Summary
Press reports suggest the South Africa is planning to pursue a case at the WTO over the EU’s trade restrictive use of Citrus Black Spot (CBS) related SPS measures. However this may be aimed at bringing into the public domain the scientific basis for EU CBS controls. This would then provide a more solid basis for the negotiation of a reduction in the severity of these commercially expensive controls. This could side step some of the political pressures which any for a wider review of EU SPS controls would generate. However structural changes in the Spanish citrus sector look likely to intensify producer pressures for import restrictions unless the functioning of citrus supply chains can be improved to the benefit of Spanish producers. While scope will exist under a no-deal Brexit for a review of UK CBS controls it is unclear whether the stalled Continuity Agreement negotiations are covering these phytosanitary issues. The UK government faces severe capacity constraints in this area of policy dialogue; constraints which are only likely to get more severe under a no-deal Brexit scenario.
At the launch of the biannual summit of the South African citrus industry in March 2019 the deputy director-general at the Department of Agriculture, Forestry and Fisheries, Mooketsa Ramasodi, announced ‘South Africa was preparing to launch a formal dispute through the World Trade Organisation’ on the EU’s handling of citrus black spot (CBS) controls. Deputy DG Ramasodi highlighted how for ‘about thirty years, South Africa has been engaging the European Union on the EU’s import legislation for citrus black spot’. This has included presenting research from across the world demonstrating the unjustifiable nature of EU CBS controls applied on imports from South Africa. This needs to be seen in a context where there is an international scientific consensus that trade in citrus fruit is ‘a negligible pathway for the disease to be spread’ (1).
He noted how efforts to resolve the issue through the dispute resolution process of the International Plant Protection Convention had achieved ‘very little progress’. The situation was now seen as becoming urgent following an extension of EU measures introduced at the end of last season. It is expected the existing measures will remain in place for a further 3 years (2).
Earlier in November 2018 South African agricultural officials had been incensed by what was termed the EC’s ‘unflinching bureaucratic coldness‘ to South Africa presentations on the CBS issue. It was maintained the EU’s Directorate General for Health and Food Safety (DG Sante) only ‘begrudgingly’ acknowledged this year as a good season’, when only 2 interceptions of CBS on consignments from South Africa occurred. Despite this achievement the South African delegation to the meeting claimed ‘the EU showed no interest in reviewing its position on CBS as a quarantine pest, demanding full compliance and refusing to consider any reasonable requests for relaxation of the excessive and unsustainable protocols governing the pest’. Indeed it was claimed DG Sante ‘appeared bent on increasing the intensity of their CBS measures – a move that can only be seen as both protectionist and overly aggressive, considering that the EU’s CBS measures remain the subject of an unresolved dispute’ (5).
It was argued that since ‘none of South Africa’s technical and political interventions on CBS has produced the desired outcome’, South Africa is in the process of launching a formal case through the WTO dispute settlement procedure (1).
However press analysis suggests pursuit of a formal WTO case may not be South Africa’s ultimate objective. It is argued South Africa may simply be using the launching of a WTO dispute to bring into the public domain information and data on the basis of EU CBS control decisions which the EU has to date declined to share with the South African authorities.
On this basis it is felt the South African authorities can then more effectively challenge the basis for EU decisions making and, through dialogue, reduce the burden of citrus black spot controls on the South African citrus industry (3).
While the current dispute has not so far had any impact on the volume of South African citrus exports, which in the 2018 export season reached 599,000, it has had a significant impact on returns to citrus producers. It is maintained CBS mitigation measures, aimed at achieving compliance with needlessly strict control requirements cost the South African citrus industry R1.87 billion per annum(€112 million) (3). This on the back of citrus industry revenues estimated at R20 billion (4).
It is maintained South Africa has until recently been unfairly singled out for CBS controls. It is maintained less stringent controls until recently have been imposed on imports from Brazil and Argentina. This was the case despite South Africa having a much better record in terms of the level of CBS interceptions than these two competing exporters (3).
South African citrus industry sources however argue EU controls having nothing to do with CBS, with it being clear ‘some European producers want to keep South Africa out of the European and British markets at the beginning of their season when their early season varieties cannot compete with South African mandarins’ (3).It is against this background that the application of the EU’s increasingly strict CBS controls are seen as primarily a trade restricting measure.
This contention would appear to be supported by the growing demands from Spanish citrus growers to take action against imports, despite EC assertions that citrus imports are not the cause of the current crisis in the citrus sector.
The Valencian Association of Agricultural Producer’s (AVA-ASAJA) has long been calling for more restrictions on imports of citrus from South Africa (see companion epamonitoring.net article, ‘EU Farmers Continue Campaign for Stricter EU Citrus Black Spot Controls’, 15 September 2017), with in January 2019 calls for restrictions on imports from Egypt and Turkey being added to these calls (5).
However on the 24th January 2019 at a hearing in the European Parliament the ‘European Commission denied that the import of oranges and mandarins from South Africa is the reason for the price crisis that producers have been suffering at the start of the campaign’. The head of the EC’s Directorate General of Agriculture, Joao Onofre, said ‘there is no statistical data to say that there has been an increase in imports from South Africa in the period that is harmful to the European production.’ He also argued ‘the irregular entry of citrus fruits from third countries with which the EU has signed trade agreements, like Egypt or Morocco, is not a key factor’. DG Onofre attributed the fall in prices to ‘organizational problems on the part of both the sector and producers, climatological issues and a lack of demand’ (6).
In regard to the organisational problems in the citrus sector Spanish producers have recently been accusing commercial operators of engaging in practices which would be in violation of new EU regulations on the elimination of unfair trading practices. This includes:
- ‘breach of contracts’;
- ‘payment defaults’; and
- the ‘detection of an abusive amount of discards during the fruit handling process’ (sometimes up to 70%) (7).
Spanish citrus producers however remain insistent they have suffered heavy losses as a result of ‘overlap of the late varieties imported from South Africa and the early ones produced in Spain, mainly in Valencia and Andalusia’ (6).
Against the background of this continued Spanish producer pressure in the context of the rise of anti-EU populism across the EU, press reports suggest it is ‘not inconceivable that the South Africans will increase their focus on Britain to at least effect a better CBS deal there once the UK departs from the EU (5)’.
It remains to be seen whether these SPS issues will be taken up and addressed in the current Continuity Agreement, negotiations with the UK. These negotiations are reportedly stalled over a range of important and substantive technical issues, ranging from future UK policy on phytosanitary controls to the rules of origin to be applied to both UK exports and UK imports under the proposed Continuity Agreement.
| Comment and Analysis
The Citrus Black Spot dispute between South Africa and the EU needs to be seen against the background of efforts by Spanish citrus producers to extend the growing season with a view to strengthening their position in negotiations with traders and multiple retailers. This has involved not only the introduction of new and improved varieties aimed at extending the season, but also investment in citrus production in Morocco. Since 2013 this has seen EU imports of citrus fruit from Morocco increase from 123,597 tonnes to 275,791 tonnes (123%) (8). Politically, now is not a good time to be taking on Spanish citrus interests, with populist parties on the rise and the mainstream parties losing power and influence in the principal citrus growing regions of Spain. Similarly at the European level with the EU’s new Plant Health Regulation being rolled out and stricter SPS controls being phased in, getting the EC to review its position on a specific high profile area where SPS controls have in recent years been strengthened will be extremely difficult. What is more CBS is only one dimension of the EU’s stricter SPS controls. Increasingly strict controls on false coddling moth, armyworm, Thrips and other non-European fruit fly infestations are an increasing feature of the EU’s SPS regime. In this context South Africa’s agricultural systems approach could offer an important means of defraying the costs of pest mitigation measures more widely, thereby reducing their commercial impact (see companion epamonitoring.net article ‘The Potential Differential Effects of Stricter EU False Coddling Moth Controls on African Exports’, 19 March 2019). Securing fundamental change in the application of EU SPS measures in the current political and policy context in the EU is unlikely. However some movement on specific cost inflating aspects linked to an intensified science based dialogue could be possible. This will require differentiating a fungal infection such as CBS from other quarantine pests such as Thrips, false coddling moth and armyworm. The South Africa Citrus Black Spot case is important for a wider grouping of ACP countries since increasingly strict EU SPS controls for CBS have had a particularly severe effect on smaller scale ACP citrus exporters. Amongst small exporters investments in new control measures are not always justified on commercial grounds. Thus we find in Belize and Eswatini (formerly Swaziland) the introduction of stricter EU CBS controls saw a dramatic fall in citrus exports to the EU in the early years, with subsequent growth in exports only partially recouping the lost ground. In the case of Belize export volumes to the EU fell from 1,196 tonnes in 2010 to 1 tonne in 2014, with only a partial recovery by 2017 to 255 tonnes. In the case of Eswatini the decline in export volumes was even more dramatic falling from 27,202 tonnes in 2011 to 6,468 tonnes in 2014, with after partial recovery, this declining still further to 4,388 tonnes in 2017 (8). Any easing of EU CBS controls could assist in restoring citrus export volumes. More likely however would be a revision of UK CBS controls under a no-deal Brexit. Agro-climatic conditions in the UK are such that a fungal infection like CBS, which is a citrus specific infection, could never pose a phytosanitary threat in a purely UK context. There would appear to be no justifiable case for maintaining CBS controls from a purely UK perspective. Any removal of UK CBS controls could lead to a substantial renewal of export volumes from these smaller scale ACP exporters. However such a renewal of citrus exports by small scale ACP exporters will depend on whether the UK maintains in place its current temporary no-deal Brexit MFN tariff levels on citrus imports. This is by no means certain. A previous statement by the UK Secretary of State for International Trade, Liam Fox, has highlighted the scope for removing tariffs on UK citrus imports to the benefit of UK consumers, in a context of high no-deal Brexit food price inflation (9). In this context domestic political pressures could well see a removal of current temporary MFN tariffs on citrus imports into the UK. Such a move would negate any benefits derived by smaller scale ACP citrus exporters from the removal by the UK of strict EU CBS controls. |
Sources:
(1) freshplaza.com, ‘South Africa prepares to launch a WTO dispute over EU’ CBS measures’, 14 March 2019
https://www.freshplaza.com/article/9082304/govt-official-south-africa-prepares-to-launch-a-wto-dispute-over-eu-s-cbs-measures/
(2) EFEagro ‘EC to increase controls on Brazilian citrus fruits due to black spot’, 22 March 2019
https://www.freshplaza.com/article/9085502/ec-to-increase-controls-on-brazilian-citrus-fruits-due-to-black-spot/
(3)fruitnet.com, ‘ South Africa turns to WTO on CBS’, 20 March 2019
http://www.fruitnet.com/eurofruit/article/178225/south-africa-turns-to-wto-on-cbs
(4) freshplaza.com, ‘Record year for South African citrus exports’, 14 March 2019
https://www.freshplaza.com/article/9082447/record-year-for-south-african-citrus-exports/
(5) fruitnet.com, ‘EU slammed for ‘unflinching bureaucratic coldness’, 27 November 201
http://www.fruitnet.com/eurofruit/article/177262/eu-slammed-for-unflinching-bureaucratic-coldness
(6) elconfidencial.com, ‘No evidence that citrus crisis is caused by imports from third countries”’, 28 January 2019
https://www.freshplaza.com/article/9066185/no-evidence-that-citrus-crisis-is-caused-by-imports-from-third-countries/?utm_campaign=highlights&utm_medium=email&utm_source=01-02-2019
(7) freshplaza.com, ‘Citrus crisis leads to breach of contracts, defaults and excessive fruit discards’, 18 Jan 2019
https://www.freshplaza.com/article/906303spain-citrus-crisis-leads-to-breach-of-contracts-defaults-and-excessive-fruit-discards/
(8) EC, Market Access Data Base http://madb.europa.eu/madb/statistical_form.htm
(9) Dialogue Secretary of State for International Trade, Liam Fox with the House of Commons International Trade Committee, 6 February 2019
https://parliamentlive.tv/Event/Index/f7cd8517-3b7f-492e-a178-ff1ac193862d