Month: April 2017

LEAD BREXIT NEGOTIATOR MICHEL BARNIER IN FARM EUROPE

Posted on - Posted by Farm Europe

IMG_4615 (1)Michel Barnier, the European Commission lead Brexit negotiator, participated today in a breakfast-debate in Farm Europe on the challenges of Brexit to the EU at large, and in particular to the EU agri-food sector.

As highlighted in Farm Europe’s report, Brexit will have a powerful impact on the EU agri-food sector, under any of the possible outcomes. That impact could be catastrophic in a no-agreement scenario.

To grasp the relevance of Brexit to the agri-food sector it is worth reminding that currently the EU 27 enjoys a large trade surplus vis-a-is the UK in excess of 20 billion euros per year.

Under a scenario where the outcome of the Brexit negotiations is favourable to a long-lasting trade relationship between the EU 27 and the UK, under a comprehensive Free Trade Agreement (FTA), the EU 27 will continue to benefit from a tariff-free access to the UK market for most of its agri-food exports.

However the EU 27 will face new and increased competition from all the other countries with which the UK will also strike Free Trade Agreements. It is indeed very likely that the UK will pursue FTAs with key world players, like the US and members of the Commonwealth, which are world-class producers of agriculture and food products.

In particular the beef, dairy and wine EU sectors would face severe headwinds from these new competitors who would benefit from the same conditions of access to the UK market as the EU 27.

The negative impact could be even stronger as the UK could become a platform for exporting products from these countries to the EU 27, benefiting from the free trade provisions of the EU 27-UK FTA. That could be case for sugar products, using the UK refining capacity on sugar cane imports, and for many other products if appropriate safeguards are not put in place. Rules of origin must be tightened to prevent a massive diversion of agri-industrial capacity from the EU to the UK on the back of access to cheaper raw materials and to the single market.

However, if the Brexit negotiations fail to produce agreement on the future trade relationship, the EU 27 would face a tariff barrier on its exports to the UK identical to what third countries face today in exporting to the EU.

The tariff level in agri-food products is substantially higher than in other sectors, and particularly high in meat and dairy products. If as expected the UK would sign new FTAs with other countries, that scenario would spell the end of EU agri-food exports to the UK on a number of key sectors and cause severe disruption of trade across the board. Not to mention the difficulties that would arise from the absence of agreement on rules and standards, and the lack of equivalency agreements, which would compound the negative effects of high tariffs.

In any case Brexit will not only bring about a 3 billion euro net cut to the CAP budget, and also the EU 27 agri-food sector will suffer from Brexit under any scenario. It is thus urgent that the Commission devises a specific set of measures to anticipate the inevitable negative impact of Brexit to the EU agri-food sector.

Resources should be mobilized from now on to promote EU 27 products in the UK and minimize the foreseeable impact of renewed competition from world players. The shape and the resources allocated to the new CAP should fully take into account the negative impact of Brexit in the sector.

The EU agri-food sector fully understands the importance of a suitable result of the Brexit negotiations for the future of the Union. But it is equally important that EU negotiators and decision-makers understand the high-stakes of Brexit for the future of farming and of a food sector that represents 15% of the EU GDP.

A sustainable approach towards biofuels in the Palm oil debate

Posted on - Posted by Luc Vernet & Valeria D'Agostino

This week, the European Parliament voted on a report “calling on the European Commission to take measures to ensure among others the phasing out of palm oil in biofuels by 2020 and a single certification scheme for palm oil entering the EU market”. This report tackled the highly debated issue of imported palm oil, and the potential damaging impacts on the climate and environment (in particular linked with peatland drainage and deforestation).

The EP’s non-binding resolution is a welcomed and balanced move in this debate, on which the European Commission could build when it comes to the biofuel discussions and transport decarbonisation goals. Going beyond easy stances, this resolution calls for the introduction of sustainability criteria for palm oil & products containing palm oil entering the EU along with a single mandatory certification scheme.

The EU Parliament also highlighted that the High Carbon Stock (HCS) Approach, which is already endorsed by the main users of palm oil, supports the production of sustainable palm oil in providing a set of rules for the implementation of companies’ commitments to “no deforestation” in their palm oil operations and supply chains.

This approach makes it possible to take responsibility and to find sound answers to the issues around sustainable palm oil production. Another example in this regard, is the Palm Oil Innovation Group, a multi-stakeholder initiative, (founded in 2013, and developed in partnership with leading NGOs & palm oil producers) that strives to achieve the adoption of responsible palm oil production practices by key players in the supply chain.

The EP Report on Palm Oil and Deforestation in its recommendations, also specifies that: “simply banning or phasing out the use of palm oil may give rise to replacement tropical vegetable oils being used for biofuel production, which would, in all probability, be grown in the same ecologically sensitive regions as palm oil and which may have a much higher impact on biodiversity, land use and greenhouse gas emissions than palm oil itself; recommends finding and promoting more sustainable alternatives for biofuel use, such as European oils produced from domestically cultivated rape and sunflower seeds”.

Farm Europe welcomes this approach, which makes a clear differentiation between the differing types of biofuels, and underlines the positive contribution of EU-sourced biofuels. As outlined in our biofuel report, a sustainable development of EU-sourced conventional biofuels is an opportunity for both transport decarbonisation (more than 50% Green House Gas savings) and the resilience of the EU agri-food sector (i.e. stable demand for farmers, rural jobs & investments) and an effective reduction of EU’s protein dependence.

EU decision-makers should promote a real fact-based strategic approach when it comes to biofuels by taking into account the actual evidence of the capacity of EU sustainable biofuels to be a key tool in contributing both to environmental sustainability and economic development in rural areas.

Clear distinction should be made between first generation EU-sourced biofuels – made from oilseeds, cereals and sugar beets grown within the European Union – and biofuels made from imported palm oil and “waste oils” or imports from territories with unverifiable sustainability or displacement effects. Undoubtedly, by efficiently strengthening sustainability criteria for the production & consumption of biofuels, the EU can reduce greenhouse gases without causing environmental damaging impacts elsewhere in the world, and without adopting a somewhat sketchy position on the potential contribution of EU agriculture to environmental goals.

The EP contribution on Palm Oil is offering a clear and sustainable political window to achieve a sound and sustainable strategy for the EU.

 

OPINION OF THE ADVOCATE GENERAL ON ENDIVES, FINALLY!

Posted on - Posted by Yves Madre

In the context of the 2007 dispute between the French Competition Authority and the association of producers selling endives as well as other operators, the French Court of Cassation filed a complaint with the Court of Justice of the European Union (CJEU) about the capacity of these organisations, producers, associations of producers’ organizations and other operators to consult on prices or quantities marketed.

In the opinion, which has been delivered today, the Advocate General observes that the common rules on competition law do not apply to collective bargaining practices of selling prices (or single selling prices) conducted by a producer organization or an association of producers’ organizations, whose objects include the marketing of the products concerned. The same applies to consultation on quantities to be placed on the market and to the exchanges of strategic information.

In other words, a PO or PDO is deemed to have the same rights as a commercial enterprise under private law ; A PO or a AOP is indeed an entire legal entity.

In this context, the common law of competition must apply to consultations on prices and quantities to be marketed or to exchanges of strategic information between separate legal entities – hence, between different POs or different AOPs – which are therefore prohibited.

Moreover, it is also prohibited to fix a minimum price between producers, either between different POs (or AOPs) or within a PO (or AOP).

This official opinion from the Court of Justice of the European Union is a positive signal for POs and AOPs:

– On the one hand, it confirms the orientation of the legislators taken during the CAP Reform of 2013 on the specific law applicable to POs and AOPs in the agricultural sector, namely the provisions of the CAP prevailing over common rules of law competition.

– On the other hand, this opinion also confirms the EU acquis, prior to the 2013 Reform, and should therefore put an end to the debates on interpretation on this extremely relevant point for the organization of the sectors. It is desirable to have it confirmed by the Court of Justice, since it will make it possible to clarify the existing margins of manoeuvre for POs and AOPs once and for all, and in particular, to avoid substantive divergent interpretations by competition authorities at national level.

TRADE: DO NOT MAKE IT WORST

Posted on - Posted by Joao Pacheco

Dark clouds are gathering over the horizon, and they are not promising healthy showers. They rather risk bringing a storm that is gaining strength around the new US Administration intentions.

A border adjustment tax, or an internal revenue tax mechanism, is being considered to promote exports and tax imports.

Another tool being examined would tackle currency manipulations, whereby they could be considered as an unlawful subsidy and thus open to countervailing duties at the request of affected US firms.

It is too soon to say whether these measures will ever be implemented, and in which form. They might fail to pass Congress, or be fundamentally redesigned. But they might also pass and become US law.

Some of the issues are real, and previous attempts to address them in WTO fora have gone nowhere. Currency manipulation is clearly one, as it can distort trade more than the average tariff. The problem is how to define what currency manipulation is, and how to sanction it.

The EU has always privileged multilateral rules and actions, and its discomfort with these potential unilateral moves by the US is palpable and understandable.

But the reactions in Brussels are to say the least puzzling.

The Commissioner for Trade has signaled a rapprochement with China as a response to US unilateralism.

If the Commission is trying to pass the message to Washington that it has options and can realign its world trade, choosing China is not the best credible card to play as the US believes according to their own experience that this might not result into a balanced relationship.

The Commission is also threatening that the EU could challenge a US border adjustment tax. That is the right thing to do if you believe the new policy would be faulty under WTO rules, and if you bet you can deter the US from going ahead.

But there are limits to this strategy, as the Commission knows well that that would risk bringing the two big trade blocks into a collision course never seen before. With unforeseen consequences if it leads to a trade war.

The current situation, with its perceived threats and uncertainties, demands careful evaluation and assessment of options, rather than rushing into false alternatives.

The situation demands additional engagement to prevent measures against EU interests to be taken, and the evaluation of options that protect our interests, rather than confrontation or grand standing.