomato imports’, 9 April 2021
https://www.hortidaily.com/article/9309944/mep-demands-the-ec-update-the-eu-entry-price-system-for-moroccan-tomato/
(2) Parliamentary questions Clara Aguilera (S&D), ‘Correcting the ineffective entry price system for Moroccan tomato imports’, Question to the European Commission for written answer (E-001827/2021), 31 March 2021
https://www.europarl.europa.eu/doceo/document/E-9-2021-001827_EN.html
(3) Parliamentary questions Clara Aguilera (S&D), ‘EU tomato market in dire straits owing to mass imports of tomatoes from Morocco’, Priority question for Written question to the European Commission (P-001183/2021), 1 March 2021
https://www.europarl.europa.eu/doceo/document/P-9-2021-001183_EN.html