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WTO, Bilaterals and Mediterranean product policyWTO, Bilaterals and Mediterranean product policy
Pierluigi Londero – Dangiris NekrasiusAgricultural Trade Policy AnalysisDG for Agriculture and Rural DevelopmentEuropean Commission
CAL/MED Consortium Workshop IICAL/MED Consortium Workshop IIWashington DCWashington DC7 December 20067 December 2006
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 2
OutlineOutline
Introduction
WTO negotiations: market access and Mediterranean products
Free Trade Areas, Regional Trade Agreements: where are we?
An example: the EU-South Africa Trade Agreement
Conclusions
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 3
OutlineOutline
Introduction– Current state of play in DDA
WTO negotiations: market access and Mediterranean products– Fruit and vegetables: tariff structure and trade pattern– Market access and sensitive products: steps of the analysis
Free Trade Areas, Regional Trade Agreements– Ongoing negotiations and new areas of interest
An example: lessons to be learned from the EU-South Africa Trade Agreement (TDCA)
Conclusions
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 4
Current state of play in market access / sensitive productsCurrent state of play in market access / sensitive products
Market access remains one of the main areas of contention in DDA
– Different interests in approach of exporters and importers logical– Lack of any objective basis for discussion more problematic
TRQ expansion: differences in approach are fundamental – Exporters opt for a general link of TRQ expansion to consumption– Importers insist on relevance of current trade parameters– The result is lack of transparency on potential product coverage
Formula for TRQ expansion is the key– Percentage of sensitive tariff lines directly linked to their treatment – Percentage of Special Product indirectly linked to Sensitive Products
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 5
Fruit and Vegetables: Fruit and Vegetables: Tariff structure and recent trade developmentsTariff structure and recent trade developments
EU Tariffs (AVEs) concentrate in the lower tariff bands– Tariff peaks for garlic and mushrooms
Entry price system
Most traded (non tropical) fruits show remarkable world trade growth – Grapes trade doubled since early 90’s– Oranges essential for US and MED countries– Apples most traded fruit, China has joined the export club
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 6
World grape exports and importsWorld grape exports and imports
Exports (million mt)
0.0
0.5
1.0
1.5
2.0
1990 1992 1994 1996 1998 2000 2002 2004
EU Chile USA
South Africa Mexico Turkey
Imports (million mt)
0.0
0.5
1.0
1.5
2.0
1992 1994 1996 1998 2000 2002 2004
EU USA Russia China Canada
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 7
World orange exports and importsWorld orange exports and imports
Exports (million mt)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1990 1992 1994 1996 1998 2000 2002 2004
EU South Africa USA
Morocco Egypt Turkey
Imports (million mt)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1992 1994 1996 1998 2000 2002 2004
EU Russia China Saudi Arabia Canada
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 8
World apple exports and importsWorld apple exports and imports
Exports (million mt)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1990 1992 1994 1996 1998 2000 2002 2004
EU South Africa USA
Chile New Zealand China
Imports (million mt)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1992 1994 1996 1998 2000 2002 2004
EU Russia China USA Mexico
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 9
Methodological choices for impact analysisMethodological choices for impact analysis
The 4 stages of market access analysis – estimate static-price gap (world/internal price) for all EU tariff lines– analyse impact of incremental changes by thresholds– apply econometric analysis to estimate impact on sectors– refine analysis based on market expertise
The limitations of the 3rd stage– CGE models cannot provide the detail and reliability needed for policy
decisions – PE models have more policy and market detail; but do not cover all sectors – choice of limiting liberalisation only on EU driven by policy questions
The analytical choice– OECD’s AGLINK in-house model used – improvements in import demand implemented (subsequently verified by OECD) – no change in parameters, no adjustment in results– caveats of the model clearly identified (no sugar, f&v, problems in poultry)
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 10
Ad-hoc analysis for fruit and vegetablesAd-hoc analysis for fruit and vegetables
Identify sensitive products– As a result of a tariff line per tariff line analysis– Taking into account potential preference erosion– Assessing the importance of certain products for the economy for certain
regions/Member States
With some specific questions for this sector– What assumptions for the Entry Price System?– What strategy for tariff lines with low tariffs?– Which approach for products which enter the EU market at prices above the entry
price level?
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 11
Bilateral trade agreementsBilateral trade agreements
New impetus after the suspension of DDA talks Ongoing bilateral negotiations
– MEDA
– MERCOSUR
– ACP (including pending question of integration of South Africa)
– Gulf Cooperation Countries New impetus/areas of interest
– South Korea
– ASEAN
– India
– Russia
– Ukraine
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 12
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Main features of South African Fruit and Vegetable sector /1
Share of horticulture in ZA agriculture (ave. 2001-03)
Horticulture27%
Livestock40%
Field crops33%
Source: OECD
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 13
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Main features of South African Fruit and Vegetable sector /2
ZA: share of F&V in total agricultural exports
26% 23% 24% 28% 33%
73% 76% 75% 70% 66%
1,2%1,4%1,2%1,1%1,0%
0%
20%
40%
60%
80%
100%
2000 2001 2002 2003 2004
Sh
are
in v
alu
e
Fruits Vegetables Other products
Source: COMTRADE
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 14
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Main features of South African Fruit and Vegetable sector /3
Production of fruits in ZA (share in quantity, ave. 2003-05)
Bananas5%Peaches and
nectarines4%
Grapefruit4%
Pears and quinces6%
Apples13%
Mandarins and clementines
2%
Lemons and limes4%
Grapes29%
Oranges20%
Other fruits10%
Pineapples3%
Source: FAOSTAT
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 15
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Main features of South African Fruit and Vegetable sector /4
Share of production being exported in ZA (ave. 2002-04)
73% 71%66%
48% 44% 41%
13%
56%
0%
20%
40%
60%
80%
100%
Plums Grapefruit Mandarinsand
clementines
Oranges Lemons andlimes
Apples Pears Grapes
Sh
are
in q
uan
tity
Source: FAOSTAT
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 16
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Main features of South African Fruit and Vegetable sector /5
Breakdown of ZA fruit exports (av. share, 2002-04)
15%
6%4% 4%
18%
38%
11%
7%4%
9%
23%23%
6%10%
16%
5%
0%
10%
20%
30%
40%
Oranges Grapes Apples Grapefruit Pears Lemons andlimes
Mandarinsand
clementines
Other fruits
in Value in Quantity
Source: FAOSTAT
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 17
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Trade, Development and Cooperation Agreement (TDCA) Trade “liberalisation” starting in 2000 Annex IV of the TDCA sets the pace for access to EU market and
classifies between 8 lists:
– List 1 to 4: trade liberalized already or will be liberalized in 2010 at the latest (e.g.: avocados, grapefruit, mandarins and clementines, apricots, peaches, plums, etc.).
– List 6: Introduction of TRQs (strawberries, pears, apricot, peaches, tropical fruit (20089272), mixed fruits (20089258/74/78/98), orange, apple and pineapple juices)
– List 7: no trade liberalisation (oranges, lemons, table grapes, apples, pears and quinces, tomatoes, other veg. (20049010, 200560/80), etc.
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 18
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Main features of South African Fruit and Vegetable trade /1
ZA exports of fruits: Share of EU
0%
25%
50%
75%
100%
2000 2001 2002 2003 2004
Sh
are
in V
AL
UE
Apples
Lemons
Fresh grapes
Oranges
Pears
Mandarins andclementinesPlums
ALL FRUITS
Source: COMTRADE
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 19
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Main features of South African Fruit and Vegetable trade /2
EU-25 import of fruits: Share of ZA
0%
10%
20%
30%
40%
50%
60%
2000 2001 2002 2003 2004 2005
Sh
are
in v
alu
e
Apples
Lemons
Grapes
Oranges
Pears andquincesMandarins andclemetinesPlums
ALL FRUITS
Source: COMEXT
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 20
Lessons from the EU-South Africa Trade AgreementLessons from the EU-South Africa Trade Agreement
Main features of South African Fruit and Vegetable trade /3
TOTAL EU-25 import of ZA fruits
0
200.000
400.000
600.000
800.000
1.000.000
2000 2001 2002 2003 2004 2005
Val
ue
('00
0 E
UR
)
Other fruits
Lemons
Plums
Mandarins andclementinesAvocados
Grapefruit
Pears
Apples
Oranges
Table grapes
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 21
Some tentative conclusionsSome tentative conclusions
WTO negotiations: Market access parameters (in particular sensitive products) far from reaching an agreement
The suspension of WTO talks has brought a new impetus to bilateral and regional trade negotiations
It is difficult to assess the impact of past trade agreement if they have not yet come into full implementation
Pierluigi Londero – Dangiris Nekrasius CAL/MED Consortium Workshop II 7 December 2006 22
For further informationFor further information
EU agriculture and CAP reformhttp://europa.eu.int/comm/agriculture/index_en.htm
EU agriculture and tradehttp://europa.eu.int/comm/agriculture/external/wto/index_en.htm
Agricultural Trade Policy Analysishttp://europa.eu.int/comm/agriculture/publi/map/index_en.htm