EU tariff escalation
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CTA. 2003. EU tariff escalation. Agritrade, October 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52654
Although the EU imports raw materials from developing countries with zero or...
Although the EU imports raw materials from developing countries with zero or low tariffs, tariffs increase going up the value chain, according to a USDA GAIN Report. The reality of this tariff escalation, it maintains, citing the cases of rice and cocoa, is not compatible with the EU's proclaimed development objectives. Taking the example of rice, which is only included in the EBA to a limited degree until 2009, there is a 21% increase in tariffs for husked rice versus paddy (rough) rice, and a 57% increase if the rice is milled or semi-milled. This regime effectively limits semi-milled and milled rice imports into the EU to less than 20% of total rice imports. The paper points out that in terms of rice imports from ACP countries the EU earns over € 10 million per annum in tariffs. What is more important is that it thereby inhibits the development of rice processing in ACP countries, with EU firms capturing the marketing margins on rice processing. 96% of EU rice exports are of semi-milled or milled rice, and 45% of the total go back to developing countries with the benefit of export refunds. With regard to cocoa the report notes a particular tariff peak on chocolate, arising partly from tariff escalation and partly from the supplementary duty charged, which is based on the sugar content of the chocolate. EBA countries (39 of which are also ACP) face no tariff escalation, but non-LDC ACP countries face a 12.9% duty, plus this supplementary sugar duty. The preferences extended to ACP countries have however encouraged more exports of cocoa paste and cocoa fat, butter and oil. Comment: The analysis contained in this report is based on the EU's standard GSP regime and does not take into account the EBA initiative established for least developed countries or the trade provisions of the Cotonou Agreement. It notes that duty-free access for rice is to be granted to LDC exporters by 2009, ending tariff escalation for these countries. However by that time, as a result of the implementation of rice-sector reforms, it is estimated that the European market price for rice will be 41% below current levels. Such a market development would greatly undermine the value of the removal of tariff escalation.