28 June 2002

EU cereal import duty is all set for approval

By Olivia Cooper

CHANGES to EU cereal import duties could soon be approved, giving domestic farmers greater protection against cheap foreign grain.

But any new regime is unlikely to be implemented before July 2003, leaving farmers vulnerable to low-priced eastern European cereals for another season.

After months of trade lobbying the European Commission is planning to negotiate with its World Trade Organisation partners to reach a fairer, more accurate import system.

Under the existing regime, import duties are calculated using the difference between US prices and 155% of the EU intervention value. But in recent years US prices have been too high to warrant many duties, while cheap Black Sea grain has been allowed to flood into the EU, putting domestic values under pressure.

"The present regime does not work," said EU Farm Commissioner, Franz Fischler. "Representative prices used for calculating import duties no longer adequately represent world market prices."

Although details of a new system have not been finalised, Mr Fischler has indicated that he plans to include Black Sea grain values in a more realistic world price calculation. It is also likely that the EC will introduce tarriff rate quotas and fixed duties, whereby countries would be allowed to export a maximum tonnage to the EU at a fixed import levy.

While grain merchants generally welcomed the move, there will be inevitable drawbacks. "It is a double-edged sword," said Dalgetys Trevor Harriman. "Anything that is displaced from coming into the EU has to go elsewhere."

Although EU farmers would be protected against cheap imports, Black Sea countries would simply export more wheat outside the EU. UK supplies would then need to become cheaper to compete on the world market, said Mr Harriman.

The proposal must be endorsed by EU member states before it goes to the WTO, which then has 90 days to reach its decision.

Even if a new regime is approved, it is unlikely to be installed halfway through the selling season, said the Home-Grown Cereals Authoritys Gerald Mason. "There is still a major risk that we are going to have to compete with former Soviet Union grain for the next season at least." &#42