UNDERSTANDING THE EPA - Part 7 - No limits on rice exports to EU after 2010 - But low Caribbean output a damper on trade
published:
Friday | February 22, 2008
David Jessop, Trade Writer
For a number of years in the late 1990s, rice producers in Guyana and Suriname were lobbying in Europe to try to achieve language in the Cotonou Convention that would ensure greater access for exports of Caribbean rice to the European Union (EU).
They were doing so because ACP rice was subject to a highly restrictive quota as a result of the concerns of Europe's domestic producers in Spain, Portugal and Italy and a complex tariff regime for rice originating from sources in south east Asia.
They were also arguing for significant EU development assistance to help the industry improve its efficiency and develop a regional market.
Then rice producers were suffering from weak prices and low production levels, as cheap imported rice and US aid programmes supplying rice undercut the viability of regional producers.
The regional market was also made more difficult as it was often the traders or processors in the overseas territories of Curaçao, Aruba and Turks and Caicos who were the ones making money through a special European dispensation for partially transforming African Caribbean and Pacific (ACP) rice by milling or packing within the ACP and then shipping it on to the EU free of restrictions.
Global shortage of rice
Today, the situation could not be more different. There is a global shortage of rice. Demand has surged in emerging nations like India and China in parallel to pressure by the United States and others to turn food crops over to the manufacture of ethanol.
As a consequence, the price of rice has escalated dramatically and there are global shortages resulting in producing nations introducing measures to restrict exports to keep domestic prices down.
This has meant that while the regional market has grown since 2000, the supply, pricing and tariff arrangements within CARICOM are now under price pressure as extra-regional and domestic demand for Surinamese and Guyanese rice is taking up most of what the two nations can produce.
All of which is ironic when it comes to the Economic Partnership Agreement (EPA) with Europe because the regional industry in Guyana, Suriname and smaller rice producers in the Dominican Republic and Belize are unlikely to be able to avail themselves fully of the opportunity offered by duty and quota free treatment in the EU market after 2010 and their regional and domestic market, unless there is a significant increase in production.
Under then terms of the EPA Europe has agreed to offer duty-free and quota-free market access from January 1, 2008 for all Caribbean goods with the sole exceptions being rice and sugar.
In the case of rice, all Caribbean originating exports to Europe will be both duty and quota free after 2010. Until this happens there will be a tariff rate quota at zero duty for 187,000 tonnes for calendar year 2008 and 250,000 tonnes in 2009. This compares with a tariff quota rate of approximately €65 per tonne currently paid.
The present quota available to the ACP (Guyana and Suriname) amounts to 145,000 tonnes and the proposed quotas for 2008 and 2009 therefore represent increases of 29 per cent and 72 per cent respectively. The new arrangement makes no distinction between whole grain and broken rice, which means that Cariforum exporters should be better able to target the higher-priced market for whole grain rice, once supplies are available.
The EPA also has legally binding language that commits both Cariforum and the EU to undertake prior consultations on any trade policy development that 'may impact on the competitive positions of traditional agricultural products', including rice in the European market.
As with other Caribbean agricultural commodities the EC has also agreed to try to maintain significant preferential access within the multilateral trading system for products such as rice originating in Cariforum for as long as is feasible.
This is particularly important in terms of any planned liberalisation of the European market to other nations by the EU in the context of the WTO and bilateral free trade agreements or in the context of its internal regulatory framework.
In addition there is also in the text of the EPA a joint declaration on rice that commits both Cariforum and the EC to ensuring that the licensing and other arrangements for the administration of the tariff rate quota for rice up to 2010 is kept under detailed review with a view to ensuring that Cariforum rice exporting states obtain the maximum benefit from the EPA.
Finally there is language in the text on rules of origin that makes clear that husking, partial or total bleaching polishing or glazing of rice imported from non Cariforum nations does not confer Cariforum origin on such products if exported to Europe.
